March 5, 2019

District Court Rules in Favor of Gene Bicknell in Years-Long Kansas Tax Case

State of Kansas Must Return $48 Million to Bicknell

A Kansas Senior District Court Judge issued his ruling today in the high-profile tax case involving Gene Bicknell, former Pittsburg, Kan. resident, entrepreneur and Pizza Hut franchisee. The dispute had been ongoing for more than ten years and is believed to be the largest individual tax case in Kansas history. Senior Judge Richard M. Smith was appointed to hear the case by the Kansas Supreme Court.

Following an 8-day trial in Pittsburg in July 2018, the Court ruled that Gene Bicknell was a resident of Florida in 2005 and 2006 when over $42 million in Kansas income tax was assessed by the Kansas Department of Revenue on the premise that Mr. Bicknell was a Kansas resident at the time. In today’s action, the Court overturned the ruling issued on October 2, 2017 by the Kansas Board of Tax Appeals, citing the overwhelming evidence that Gene had in fact established his Florida domicile well before the tax years in question and questioning the integrity of agencies which upheld the assessment. Mr. Bicknell earlier paid into the state over $48 million in tax, interest, and penalties as a result of the assessment and the Court has ordered that this money must be returned.

In respect to the Kansas regulatory agencies, the Court stated, “With all due respect, there can be little room for any conclusion other than that the COTA decision was purely result driven. With a BOTA summary decision, which merely repeats the COTA determination without analysis, it is difficult to view either one of these regulatory agencies as anything other than a rubberstamp of the KDOR. That may seem harsh, but the only logical alternative is that neither regulatory agency was or is aware of their own regulations.” 

The Bicknell's challenged the assessment and ultimately perfected their appeal to the District Court in Crawford County. The Bicknell's have maintained that the tax was improperly assessed and was motivated by politics including the state’s dire financial condition. 

During the trial, the Bicknell's introduced evidence that the former Secretary of the Kansas Department of Revenue told a Kansas legislator that if the Bicknell's were able to secure review in the District Court, the state would lose. 

The Bicknell's called not only Mr. Bicknell, but also numerous fact witnesses at trial, including a number of Pittsburg residents, all whom the Court found credible. The state called only one live witness and did not call any of the auditors or personnel who reviewed and issued the initial tax assessment.

The state argued that Mr. Bicknell did not abandon his Kansas residency and maintained significant contacts with the state including ownership of property in Pittsburg and family still residing there. Likewise, the state focused on Mr. Bicknell’s continuing financial support of the university, his former church, and charities in Pittsburg.

In regards to Bicknell’s charitable giving, the Court stated that the 2006 Kansas tax regulation “provides for the exclusion of certain evidence which may not be considered in the determination of domicile…the location of any organization to which the person makes charitable contributions and the location of any charitable organization for which the person serves as a board member, committee member, or other volunteer. Consistent with this regulation, the court excluded consideration of that evidence with which fell within the parameters of this exclusion. Frankly, even if the court took into consideration all of the evidence regarding Pittsburg State and other charitable organizations, the decision would remain unaltered.”

Comment from Polsinelli attorney R. Dan Boulware, Bicknell lead counsel:

“We are pleased with the decision setting aside the tax, as it is the right decision.  Mr. Bicknell has clearly been a Florida resident since 2003.  This was a tax that should never have been assessed. Judge Smith’s ruling, in light of the overwhelming evidence presented at trial, will be upheld if challenged by the state.”

Comment from Gene Bicknell: 

“I have always believed that if I would be given a fair hearing free of political implications, I would prevail.  This ruling obviously has implications for others like me who have moved their legal residence but still have affection for the state and want to help the people, schools, and charities.  We should not want a law that negates that.”

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