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North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust

Paid petition · Supreme Court of North Carolina, No. 307PA15-2 · judgment June 8, 2018

Decided · June 21, 2019
Pre-decision estimate: 8% cert probability (95% interval 5%–13%)

Before the decision, about 2× the 4.1% base rate. The model weighted this up for a state or local-government petitioner, a circuit split argued in the petition, and a dissent in the court below (flagged in the petition).

Question presented

More than $120 billion of our nation's income flows through trusts. That income is a vital source of tax revenue for the states. Eleven states, including North Carolina, tax trust income when a trust's beneficiaries are state residents. For the last ninety years, however, this Court has been silent on whether these taxes comport with due process. The Court's last words on the subject come from the Pennoyer era of due-process analysis. Pennoyer v. Neff, 95 U.S. 714 (1878). As a result, lower courts and state taxing authorities have been searching in vain for modern guidance. There is now a direct split spanning nine states. Four state courts have held that the Due Process Clause allows states to tax trusts based on trust beneficiaries' in-state residency. Five state courts, including two state supreme courts this year, have concluded that the Due Process Clause forbids these taxes. The Due Process Clause should not have different meanings in different statesparticularly when billions of dollars of state-tax revenue hang in the balance. The question presented to this Court is: Does the Due Process Clause prohibit states from taxing trusts based on trust beneficiaries' in-state residency?

Counsel of record

For petitioner
Matthew W. Sawchak
Robinson Bradshaw & Hinson, P.A.

For respondent
David A. O'Neil
Debevoise & Plimpton LLP

Case

Conference history
Distributed for 3 conferences

Amicus briefs
14 merits
(5 supporting pet./neither, 9 respondent)

Argument & decision

Argued April 16, 2019 — Matthew W. Sawchak · David A. O'Neil. Audio and transcript

Decided June 21, 2019. Opinion by Sotomayor.

Proceedings

  1. Jul 23 2019
    MANDATE ISSUED.
  2. Jul 23 2019
    JUDGMENT ISSUED.
  3. Jun 21 2019
    Adjudged to be AFFIRMED. Sotomayor, J., delivered the opinion for a unanimous Court. Alito, J., filed a concurring opinion, in which Roberts, C. J., and Gorsuch, J., joined.
  4. Apr 16 2019
    Argued. For petitioner: Matthew W. Sawchak, North Carolina Solicitor General, Raleigh, N. C. For respondent: David A. O'Neil, Washington, D. C.
  5. Apr 05 2019
    Reply of petitioner North Carolina Department of Revenue filed. (Distributed)
  6. Mar 25 2019
    Brief amici curiae of Washington State Tax Practitioners filed. (Distributed)
  7. Mar 25 2019
    Amicus brief of American College of Tax Counsel not accepted for filing. (Corrected version submitted.)
  8. Mar 25 2019
    Brief amicus curiae of American College of Tax Counsel filed (March 25, 2019). (Distributed)
  9. Mar 25 2019
    Brief amici curiae of State of South Dakota, et al. filed. (Distributed)
  10. Mar 25 2019
    Brief amicus curiae of Council On State Taxation filed. (Distributed)
  11. Mar 25 2019
    Brief amicus curiae of The Chamber of Commerce of the United States of America filed. (Distributed)
  12. Mar 25 2019
    Brief amicus curiae of Professor Roberta Lea Brilmayer filed. (Distributed)
  13. Mar 25 2019
    Brief amici curiae of Certain State Trust and Bank Associations filed. (Distributed)
  14. Mar 22 2019
    Brief amicus curiae of William Fielding, Trustee filed. (Distributed)
  15. Mar 22 2019
    Brief amicus curiae of The New York State Bar Association filed. (Distributed)
  16. Mar 21 2019
    Record requested from the Supreme Court of North Carolina.
  17. Mar 20 2019
    CIRCULATED
  18. Mar 18 2019
    Brief of respondent The Kimberley Rice Kaestner 1992 Family Trust filed. (Distributed)
  19. Mar 01 2019
    Brief amicus curiae of The American College of Trust & Estate Counsel in support of neither party filed.
  20. Mar 01 2019
    Brief amici curiae of Minnesota, Nineteen Other States, & the District of Columbia filed.
  21. Mar 01 2019
    Brief amici curiae of Constitutional Law Scholars in support of neither party filed.
  22. Feb 28 2019
    Brief amici curiae of Tax Law Professors filed.
  23. Feb 28 2019
    Brief amici curiae of Law Professors filed.
  24. Feb 22 2019
    Joint appendix filed. (Statement of costs filed)
  25. Feb 22 2019
    Brief of petitioner North Carolina Department of Revenue filed.
  26. Feb 11 2019
    SET FOR ARGUMENT on Tuesday, April 16, 2019
  27. Feb 06 2019
    Blanket Consent filed by Respondent, The Kimberley Rice Kaestner 1992 Family Trust.
  28. Feb 04 2019
    Blanket Consent filed by Petitioner, North Carolina Department of Revenue.
  29. Jan 11 2019
    Petition GRANTED.
  30. Jan 07 2019
    DISTRIBUTED for Conference of 1/11/2019.
  31. Dec 19 2018
    DISTRIBUTED for Conference of 1/4/2019.
  32. Dec 14 2018
    Reply of petitioner North Carolina Department of Revenue filed.
  33. Nov 30 2018
    Brief of respondent Kimberley Rice Kaestner 1992 Family Trust in opposition filed.
  34. Oct 31 2018
    Response Requested. (Due November 30, 2018)
  35. Oct 24 2018
    DISTRIBUTED for Conference of 11/9/2018.
  36. Oct 16 2018
    Waiver of right of respondent The Kimberley Rice Kaestner 1992 Family Trust to respond filed.
  37. Oct 09 2018
    Petition for a writ of certiorari filed. (Response due November 13, 2018)
  38. Aug 24 2018
    Application (18A210) granted by The Chief Justice extending the time to file until October 9, 2018.
  39. Aug 22 2018
    Application (18A210) to extend the time to file a petition for a writ of certiorari from September 6, 2018 to October 9, 2018, submitted to The Chief Justice.
    Main Document