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Supreme Court of the United States
North Carolina Department of Revenue 5. The Kimberley Rice Kaestner 1992 Family unit Trust
Term: 2018
Important Dates
Argument: April 16, 2019
Decided: June 21, 2019
Outcome
Affirmed
Vote
nine-0
Majority
Chief Justice John G. Roberts • Clarence Thomas • Ruth Bader Ginsburg • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan • Neil Gorsuch • Brett Kavanaugh


N Carolina Department of Acquirement v. The Kimberley Rice Kaestner 1992 Family Trust was a example argued before the Supreme Courtroom of the U.s.a. on April 16, 2019, during the court'southward 2018-2019 term. It came on a writ of certiorari to the North Carolina Supreme Court.[1]

On June 21, 2019, the U.S. Supreme Court unanimously affirmed the judgment of the North Carolina Supreme Court, belongings a country is not authorized to tax trust income of an in-land beneficiary if the income has not been distributed to the casher during the years in question. Justice Sonia Sotomayor wrote the stance. Justice Samuel Alito filed a concurring opinion, joined by Chief Justice John Roberts and Justice Neil Gorsuch.[ii] Click here for more than data on the opinion.

HIGHLIGHTS

  • The case: In 1992, Joseph Lee Rice III established a trust in New York for the benefit of Rice's descendants. In 2002, the trust was divided into three sub-trusts, including one for his girl—the Kimberley Rice Kaestner 1992 Family Trust ("the Trust"). From 2005 to 2008, the Trust paid state income taxes on income accrued during those years, although no funds were distributed. In 2009, Trust representatives filed a claim for a refund of taxes paid to the North Carolina Section of Revenue. The department denied the request. The representatives then took the conform to state courtroom, asking the court to require the department to refund all the paid taxes and declare unconstitutional the country statute enabling the state's department of revenue to collect taxes from the strange trust. The state court found that the state statute was unconstitutional as applied and granted the Trust's motion for summary judgment. The North Carolina Section of Revenue appealed. The state appellate court found that the fact that when the beneficiary of the trust is living in North Carolina, whereas the trust location, its assets, and its trustee, are all outside the state, does non institute sufficient contacts with North Carolina to permit taxing the trust in that state. The state supreme court affirmed.

  • The issues: Whether the due process clause prohibits states from taxing trusts based on trust beneficiaries' in-country residency.

  • The outcome: the U.S. Supreme Court unanimously affirmed the judgment of the North Carolina Supreme Court, property a country is not authorized to tax trust income of an in-state beneficiary if the income has not been distributed to the beneficiary during the years in question.[2]

    • You can review the lower court's opinion here.[iii]

    Timeline

    • June 21, 2019: U.Southward. Supreme Court affirmed the ruling of the N Carolina Supreme Court
    • April 16, 2019: Oral argument
    • Jan eleven, 2019: The U.S. Supreme Court agreed to hear the example
    • October ix, 2018: Petition filed with the U.S. Supreme Court
    • June eight, 2018: The N Carolina Supreme Court affirmed the case

    Background

    In 1992, Joseph Lee Rice 3 established a trust in New York for the benefit of Rice's descendants, with the initial trustee being William B. Matteson. In 2002, the trust was divided into iii sub-trusts—ane for each of Rice'south children. I of these was the Kimberley Rice Kaestner 1992 Family Trust ("the Trust"), which benefited Rice's daughter Kimberly Rice Kaestner, who was a resident of North Carolina at the time.

    Matteson resigned as trustee in 2005 and was replaced equally trustee by David Bernstein, who was a resident of Connecticut. From 2005 to 2008, the Trust paid state income taxes on income accrued during those years, although no funds were distributed. In 2009, Trust representatives filed a claim for a refund of taxes paid to the Northward Carolina Department of Revenue. The department denied the asking. The representatives and so took the suit to country court. They asked the court to require the department to refund all the paid taxes and declare unconstitutional the land statute enabling the state'south department of revenue to collect taxes from the foreign trust. The judge "granted the move equally to plaintiff's claim for injunctive relief, but denied the move equally to plaintiff'southward constitutional claims."[3]

    Both parties afterward filed motions for summary judgment every bit to the ramble claims. The state court found that the land statute was unconstitutional as applied and granted the Trust's motion for summary judgment. The North Carolina Department of Revenue and then appealed.

    The land appellate court found that the fact that when the beneficiary of the trust is living in North Carolina, whereas the trust location, its assets, and its trustee, are all outside the state, does non institute sufficient contacts with North Carolina to let taxing the trust in that land. The state supreme court affirmed.[3]

    Questions presented

    The petitioner presented the post-obit questions to the court:[4]

    Questions presented:
    • Whether the due process clause prohibits states from taxing trusts based on trust beneficiaries' in-land residency.

    Outcome

    On June 21, 2019, the U.S. Supreme Court unanimously affirmed the judgment of the North Carolina Supreme Court, holding a state is not authorized to tax trust income of an in-state beneficiary if the income has not been distributed to the beneficiary during the years in question.[2]

    Justice Sotomayor wrote the opinion. Justice Alito filed a concurring stance, joined by Master Justice Roberts and Justice Gorsuch.[2]

    Opinion

    In her opinion, Justice Sotomayor wrote:[2]

    " The Northward Carolina courts held the taxation to exist unconstitutional when assessed in such a instance because the State lacks the minimum connection with the object of its tax that the Constitution requires. We agree and affirm. Every bit applied in these circumstances, the Country's taxation violates the Due Procedure Clause of the Fourteenth Amendment. [v] "

    Concurring

    Justice Alito filed a concurring opinion, joined by Chief Justice Roberts and Justice Gorsuch.

    In his concurring opinion, Justice Alito wrote:[2]

    " The opinion of the Court rightly concludes that the assets in this trust and the trust'due south undistributed income cannot exist taxed by North Carolina considering the resident beneficiary lacks control, possession, or enjoyment of the trust assets. The Courtroom's discussion of the peculiarities of this trust does not change the governing standard, nor does it modify the reasoning practical in our before cases. On that ground, I concur.[five] "

    Text of the opinion

    Read the full opinion hither.

    Audio

    Transcript

    Come across too

    External links

    • Supreme Courtroom of the United States - North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust
    • SCOTUSblog instance file for Due north Carolina Section of Revenue v. The Kimberley Rice Kaestner 1992 Family unit Trust

    Footnotes

    1. ↑ Supreme Courtroom of the United States, "Docket No. 18-457," accessed March 20, 2019
    2. ↑ two.0 ii.1 ii.2 2.3 2.4 two.5 Supreme Court of the United states, North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust, decided June 21, 2019
    3. ↑ 3.0 3.1 3.2 Instance Text, "Kimberley Rice Kaestner 1992 Family Tr. v. North.C. Dep't of Revenue," accessed March 20, 2019
    4. ↑ SCOTUS Blog, "N Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust," accessed March 20, 2019
    5. ↑ 5.0 5.1 Note: This text is quoted verbatim from the original source. Whatever inconsistencies are owing to the original source.

    5•e

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