Illinois officials seek six-month delay to 0.2% digital-asset tax

Illinois officials joined crypto industry groups in seeking a six-month delay to the state's digital-asset tax. The agreed motion, filed October 1 in Sangamon County, asks a judge to postpone the January 1 start until July 1, 2027. Revenue Director David Harris and Attorney General Kwame Raoul joined the request. The Digital Chamber and the Illinois Blockchain Association brought the constitutional challenge that would continue during the proposed delay. Entry of the court order had not been confirmed as of October 4.

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. Crypto firms have spent months warning that the levy could raise compliance costs and push activity outside Illinois. The law remains in force. The state continues to dispute the industry groups' claims, and the joint filing neither concedes that the law is unconstitutional nor seeks its repeal.

The Illinois Department of Revenue's draft rules indicate that a fee-paid withdrawal from a broker to a self-custody wallet can qualify when statutory conditions are met. A direct transfer without a covered broker may fall outside the levy. Brokers must collect and remit the tax and can remain liable if brokers fail to collect it. Customers may have to calculate and pay an uncharged tax themselves by the 20th of the following month.

Those obligations were due to begin in January despite the pending lawsuit. If granted, the injunction would temporarily spare brokers from collecting the tax and defer corresponding liabilities for covered customers. A court-approved delay would remove the immediate deadline for the first half of 2027, giving affected firms more time to build collection and reporting procedures. However, the pause would not necessarily halt all compliance work. Both sides would preserve their legal positions while the lawsuit and rulemaking process continue.

The Illinois Department of Revenue accepts public comments on preliminary rules through close of business October 30. The rules have not yet been filed with the Secretary of State or submitted to the Joint Committee on Administrative Rules. Key implementation details remain unsettled. The parties also asked to move the state's deadline for responding to the lawsuit to November 13.

Crypto companies face uncertainty before year-end over whether the judge grants the delay and how the Revenue Department changes the rules after industry feedback. If the injunction is entered, firms would gain another six months before customers begin seeing the tax on covered transactions. Companies could use that time to prepare for a levy whose ultimate validity remains before the court.