The tax originally was scheduled to begin Jan. 1, 2027. The new filing says the court entered an agreed preliminary injunction on Oct. 7 delaying its effectiveness and enforcement until July 1, 2027. The Defiant previously reported on the parties’ request for that six-month pause.
A Tax on Digital Assets Alone
The associations argue that the federal Internet Tax Freedom Act preempts the levy because it singles out electronic commerce. Their filing compares taxed crypto activity with exchanging dollars for euros, buying gold or storing cash at a bank, which it says Illinois does not tax in the same way.
“It shouldn’t single out crypto,” Blockchain Association said in its announcement.
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The motion also invokes the dormant Commerce Clause, which limits state burdens on interstate commerce. The groups argue that overlapping home-address and IP-address tests could expose customers to double taxation if other states adopted identical laws. They also challenge using an asset’s full value as the tax base rather than the value of the brokerage service.
A separate due-process claim argues that unclear definitions leave brokers and customers unable to determine their obligations, despite criminal penalties for brokers. The filing disputes which assets qualify, how bundled services are counted and which brokers must collect the tax.
Under the Illinois Constitution, the groups challenge the unequal treatment of digital and non-digital assets, the delegation of tax policy to future federal broker rules, and the omnibus bill’s compliance with single-subject and three-readings requirements. They acknowledge that the enrolled-bill doctrine prevents the trial court from granting relief on the three-readings argument, which they preserve for appeal.
The collection requirements would reach beyond Illinois-based businesses: the statute includes out-of-state brokers with at least $100,000 in gross receipts from digital-asset business activity sold to Illinois customers over the preceding 12 months.
Illinois officials disputed the alleged constitutional and federal-law defects in the related Digital Chamber lawsuit’s October agreement seeking the temporary pause. That agreement expressly reserved the parties’ claims and defenses; the postponement did not settle the tax’s validity.
