The Idaho Athletic Club is suing its former accountant, alleging bad advice led to a rat’s nest of trouble with the Internal Revenue Service.
In a lawsuit filed June 6 in Ada County District Court, the fitness chain states that Howard Busmann, now an accountant with his own business in Star, prepared its tax documents in 2003 and 2004.
In those years he used accelerated federal tax depreciation for building improvements — wherein depreciation of assets is higher in the first years, resulting in a tax deduction, before depreciation becomes more gradual — on the Idaho Athletic Club property, according to the lawsuit.
The IRS started looking at the 2003 and 2004 returns in 2005 and came to the conclusion that the building improvements cited in the tax returns were not eligible for accelerated depreciation, it states.
From May 2007 until October 2011, Busmann told the Idaho Athletic Club that the IRS was wrong about the tax deduction and advised founder Cheryl Wardle and her husband, athletic club CEO John Wardle, to decline any settlements offered by the IRS to make good on their tax deficiencies, the lawsuit states.
In October 2011, Busmann “advised (the Wardles) that they were not entitled to the above-described deduction and they should accept the most recent IRS settlement offer because ‘it won’t get any better,'” the lawsuit states.
The Wardles claim Busmann was negligent in his duties and are suing for an unspecified amount of damages, plus $5,000 in attorney fees.
Busmann had not been served with the lawsuit when reached by phone June 12. He said he did not know the details of the litigation and declined to comment.
The suit also names Reagan Parks and Associates, an accounting firm Busmann worked at when preparing the Idaho Athletic Club tax returns, as a defendant.
Ben Reagan, a partner in the accounting firm, said Busmann had not worked there for seven years and no one at the firm was familiar with the situation.