TDC Files Lawsuit Against Illinois Over New Digital Asset Tax

The Digital Chamber (TDC), a crypto lobbying organization, has launched a lawsuit against the state of Illinois to block the recently enacted Digital Asset Tax Act. This law imposes a 0.2% tax on all digital asset transactions conducted by firms based in or operating in Illinois, effective January 2027.

According to the lawsuit, filed in federal court, TDC argues that this tax violates the U.S. Constitution and the state constitution. Specifically, it contends that the law breaches the uniformity and due process clauses of the Illinois state constitution and the Commerce Clause of the U.S. Constitution. The act was passed rapidly as part of the last-minute budget discussions and applies to entities with gross receipts exceeding $100,000 from digital asset services.

TDC asserts that the tax discriminates against electronic commerce by specifically targeting digital assets while exempting traditional financial transactions. It points to the Internet Tax Freedom Act, which prohibits discriminatory taxation against electronic commerce, as a key piece of legislation supporting its position. In its filing, TDC states that “the Act does not distinguish between gains and losses, between profitable and unprofitable transactions, between realized and unrealized appreciation, or between transfers that change ownership and transfers that do not.”

The lawsuit seeks to prevent the enforcement of the Digital Asset Tax and requests reimbursement of legal fees. TDC is advocating not only for its own interests but also for the broader crypto business ecosystem that may be affected by the new tax.

The outcome of this legal challenge could have implications for the regulatory landscape surrounding digital assets in the United States, particularly as more states consider introducing or modifying tax policies related to cryptocurrencies.