When you become a CPA, you will find many challenges and ethical concerns. This may come about because of your relationship with a client. Many times there will be competing concerns that place you between the law, your CPA practice, and serving the needs of clients. The New York Times published an article, "The $500,000 Apology." There are very few occasions that the IRS apologizes for anything, but the article describes one such situation. After reading this article, what issues can we discuss in the classroom?

The New York Times https:/yti.ms/29dr9NU ARCHIVES ! 1994 A '$500,000 Apology' From the I.R.S. By ROBERT D. HERSHEY JR. and In what is almost certainly the largest payment ever by the Internal Revenue Service over accusations of harassing a taxpayer, the agency has written a $500,000 check to a prominent Miami lawyer to settle his accusations that three vindictive agency employees violated his civil rights. The lawyer, Daniel N. Heller, won the settlement late last month after a struggle with the I.R.S. that began in 1975 and that resulted in, among other things, Mr. Heller's serving four months in prison. "This $500,000 apology by the I.R.S. is my total vindication," Mr. Heller said. "It proves I never cheated on my tax returns, never owed any money to the I.R.S., paid all my taxes on time and was totally innocent of the trumpcd-up charges filed against me." Mr. Heller's suit was against the three agents, but the settlement money is coming from the I.R.S. As part of the settlement, Mr. Heller agreed not to sue the I.R.S. itself. Mr. Heller said he hoped his efforts would help prevent similar treatment of other taxpayers who might not have his financial and legal resources. The $500,000 will go to charity, he said. The Government acknowledged that it had paid the money to settle out of court with Mr. Heller, who had sued the I.R.S. for indicting him on tax evasion charges. But officials would not confirm Mr. Heller's assertion that he was the first "wronged taxpayer" to win payment from the I.R.S. "More than likely there have been some payments of money," said Wilson Fadely, an I.R.S. spokesman, although he said he could not recall any. In any event, Mr. Fadely said, privacy considerations would prevent him from disclosing such cases. Mr. Heller's troubles began when The Miami News, where he was general counsel, reported that an I.R.S. team was engaged in illegal spying on the sexual and drinking habits of important local citizens. The newspaper, which is no longer in business, gave the spying activity the name "Operation Leprechaun" and its reports led to Congressional investigations and many years of unfavorable publicity for the I.R.S. The I.R.S., believing the newspaper obtained information from within the agency, asked Mr. Heller to identify the source. He refused, citing the First Amendment. He had what a judge later called "a heated exchange of words" with one agent, Thomas A. Lopez, whom the paper had identified as head of the spy operation. "They were very menacing and very threatening to me," Mr. Heller said in a telephone interview today. After filing his tax return for 1976, Mr. Heller was investigated for tax evasion, with one of the three agents on his case turning out to be Mr.Lopez. In 1982 Mr. Heller was indicted. Accountant Involved Generally speaking, a taxpayer who has done no wrong can make a successful defense by asserting reliance on an accountant. In this case, however, the I.R.S. agents engaged in what an appeals court called "intentional intimidation" of Mr. Heller's accountant, Leonard I. Safra, who had prepared and signed Mr. Heller's returns for seven years. Instead of testifying in Mr. Heller's defense, Mr. Safra, "testified falsely" against his client, the appeals court determined, and Mr. Heller was convicted and sentenced to three years in jail. In 1987, Mr. Heller served four months at a minimum security prison at Eglin Air Force Base in northern Florida before the United States Court of Appeals for the 11th Circuit, in Atlanta, reversed his conviction. He filed suit in 1989, citing the appeals court's ruling that his rights had been violated by Government "misconduct." Mr. Heller and his wife, Diane, also sued his accountant's firm, Rechlin & Cohen, and collected a $5 million pretrial settlement from the insurance company that had covered the firm for malpractice. Of the three agents accused of harassing Mr. Heller, only one, Doreen H. Kaplan, remains with the I.R.S. The agency would not comment about any possible disciplinary measures. The other agent involved in Mr. Heller's case was Lawrence S. Plave. Donation Is Planned Mr. Heller, who said he was in his mid-60's, is a graduate of New York University. He said he would give the settlement money to his wife, an art patron and civic leader, who would donate it to charity. "She suffered terrible humiliation when I went off to prison," Mr. Heller said today. "She carried on with great honor and dignity." When Mr. Heller was asked about the tax consequences for him of receiving the $500,000 settlement, he said he had given it no thought. But it is clearly taxable as income, specialists said today, possibly resulting in a tax liability even if all of it is given away. "It depends," said Eileen J. O'Connor in the Washington office of Grant Thornton, the accounting firm. In general, she said, charitable deductions are limited to 50 percent of adjusted gross income, 30 percent if the recipient is a private foundation. The Times Machine article viewer is included with your New York Times subscription. We are continually improving the quality of our text archives. Please send feedback. error reports, and suggestions to archive_feedback@nytimes.com. A version of this article appears in print on February 9, 1994, on Page D00001 of the National edition with the headline: A '$500,000 Apology' From the I.R.S. 2018 The New York Times Company The New York Times https:/yti.ms/29dr9NU ARCHIVES ! 1994 A '$500,000 Apology' From the I.R.S. By ROBERT D. HERSHEY JR. and In what is almost certainly the largest payment ever by the Internal Revenue Service over accusations of harassing a taxpayer, the agency has written a $500,000 check to a prominent Miami lawyer to settle his accusations that three vindictive agency employees violated his civil rights. The lawyer, Daniel N. Heller, won the settlement late last month after a struggle with the I.R.S. that began in 1975 and that resulted in, among other things, Mr. Heller's serving four months in prison. "This $500,000 apology by the I.R.S. is my total vindication," Mr. Heller said. "It proves I never cheated on my tax returns, never owed any money to the I.R.S., paid all my taxes on time and was totally innocent of the trumpcd-up charges filed against me." Mr. Heller's suit was against the three agents, but the settlement money is coming from the I.R.S. As part of the settlement, Mr. Heller agreed not to sue the I.R.S. itself. Mr. Heller said he hoped his efforts would help prevent similar treatment of other taxpayers who might not have his financial and legal resources. The $500,000 will go to charity, he said. The Government acknowledged that it had paid the money to settle out of court with Mr. Heller, who had sued the I.R.S. for indicting him on tax evasion charges. But officials would not confirm Mr. Heller's assertion that he was the first "wronged taxpayer" to win payment from the I.R.S. "More than likely there have been some payments of money," said Wilson Fadely, an I.R.S. spokesman, although he said he could not recall any. In any event, Mr. Fadely said, privacy considerations would prevent him from disclosing such cases. Mr. Heller's troubles began when The Miami News, where he was general counsel, reported that an I.R.S. team was engaged in illegal spying on the sexual and drinking habits of important local citizens. The newspaper, which is no longer in business, gave the spying activity the name "Operation Leprechaun" and its reports led to Congressional investigations and many years of unfavorable publicity for the I.R.S. The I.R.S., believing the newspaper obtained information from within the agency, asked Mr. Heller to identify the source. He refused, citing the First Amendment. He had what a judge later called "a heated exchange of words" with one agent, Thomas A. Lopez, whom the paper had identified as head of the spy operation. "They were very menacing and very threatening to me," Mr. Heller said in a telephone interview today. After filing his tax return for 1976, Mr. Heller was investigated for tax evasion, with one of the three agents on his case turning out to be Mr.Lopez. In 1982 Mr. Heller was indicted. Accountant Involved Generally speaking, a taxpayer who has done no wrong can make a successful defense by asserting reliance on an accountant. In this case, however, the I.R.S. agents engaged in what an appeals court called "intentional intimidation" of Mr. Heller's accountant, Leonard I. Safra, who had prepared and signed Mr. Heller's returns for seven years. Instead of testifying in Mr. Heller's defense, Mr. Safra, "testified falsely" against his client, the appeals court determined, and Mr. Heller was convicted and sentenced to three years in jail. In 1987, Mr. Heller served four months at a minimum security prison at Eglin Air Force Base in northern Florida before the United States Court of Appeals for the 11th Circuit, in Atlanta, reversed his conviction. He filed suit in 1989, citing the appeals court's ruling that his rights had been violated by Government "misconduct." Mr. Heller and his wife, Diane, also sued his accountant's firm, Rechlin & Cohen, and collected a $5 million pretrial settlement from the insurance company that had covered the firm for malpractice. Of the three agents accused of harassing Mr. Heller, only one, Doreen H. Kaplan, remains with the I.R.S. The agency would not comment about any possible disciplinary measures. The other agent involved in Mr. Heller's case was Lawrence S. Plave. Donation Is Planned Mr. Heller, who said he was in his mid-60's, is a graduate of New York University. He said he would give the settlement money to his wife, an art patron and civic leader, who would donate it to charity. "She suffered terrible humiliation when I went off to prison," Mr. Heller said today. "She carried on with great honor and dignity." When Mr. Heller was asked about the tax consequences for him of receiving the $500,000 settlement, he said he had given it no thought. But it is clearly taxable as income, specialists said today, possibly resulting in a tax liability even if all of it is given away. "It depends," said Eileen J. O'Connor in the Washington office of Grant Thornton, the accounting firm. In general, she said, charitable deductions are limited to 50 percent of adjusted gross income, 30 percent if the recipient is a private foundation. The Times Machine article viewer is included with your New York Times subscription. We are continually improving the quality of our text archives. Please send feedback. error reports, and suggestions to archive_feedback@nytimes.com. A version of this article appears in print on February 9, 1994, on Page D00001 of the National edition with the headline: A '$500,000 Apology' From the I.R.S. 2018 The New York Times Company