January 28, 2012

Supreme Court says KFC has to pay taxes on franchise fees

The Iowa Supreme Court has ruled a fast food company has to pay taxes to the state even though it has no corporate presence here. The Iowa Department of Revenue ruled in 2001 that the Kentucky Fried Chicken corporation owed just over 284-thousand dollars in corporate income taxes, penalties and interest for 1997 through 1999.

K-F-C’s corporation is located in Delaware with its primary place of business in Louisville, Kentucky. The company appealed saying all of the restaurants in Iowa are owned by independent franchisees, and without a physical presence in the state, under federal and state law the company does not owe any taxes on franchise royalties. The Department of Revenue said the royalties are taxable because the fees are derived from Iowa customers and are made possible by Iowa’s infrastructure and the legal protection of the Iowa marketplace.

The district court found that, because K-F-C’s marks and trademarks were “an integral part of business activity occurring regularly in Iowa,” the income derived from the use of that property was taxable under Iowa law. The Iowa Supreme Court agreed that the U.S. Supreme Court would likely find that the fees are taxable under federal law, and upheld the district court ruling.

Fog causing some problems at airports

Foggy skies have grounded some flights at the Eastern Iowa Airport in Cedar Rapids. The airport saw several delays and cancellations Wednesday and officials are predicting more problems over the next couple of days. Spokeswoman Pam Hinman says the foggy weather comes at an especially bad time.

“I expect more canceled flights because all airports were affected by cancellations and delays from the storm in the northeast,” Hinman said. “the airlines were already a little behind and now they’ll have to scramble to find places for people to get back to where they’re going.”

Hinman says some passengers whose flights were canceled Wednesday will not be able to get out of the city until Friday. “Fog is absolutely, to me, the worst enemy of an airport,” Hinman said. “You can shovel snow and treat runways if there’s ice. But with fog, there’s nothing you can do but wait it out.”

Airport staff in Des Moines and the Quad Cities say they’ve had a few delays or cancellations this morning, but most flight are running on schedule.

Grant helps in fundraising for new Cedar Rapids library

The Hall Perrine Foundation is giving a $3-million grant to the effort to rebuild the flooded Cedar Rapids Public Library. Grants from FEMA and that state will pay for most of the estimated $45-million cost of rebuilding and putting in new updated technology.

Library information officer Amber Mussman says this new private grant puts the rest of their fundraising goals within reach. “This is absolutely the greatest support that we’ve gotten up to this point. It’s estimated that this is a little less

than maybe half of what we have left to raise,” Mussman says, “so we know what we’re up against, there’s a lot of projects in our area and there’s a recession on and times are tough for everybody, but we also know that this library is valuable to the community.”

The new library will be 95,000 square feet.“When we lost our library each one of us lost something,so when these doors open and they see that this library’s not just something that they had before but something spectacular, something state of the art, something that really this community deserves and needs, I think they’re gonna be absolutely thrilled,” Mussman says.

Mussman says they expect to begin construction this summer, with a grand opening planned for the summer of 2013.

Audit finds few problems in state agency that’s under new management

A new state audit of the state’s Alcoholic Beverages Division finds a few discrepancies, but nothing like what was found in an audit of the agency that identified millions of dollars worth questionable spending. 

The former administrator of the Alcoholic Beverages Division approved spending tens of thousands of dollars on remodeling projects, and audits revealed other significant problems with bookkeeping and staff promotion in the agency. The agency’s new administrator asked for a new examination by the state auditor’s office.

The new audit concludes the system for reporting broken liquor bottles needs to be improved, but found in a two-month period there were only three bottles could not be properly traced in a “breakage report.” The value of the lost liquor was less than $42.

The audit also identified problems in the system for tracking shipments out the warehouse, as well as problems in the way overtime is managed for warehouse workers and truck drivers, but notes the new administrator was already making changes there, too. 

Former Alcoholic Beverages Division administrator Lynn Walding was not fired, but Governor Culver did not reappoint him when Walding’s term as administrator expired.  Walding now works for the world’s leading liquor, wine and beer company which owns brands like Baileys, Smirnoff, Johnny Walker, Captain Morgan and Jose Cuervo.  While he worked the state Walding approved buying leather chairs, expensive artwork, high-definition TVs and a camper for the state’s liquor warehouse.

Last second shot ends UNI home winning streak

U.N.I.’s school record home court winning streak was snapped by Missouri State as the Panthers dropped their Missouri Valley Conference opener 58-57. Missouri State hit a three pointer with 1.9 seconds remaining and the Panthers missed a long shot at the buzzer.

Missouri State outscored the Panthers 12-5 to close the game. U.N.I. coach Ben Jacobsen says the one area where they didn’t get the job done was rebounding, and had they rebounded better, they would have had a bigger lead down the stretch.

The Panther’s were outrebounded 38-27. Jacobsen says they gave up too many offensive boards.

U.N.I. is 10-4 overall.

By Elwin Huffman KOEL Oelwein

Hot shooting Illini down Iowa

The Iowa Hawkeyes could not stay with hot-shooting Illinois as the Hawkeyes dropped an 87-77 decision in their Big Ten opener in Iowa City.  Illinois hit a sizzling 66 % for the game, made 13 of 18 shots from three point range and took control with a 17-0 run in the opening half.

Iowa coach Fran McCaffery says they were slow on their rotations in the first half, but got better in the second half. He says the Illini are tough to guard as they do a great job of making the extra pass and they are unselfish. McCaffrey says they got open shots because of their passing.

Matt Gatens led Iowa with 21 points as the Hawkeyes fall to 7-6.

Drake opens MVC with a win

Drake opened Missouri Valley Conference play with a 69-55 win over Southern Illinois in a physical, defensive battle.

Drake coach Mark Phelps on his postgame show on KRNT in Des Moines says the state sheet isn’t pretty, but they did enough to pull out the victory. Phelps says the Bulldogs adjusted to the physical style.

He says it was surprising to some players who haven’t played that style before and that led to some turnovers.

Drake is 6-6 overall.