Michael J. Bologna (Bloomberg Law): Cryptocurrency Trade Group Sues Illinois Over Digital Asset Tax
A major cryptocurrency trade group is asking an Illinois court to block the nation’s first state tax on digital asset transactions, describing it as discriminatory, unconstitutional, and prohibited under federal law.
The Digital Chamber filed a lawsuit Tuesday against the Illinois Department of Revenue over the state’s digital asset tax, which was added to an omnibus revenue bill in the final moments of the General Assembly’s spring legislative session and approved by Gov. J.B. Pritzker (D) June 16.
Maria Koklanaris (Law360): Illinois Crypto Tax Unfairly Targets Traders, Suit Says
According to the suit, Illinois is singling out, and penalizing, those who trade in crypto. It said that is a violation of the federal Internet Tax Freedom Act, which bans discriminatory taxation of a digital good when the nondigital counterpart is not taxed.
“Illinois imposes no comparable tax on the exchange, transfer, or custody of economically identical assets, including cash, stocks, bonds, Treasury securities, fund interests, commodities, and derivatives, when those assets are held or transferred through traditional financial infrastructure,” the suit said. “No other state imposes such a tax on either category.”
But, the trade group said, S.B. 3019 “therefore distinguishes between economically identical property based solely on the technological medium through which ownership is recorded and transferred.”
Emily Hollingsworth (Tax Analysts): Digital Chamber Files Challenge to Illinois Digital Asset Tax
Chamber of Digital Commerce v. Harris was filed in the Circuit Court of Sangamon County July 21. The Chamber of Digital Commerce — doing business as the Digital Chamber — is asking for preliminary and permanent injunctive relief barring the defendants (state Department of Revenue Director David Harris and Attorney General Kwame Raoul) from enforcing the state’s 0.2 percent tax on digital assets received through business activities, which the chamber argues violates the Illinois and U.S. constitutions and the federal Internet Tax Freedom Act.
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