First, this is because the NLT does not draw its right to exist from any body of law that has any tax filing requirements.  Second, it is because even when the NLT’s activities are noticed by a tax authority, they discover that the assets going into the trust become corpus – – not “income”. 

Third, because what is in the corpus is eventually distributed to beneficiaries, the NLT is seen as a “pass-through” vehicle.  Pass-through vehicles are not assessed for income tax.  Here is a Yale university review article, reviewing Commerce and Trusts and it states over and over again, most trusts are treated as pass-through entities.  (page 171, 175, 180, 189… “There is no mystery, however, in understanding why the trust appears so attractive as a commercial form. Although the trust resembles the corporation in supplying for the particular venture a highly adaptable, contract-like regime of rights, of fiduciary duties, and of internal governance, the trust offers investors an insolvency regime superior to that of corporate law, packaged in a way that facilitates pass-through taxation.”