Illinois, crypto groups ask court to delay 0.2% digital-asset tax start by six months

Illinois officials and cryptocurrency industry groups have jointly asked a judge to push back the launch of the state's new digital-asset tax. In an agreed motion filed Oct. 1 in Sangamon County, the parties seek to move the effective date from Jan. 1 to July 1, 2027. Illinois Department of Revenue Director David Harris and Attorney General Kwame Raoul joined the request. The Digital Chamber and the Illinois Blockchain Association filed the constitutional challenge to the tax, which would continue during the requested delay. As of Oct. 4, it had not been confirmed that the court had entered the order. Illinois enacted the Digital Asset Tax in June. The law imposes a 0.2% levy on the value of digital assets involved in certain covered transactions, rather than on investors' trading profits. Industry groups have warned for months that the tax could increase compliance costs and drive activity out of the state. The law remains in effect, and Illinois continues to dispute the groups' claims. The joint filing does not concede the tax is unconstitutional and does not ask the court to repeal it. Draft rules from the Department of Revenue suggest a fee-paid withdrawal from a broker to a self-custody wallet can be taxable when statutory conditions are met, while a direct transfer that does not involve a covered broker may fall outside the levy. Brokers would be required to collect and remit the tax and could remain liable if they fail to do so. Customers may need to calculate and pay any uncollected tax themselves by the 20th of the following month. Those obligations were set to begin in January despite the ongoing lawsuit. If the injunction is granted, brokers would be temporarily relieved of collection duties and covered customers' related liabilities would be deferred. A court-approved delay would also remove the near-term deadline for the first half of 2027, giving affected firms more time to build collection and reporting systems, though it would not necessarily eliminate all compliance preparation. The parties also asked to extend the state's deadline to respond to the lawsuit to Nov. 13. The Department of Revenue is taking public comments on its preliminary rules through the close of business Oct. 30. The rules have not yet been filed with the Secretary of State or sent to the Joint Committee on Administrative Rules, leaving key implementation details unresolved. Crypto firms face uncertainty heading into year-end over whether the judge will grant the delay and how the department may revise the rules after industry feedback. If the injunction is entered, companies would have an additional six months before customers begin seeing the tax applied to covered transactions, while the law's ultimate validity remains before the court.