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Colorado man gets $100,800 bill from IRS

9:23 PM, Jan 7, 2014   |    comments
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KUSA - A Colorado man gets a bill from the IRS for more than $100,000 the day after Christmas. It's due on Jan. 13, 2014.

The thing is, he has paid his taxes on time, every year.

The fee is for not filling out an informational form for small business owners who have a 401(k) valued at more than $250,000.

The penalties are $15,000 a year for every year he didn't fill out a 5500-EZ.

"The form 5500-EZ is an employee benefit plan form," Certified Public Accountant Denyse with Gibbs & Associates said. "The purpose of it is to report the assets for a retirement plan."
He should have been filing it with the IRS every year since 2005. But he had no idea until he switched from one investment company to another one.

"He [an advisor at his new investment firm] mentioned that it looked like we hadn't been filling out this form, you know, [the] 5500 EZ," small business owner Curtis Camus said. "And we said, 'Well, we never really heard of that form before.'"

Camus' new advisor immediately recommended he visit certified CPA Denyse Gibbs to help him clear up the problem.

"It took her a little while because she had to go back and research the beginning and ending year averages - of you know - our solo 401K plan - from I think 2005, 2006 - all the way to current," Camus said.

"Because he's been current and paid his tax returns on time and paid his taxes on time, we can basically get - it's called a first time abatement [or] waiver," Certified Public Accountant Denyse with Gibbs & Associates said. "And I feel fairly confident that we'll be able to get all of the penalties waived for him."

The penalty came after Camus sent in the late forms.
That's when the IRS sent individual bills for each year since 2005.

Now he waits to see if the IRS will waive the fees. He recommends doing your homework when selecting a financial advisor and CPA. He had both during those years and they missed it.

"I think a lot of the different investment companies out there, depending on who you have, as your advisor, will give you advice, and sometimes you know they'll do a flat fee or they'll do a percentage of your assets in order to manage your money," Gibbs said. "And you just need to make sure that you do your homework to make sure that you're getting what you're paying for. Because it doesn't sound like in Curtis' case, with his former investment firm, that they advised him on forms that were necessary at that time."

You get what you pay for.

"Sometimes it's better to pay a little bit of money and you know put your mind at ease on these particular subjects," Gibbs said.

But taxes can be complicated and not everyone has the money to invest in a CPA or financial advisor. In those cases, IRS spokesperson Karen Connelly recommends using the IRS website as a resource.

"We have such a wealth of information on our website," Connelly said. "If you're not going to pay someone to look into your taxes for you, one of the things you can do is educate yourself for free on our website."

(KUSA-TV © 2014 Multimedia Holdings Corporation)

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