- Court: United States Supreme Court
- Area(s) of Law: Constitutional Law
- Date Filed: June 20, 2019
- Case #: 18-457
- Judge(s)/Court Below: SOTOMAYOR, J., delivered the opinion for a unanimous Court. ALITO, J., filed a concurring opinion, in which ROBERTS, C. J., and GORSUCH, J., joined.
- Full Text Opinion
The trust to which Respondent is a beneficiary was taxed by Petitioner, although she had not received any income during the years at issue. Respondent argues that the tax violated the Due Process Clause of the Fourteenth Amendment. Respondent’s trustee filed suit in state court, which held in favor for Respondent, holding that the tax was unconstitutional because the requisite connection between the State and the trust was lacking. The state court of appeals and supreme court both affirmed. On appeal, the United States Supreme Court affirmed, holding that States are prohibited from taxing trusts “based only on the in-state residency of trust beneficiaries.” The Court reasoned that, in applying International Shoe Co. v. Washington, 326 U.S. 310 (1945), a state is permitted to impose taxes only when “certain minimum contacts” have been established. Similar state taxes have been held constitutional where the trust itself, its trustees, or any income distributed therefrom reside or occur within the state. However, the “presence of in-state beneficiaries alone” is not enough to support the taxation of a trust when those beneficiaries have not received income, have no right to demand income, and may never actually receive income from the trust. Therefore, the State’s tax is unconstitutional. AFFIRMED.