Goldberg v. Sweet

In 1985 Illinois passed the Illinois Communications Excise Tax Act (the act), establishing a 5 percent tax on the charge for interstate telephone calls that originated or terminated in Illinois and were charged to an Illinois service address. To prevent a customer from being charged twice for the same phone call, the act provided a credit to any customer who could prove that he had already paid a tax in another state on a phone call to which the Illinois tax applied. Illinois collected the tax through telecommunications carriers who provided services to the customers. Illinois also charged a 5 percent tax on intrastate telephone calls. Jerome Goldberg (plaintiff) filed a class-action lawsuit in state court against the director of revenue for the state of Illinois (defendant) alleging that the act violated the Commerce Clause of the United States Constitution. The trial court found the act unconstitutional under the four-part test provided by Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977). Under that test, a state tax is valid under the Commerce Clause if it applies to an activity with a substantial nexus to the taxing state, is fairly apportioned, does not discriminate against interstate commerce, and is related to services provided by the state. The trial court argued that the tax was not fairly apportioned, discriminated against interstate commerce, and was not related to services provided by Illinois. The Illinois Supreme Court reversed the trial court, holding that the act was valid. Goldberg appealed.