Crypto lobby group TDC sues Illinois to block digital asset tax
The Digital Chamber (TDC) has filed a lawsuit against the state of Illinois to block a new 0.2% tax on digital asset transactions. The group argues the tax is unconstitutional and violates federal laws regarding internet commerce.
Why it matters
This legal challenge highlights the ongoing tension between state-level digital asset taxation and federal commerce protections, setting a precedent for future crypto regulation.
TDC (otherwise known as The Digital Chamber) alleged that Illinois' Digital Asset Tax Act violated both the U.S. and state constitutions and is preempted by a federal tax law. The lawsuit , filed Tuesday, asks a federal judge to block the Illinois state government from enforcing the tax.
The tax violates the Illinois state constitution's uniformity and due process clauses, the Commerce Clause of the U.S. Constitution and the Internet Tax Freedom Act by specifying digital asset transactions, the suit said.
The Digital Asset Tax Act was passed and approved on short notice last month, right before the Illinois state government wrapped up its session for the year. The 0.2% tax applies to any entities that are based in Illinois or provide services with gross receipts of over $100,000. The tax takes effect in January.
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