Illinois to levy 0.2% crypto tax if brokers don’t collect

Two crypto industry groups filed a lawsuit challenging Illinois’ Digital Asset Tax Act on Aug. 21, but their court filing did not pause the law, which is scheduled to take effect Jan. 1, 2027.

The Blockchain Association and the Crypto Council for Innovation asked a Sangamon County court to declare the statute invalid and to issue preliminary and permanent injunctions. The complaint names Illinois Department of Revenue Director David Harris, Attorney General Kwame Raoul and Sangamon County State’s Attorney John Milhiser in their official capacities.

Plaintiffs allege the tax is preempted by the federal Internet Tax Freedom Act and that it violates the Commerce Clause, federal and state due process protections, and Illinois constitutional rules on tax uniformity, delegation and legislative procedure. The filing did not include a case number and did not report any injunction or court schedule that would delay the law’s start date.

Under the statute, the levy applies at 0.2% of the value of a covered digital asset when an Illinois customer receives covered digital-asset business activity. Covered activity includes a single occurrence of exchanging, transferring or storing a digital asset as part of a business or when a broker provides services on behalf of a customer who agreed to receive them. The tax is assessed on the asset’s value, not on gains or on broker service fees.

Brokers that make or effectuate a sale of covered activity must collect the tax. For brokers headquartered outside Illinois, the state applies a $100,000 threshold: if gross receipts from covered digital-asset business activity to Illinois customers reach at least $100,000 over the preceding 12 months, the broker must begin collecting. Illinois will test that threshold quarterly; once met, the broker is treated as maintaining a place of business in the state and must collect, remit and file returns for one year. Registration requirements are handled separately in the law.

If a broker does not charge the tax at the point of sale, the Illinois customer must remit the 0.2% by the 20th day of the following month using forms prescribed by the Department of Revenue. The plaintiffs’ request for relief could prevent collection and liability for brokers and customers if a court grants an injunction.

The industry challenge follows an earlier, separate lawsuit filed by The Digital Chamber in the same Sangamon County court. The two complaints use different captions and defendant lists, and no public filings indicate coordination, consolidation or a joint court schedule. Unless a court blocks enforcement or the legislature changes the law, Jan. 1, 2027 remains the operative compliance date.