A crypto lobbying organization has sued the state of Illinois over a last-minute tax provision inserted into the state budget last month.
The Digital Chamber alleged that Illinois’ Digital Asset Tax Act violated both the US and state constitutions and was preempted by federal tax law. The lawsuit, filed Tuesday, asks a federal judge to block the Illinois state government from enforcing the tax.
The lawsuit says the tax violates the Uniformity and Due Process Clause of the Illinois State Constitution, the Commerce Clause of the U.S. Constitution, and the Internet Tax Freedom Act by specifying digital asset transactions.
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. A 0.2% tax applies to entities that are located or provide services in Illinois with gross receipts over $100,000. The tax takes effect in January.
TDC’s lawsuit states that the Internet Tax Freedom Act alone creates a rule that “electronic commerce shall not be subject to discriminatory state and local taxation.”