Illinois has agreed to push back the start of its 0.2% digital asset tax by six months, potentially delaying implementation until July 1 if a state court approves the agreement.
The proposed postponement was negotiated between state officials and the Digital Chamber and Illinois Blockchain Association, the Digital Chamber told CoinDesk. The arrangement would give both sides additional time to address the broader legal dispute without immediately dealing with the tax’s Jan. 1 implementation deadline.
Illinois approved the tax in June through its Digital Asset Tax Act. The measure applies a 0.2% tax to crypto-related activity by businesses with more than $100,000 in receipts, including transactions and the acceptance of digital assets for custody.
Delay Requires Court Approval
A joint request asking the court to approve the six-month delay is expected to be filed Thursday morning in the state circuit court in Sangamon County.
If the judge approves the agreement, the parties would be able to set aside the immediate fight over preliminary injunctions and concentrate on the underlying legal questions. Those issues include whether the Digital Asset Tax Act is constitutional and legally enforceable.
Crypto industry groups had already sought temporary relief from the tax. On Sept. 9, advocacy organizations opposing the measure asked the state court to halt its implementation, arguing that companies were already taking on significant compliance costs in preparation for the tax.
Digital Chamber CEO Cody Carbone welcomed the proposed postponement, saying it would reduce the compliance burden while the industry continues its court challenge.
“We’re pleased that the State of Illinois has agreed to delay implementation of its Digital Asset Tax, giving digital asset businesses and users relief from costly compliance obligations while we continue to seek to have this tax permanently repealed through the courts,” Carbone said in a statement.
Industry Disputes Constitutionality
The crypto groups challenging the measure argue that Illinois’ tax is invalid under state law and unconstitutional. They have also argued that federal law, including the Internet Tax Freedom Act, prevents the state from imposing the levy.
The joint court filing reviewed by CoinDesk says the requested delay is being sought “in the interest of justice while the matter works towards resolution on the merits.”
A court-approved postponement would change the implementation timetable but would not resolve the industry’s underlying challenge. The constitutional and federal-law arguments would continue to be considered as the litigation moves forward.
