A crypto lobby 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 the Illinois Digital Asset Tax Law violated the US 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 Uniformity and Due Process Clauses of the Illinois state constitution, the Commerce Clause of the United States Constitution, and the Internet Tax Freedom Act by specifying digital asset transactions, according to the lawsuit.
The Digital Asset Tax Act was passed and passed on short notice last month, just before the Illinois state government wrapped up its session for the year. The 0.2% tax applies to any entity based in Illinois or providing services with gross receipts greater than $100,000. The tax goes into effect in January.
TDC’s lawsuit said the Internet Tax Freedom Act alone created a rule that “electronic commerce would not be subject to discriminatory state and local taxes.”
