Former Pizza Hut magnate sues Kansas over tax bill

Markets Associated Press

Entrepreneur Gene Bicknell is suing Kansas as part of a long-running dispute over a $42 million tax bill stemming from the sale hundreds of Pizza Hut franchises he owned.

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Bicknell, a Pittsburg native, once owned the largest number of Pizza Hut franchises in the nation. The dispute centers on where his official residence was when he sold his company, NPC International, in 2006. The state has said he officially lived in Kansas, but Bicknell says his official residence was in Florida.

The State Board of Tax Appeals upheld the tax assessment on Oct. 2, prompting Bicknell to file the lawsuit Wednesday in Crawford County.

"This is a massive, improper and egregious overreach by the State of Kansas and the Department of Revenue," Bicknell said in a statement.

Kansas Department of Revenue spokeswoman Rachel Whitten said the agency doesn't comment on pending litigation.

According to his lawsuit, in the 2003, 2004 and 2005 tax years, Bicknell filed taxes as a Florida resident and as a Kansas nonresident. The state didn't challenge the nonresident status until auditing his taxes in 2007, after the sale of the franchises. He said he paid "tens of millions of dollars" in state and federal capital gains taxes on the proceeds from the sale of his company.

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Bicknell eventually paid the state $48 million, which included accumulating interest, and claimed the payment guaranteed his right to appeal through the state's legal system.

Bicknell argues that since 2003, he has maintained a home, bank accounts, a driver's license and voter registration in Florida. But Kansas officials have said he owned property in Kansas, built a swing set for this grandchildren at his former home, visited a business he owns and allowed a farm cat to live on his property.

The lawsuit alleges that Bicknell was targeted by the state as part of a program begun during the administration of Gov. Kathleen Sebelius, a Democrat, which he said "sought to identify high-income taxpayers who filed Kansas tax returns as non-residents." He said the current administration of Republican Gov. Sam Brownback has continued the "outrageous" program.

But Joan Wagnon, revenue secretary during the Sebelius administration, said the agency followed the laws and that Bicknell has rejected numerous chances to settle the case.