Illinois faces lawsuit from Digital Chamber challenging 0.2% cryptocurrency transaction tax
Legal action has been initiated by The Digital Chamber in Illinois courts seeking to prevent the enforcement of a cryptocurrency taxation measure that was incorporated into the state's budget legislation.
The Digital Chamber, an advocacy group focused on cryptocurrency and blockchain technology, has initiated legal proceedings against the State of Illinois concerning a 0.2% tax on cryptocurrency transactions that is scheduled to take effect in 2027.
According to a Tuesday court filing submitted to the circuit court of Sangamon County, Illinois, the Chamber contended that the Illinois state tax designated for the 2027 fiscal year was "facially invalid." The advocacy group launched civil litigation targeting Illinois Attorney General Kwame Raoul along with David Harris of the Department of Revenue, asserting that the cryptocurrency tax was "slipped into the state's budget" in the absence of proper debate or input from those who would be potentially impacted by the measure.
The lawsuit argues that no one should be taxed differently because of how ownership is recorded or transferred. Put simply, this tax discriminates against people who transact in digital assets. This tax is universally applied, regardless of whether the investor realizes any gain, or whether ownership is even being transferred.
The Digital Chamber
The digital asset policy measure, which was incorporated into a senate bill as a component of the Illinois state budget for the fiscal year 2027, mandates that crypto brokers must collect a 0.2% tax or potentially face prison sentences and monetary fines. The budget bill received Governor JB Pritzker's signature and became law in June.