TOPEKA — Former Pittsburg entrepreneur Gene Bicknell filed a lawsuit against the state of Kansas challenging the government’s “outrageous and politically motivated” decision to extract at least $42 million in income tax on the sale of hundreds of Pizza Hut franchises.
Bicknell has fought the state since the Kansas Department of Revenue audited his tax returns from 2005 to 2008 and levied a massive tax bill based on the 2006 sale of NPC International. The state didn’t challenge his non-resident status claim on 2003 and 2004 tax returns, but revised that position after he sold one of the country’s largest collections of Pizza Huts.
The state maintained Bicknell’s primary residence was in Kansas and ordered him in 2009 to pay a debt of $42 million in taxes, interest and penalties. However, Bicknell contended he was resident in Florida and didn’t owe Kansas the money.
Bicknell eventually cut a check to the state for $48 million, which reflected accumulating interest, and claimed the payment guaranteed his right to appeal through the state’s legal system.
“This is a massive, improper and egregious overreach by the state of Kansas and the Department of Revenue,” Bicknell said in a statement. “As Florida residents, our assets should be returned to us, and returned promptly.”
An attorney for Bicknell filed suit Wednesday in Crawford County District Court after exhausting administrative remedies.
Rachel Whitten, spokeswoman for the state revenue department, said the agency wouldn’t comment on pending litigation.
The State Board of Tax Appeals issued a ruling Oct. 2 that found Bicknell failed to prove he established Florida residency during the years in dispute and the board sustained the tax assessment. That resulted in Bicknell filing the lawsuit in Pittsburg.
In court documents, Bicknell said he’d maintained since 2003 a residence, bank accounts, a driver’s license and voter registration in Florida.
Bicknell said Kansas officials argued to the contrary because he owned property in Kansas, allowed his grandchildren to use the swing set and pool at his former home, donated to a local church, visited a business he owns and allowed a farm cat to live on his property.
“You get a sense of the nonsensical and illogical state revenue-generation strategy that we’ve been dealing with for a decade,” he said. “The filing of our petition will be the first time in this 10-year nightmare in which an actual court of law will hear the facts of our case.”
Bicknell, an unsuccessful GOP candidate for governor in 1994, accused the Democratic administration of Gov. Kathleen Sebelius of launching a “secret” program to extract tax revenue from former Kansas residents. He said Republican Gov. Sam Brownback’s administration perpetuated the program.
“We vow to fight for our rights and on behalf of other former Kansas residents who are also facing the same outrageous and political manipulation. We believe it is both unconstitutional and illegal,” Bicknell said.