Court: KFC Owes Iowa Taxes

(PUBLISHED: The KFC restaurant on First Avenue SE in Cedar Rapids, shown above, is moving its location two blocks to the former Hardee's restaurant space. Big Mike's Super Subs is moving into the KFC building.) The Kentucky Fried Chicken on First Ave. SE in Cedar Rapids April 6, 2001.

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By Adam Carros

WASHINGTON (AP) - The Supreme Court won't stop Iowa from forcing KFC Corp. to pay nearly $250,000 in corporate income taxes, even though it had no restaurants or employees in the state.

The high court on Monday refused to hear an appeal from the fried-chicken giant, which a decision by that state's Supreme Court overturned.

All KFC restaurants in Iowa are independent franchises, whose owners pay KFC for the use of its logo and systems. But the Iowa Department of Revenue and Finance assessed the company more than $248,000 in unpaid corporate income taxes, including interest and penalties, in 2001. The taxes were for 1997 to 1999.

KFC says it doesn't owe Iowa taxes because it doesn't have property in the state. But Iowa judges have not agreed with that argument.

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