Ex-pizza mogul Bicknell prevails in Kansas Supreme Court tax appeal
TOPEKA — The Kansas Supreme Court waded through more than a decade of complex procedural history and a massive record of evidence on Friday to overturn the Kansas Court of Appeals by answering a simple question about where the man of Gene Bicknell’s business resided for tax purposes in 2005 and 2006.
Bicknell, who rose to prominence as a Pizza Hut mogul, Republican gubernatorial candidate and part-time movie actor, battled to defeat the Kansas Department of Revenue in a case with more than 60 million dollars in state taxes, interest and penalties at stake. At issue was whether Bicknell was a resident of Kansas or Florida — for income tax purposes — when he sold a business that was at one time the largest owner of Pizza Hut restaurants in the world.
The bottom line has always been money: Florida has no income tax, unlike Kansas.
The Supreme Court, in a unanimous opinion written by Justice Keynen Wall, decided that Bicknell’s residence was in Florida during the years the Department of Revenue sought to impose the extraordinary tax liability. The Department of Revenue’s position has been endorsed by the Kansas Board of Tax Appeals.
In reversing the Court of Appeals, the Supreme Court upheld the Crawford County District Court’s ruling that Bicknell was not a resident of Kansas during the period he sold NPC International.
The judges concluded that Bicknell bore the burden of proving that he had changed his southeast Kansas residence to a Florida home, although his wife retained her Kansas residence.
“We conclude that the findings of the district court are supported by substantial and competent evidence,” Wall said in the Supreme Court’s opinion. “In turn, these findings support its legal conclusion that Gene was domiciled in Florida in 2005 and 2006. We also reject KDOR’s contention that the district court’s decision was otherwise contrary to established Kansas law. “
Judge Caleb Stegall withdrew from the case because he worked as an attorney for Republican Gov. Sam Brownback during a period when the Department of Revenue was actively seeking a portion of Bicknell’s millions.
Jay Heidrick, an attorney representing Bicknell, said during his closing argument before the Supreme Court that Bicknell was a resident of Florida. He said there was no doubt that his client voted in Florida, held a Florida driver’s license, and amended estate documents to reflect his Florida residency.
“Gene maintains that he took these steps to become a resident of Florida,” Heidrick said. “The state argued that Gene is a classic example of a seasonal resident trying to establish a domicile on paper.”
Heidrick said Bicknell presented evidence to the trial court that he was a resident of Florida during the tax period. This claim was reinforced by the testimony of Bicknell’s friends and family.
“The state has produced no witnesses who contradict this testimony,” Heidrick said.
James Oliver, representing the state Department of Revenue, said Bicknell’s mere intention to claim Florida residency is not sufficient to resolve this issue under Kansas law, regulation or case law. . He said state courts should not adopt a standard of “deference to Gene.”
“The cases clearly indicate that intention alone is never enough,” Oliver said. “The same laws that apply to all other Kansas residents should be applied to Gene without exception to what he was oblivious to or what he thought the law was.”
Oliver argued that the Court of Appeals was correct in stating that the district court improperly shifted the burden of proving Bicknell’s residency to the revenue department. Oliver also claimed the proper location for the case was Shawnee County rather than Crawford County, where Bicknell was a prominent Pittsburgh businessman and philanthropist.
In response, the Supreme Court ruled that Crawford County was the appropriate location, as that is where the Department of Revenue claimed Bicknell resided.
In 2017, Bicknell said he wrote a check to the state of Kansas for $48 million as part of the tax case. He said the payment guaranteed his right to appeal to the court system.
Bicknell said at the time, “This is a massive, inappropriate, and egregious overreach by the State of Kansas and the Department of Revenue.”