A crypto lobbying organization has sued the state of Illinois over a last-minute tax provision inserted into the state budget last month.
TDC (also known as The Digital Chamber) alleged that Illinois’ digital asset tax law violated both the United States and state constitutions and was preempted by a federal tax law. The lawsuit, filed Tuesday, asks a federal judge to block the Illinois state government from implementing the tax.
The tax violates the Uniformity and Due Process Clauses of the Illinois State Constitution, the Commerce Clause of the U.S. Constitution, and the Internet Tax Freedom Act by specifying digital asset transactions, according to the suit.
The Digital Asset Tax Act was passed and approved on short notice last month, just before the Illinois state government ended its session for the year. The 0.2% tax applies to all entities based in Illinois or providing services with gross receipts greater than $100,000. The tax takes effect in January.
TDC’s lawsuit said the Internet Tax Freedom Act alone created a rule that “e-commerce would not be subject to discriminatory taxation at the state and local level.”
