Illinois Requests Six-Month Delay to Digital Asset Tax as Legal Challenge Proceeds

Illinois officials and crypto industry groups have jointly requested a six-month postponement of the state’s digital-asset tax, filing a motion in Sangamon County on October 1 to delay the January 1 start date until July 1, 2027, while a constitutional challenge proceeds.

Revenue Director David Harris and Attorney General Kwame Raoul joined the motion despite the state continuing to dispute the industry groups’ legal claims. If approved, the injunction would temporarily relieve brokers from collecting the tax and defer customer liabilities.

As of October 4, the court had not confirmed entry of the order. The filing represents a tactical shift in the dispute, though the law remains in force and neither side concedes unconstitutionality or seeks repeal.

Both parties would preserve their legal positions while delaying collection during ongoing litigation and rulemaking.

Illinois enacted the Digital Asset Tax in June, levying 0.2% on the value of digital assets in covered transactions rather than on trading profits. Draft rules from the Department of Revenue indicate broad reach: a fee-paid broker withdrawal to a self-custody wallet may qualify, while direct transfers without a covered broker may not.

Brokers remain responsible for collection and remittance, with liability if they fail to collect. Customers face a fallback obligation to self-calculate and pay by the 20th of the following month if the tax is not charged.

These obligations were originally set for January, but a court-approved delay would remove the immediate deadline for the first half of 2027, giving firms more time to build compliance infrastructure.

The pause would not halt all compliance work. Draft rules remain under consultation, with public comments open through October 30, and have not yet been filed with the Secretary of State or submitted to the Joint Committee on Administrative Rules.

The parties also requested extending the state’s response deadline to November 13. Crypto companies now face two questions before year-end: whether the judge grants the delay, and how the Revenue Department adjusts rules after industry feedback.

If the injunction is entered, firms would gain six months before customers see the tax on covered transactions, while the legal challenge continues, leaving open the possibility that companies use the reprieve to prepare for a levy whose validity remains unresolved.

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