(Bloomberg Law) -- Kansas will have to pay back over $42 million plus interest to the former Pizza Hut franchise king after the state high court agreed that he was a Florida resident for the tax years at issue.
The Kansas Supreme Court ruled Friday that Gene Bicknell, former owner of the largest chain of Pizza Hut franchises in the US, was no longer a Kansas resident when he sold the chain in 2006 and therefore didn’t owe Kansas income tax on the sale.
“While the procedural history is complex and the evidentiary record is enormous, the controlling legal question throughout the litigation has remained relatively simple—whether Gene was a Kansas resident for tax purposes in 2005 and 2006,” Justice Keynen Wall Jr. wrote for the court. “We hold Gene was domiciled in Florida during those years.”
Kansas insisted otherwise, arguing Bicknell’s motive for seeking to establish Florida residency was to avoid millions of dollars in Kansas income tax on the proceeds from the sale of his company by moving to a state without an income tax.
The Board of Tax Appeals agreed with the state that Bicknell was a Kansas resident. The district court reversed. A divided appeals court again reversed in favor of Kansas. The Supreme Court reversed yet again, finding that the district court’s findings were “supported by substantial competent evidence.”
“When, as here, the parties each presented copious amounts of evidence and vigorously contested nearly every inference drawn from the evidence, the significance of the district court’s credibility determinations cannot be overstated,” the high court said. “It is not the proper function of this court to reassess witness credibility or reweigh the conflicting evidence.”
Bicknell said in a statement he’s glad this “nightmare” is over. “The Department of Revenue’s approach has always felt like extortion, forcing me and my family to endure hundreds of interrogatories, depositions, three trials, three appeals, 15 years of attorney time, and appearances before an agency board that was a kangaroo court,” he said.
Bicknell said he hopes “today’s decision prevents others from having to endure torment I have endured from the Department of Revenue over the past 15 years.”
The department said it is reviewing the decision.
Justice Caleb Stegall didn’t participate in the case.
The case is Bicknell v. Kansas Dep’t of Revenue, Kan., No. 120,935, 5/20/22.
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(Updated with comment starting at the seventh paragraph.)
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