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Illinois Appellate Court holds imposition of income tax on trust with insufficient connections violated due process

The Illinois Appellate Court has held that the imposition of Illinois income tax on an inter vivos trust violated the Due Process Clause of the U.S. Constitution because there were insufficient connections between the state and the trust. During the tax year in question, the trust did not have the necessary connections with Illinois because all of its business was conducted outside Illinois; the trustee, protector and the noncontingent beneficiary resided outside Illinois; and none of the trust’s property was located in Illinois. The fact that the grantor was an Illinois resident was not sufficient to satisfy due process.

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