TDC sues Illinois to block digital asset tax law

TDC, also known as The Digital Chamber, has sued the Illinois Department of Revenue in Sangamon County court to stop the state's Digital Asset Tax Act from taking effect, arguing the 0.2% levy violates the Illinois constitution, the U.S. Constitution's Commerce Clause and the federal Internet Tax Freedom Act by taxing digital-asset activity differently based on the technology used to record it. The lawsuit, filed Tuesday on behalf of a trade group representing more than 250 member companies, seeks to block enforcement before the tax's planned January 1, 2027 start. Illinois enacted the measure through Senate Bill 3019 as part of its fiscal 2027 budget package, and state projections estimate it could raise about $60 million annually. The law applies to covered exchange, transfer and storage events handled by brokers whose customers' place of primary use is in Illinois, including entities based in the state or providing digital asset services with gross receipts above $100,000. The Digital Chamber argues the measure is the first state transaction-based levy of its kind on digital assets, discriminates against blockchain infrastructure while sparing functionally similar traditional systems, and could reach beyond crypto into other distributed-ledger-based services. The complaint asks the court for declaratory and injunctive relief, while a repeal bill, House Bill 5798, remains pending in the legislature.