TN: At the time of the August 1972 telephone call, the 29th of August 1972, when you're listening in with Roger Barth. The fist question I have is why did you decide to bring Barth into the meeting with Secretary Shultz? JW: Because by that time, I was convinced that Roger was spying at IRS for the White House and that I was being pressured to do something that shouldn't be done, and I wanted to confront the Secretary with the source and say we can't do anymore. I wanted to clean it up. TN: It's a long time ago, but can you recall what it was that convinced you that Roger was a spy for the White House? JW: It was, we kept getting pressure from, mainly by Ehrlichman, I mean about Larry O'Brien. That was mainly what convinced me. Cause John Ehrlichman had to be getting information from somewhere. And that was the issue, I thought. TN: Ehrlichman, at least later, testifies that he never really had a chance to tell you directly how much he didn't like you. JW: [laughter] TN: Because Shultz protected you from him. JW: Oh, boy. He did? TN: Yes, that's what he... So, you don't agree with him? JW: Well, maybe he did, a lot of times I don't know about. Maybe. TN: But you never had a one-on-one, other than the phone call. Did you remember one-on-ones with John Ehrlichman about the issue? JW: No, no. That was...never. TN: So, what indications other then the Larry O'Brien, I'm trying to... What indications did you have that the White House was unhappy with you? JW: Well, it was generally known that they considered firing me. The President disliked me very much because I wasn't doing what they wanted done. TN: You knew that at the time? JW: Yes, I knew it, sure. TN: Well, what else did they want you to do other than investigate Larry O'Brien that you can remember? JW: The Enemies List. TN: The Enemies List. No, I meant before that because I, as I said, the Enemies List comes a little bit after. JW: No, no that was, I'm talking about... TN: I'm actually responding to the, 'cause I'm not going to repeat it, but what you said to Secretary Shultz, basically, when you said, "You can have this job." JW: [laughter] TN: I just wanted to know what brought you to the boiling point. JW: That telephone call and when Ehrlichman said what he did. That was the peak. TN: Because you knew before then that the White House felt this way about you. JW: Yes. TN: And you wanted Shultz to intervene and tell Ehrlichman to go away? JW: Well, he should've. Mr. Shultz knew that that kind of pressure was not acceptable and he should have said, 'That's enough. Stop.' He didn't. TN: I see. TN: You leave May 1st 1973. JW: Mm-hm. TN: What... You come back to Greenville, right? JW: No. JW: We wanted to come back to Greenville at that time but our youngest child was a senior in high school and pled for us not to move him again, at that time. Let him finish high school. So, I went with a law firm, a Richmond, Virginia law firm, Justice Powell's firm, and stayed five years, and then came to Greenville. TN: Oh. Who succeeded you as Commissioner? JW: Don Alexander. TN: Did you have the same kind of talk with him that Mr. Thrower had had with you? JW: No, I guess not, because Don was a very difficult person and he didn't ask for any advice, didn't want any advice, and he was just independent. TN: So, you didn't have a chance to warn him. JW: Well, he knew. He knew, and he was handpicked by the White House. So, it would have been inappropriate for me to advise him. TN: When did you get the call from the Senate? TN: When did you, um, it was the next year. When is it that you gave the Enemies List to Congress? JW: It was in '72 before the election. TN: You gave it to... JW: Well, I say, wait a minute. JW: I don't remember exactly the date I gave it to Larry... Larry Woodworth... TN: Yeah. JW: ...but it was some time... um, I don't remember. TN: But was it before the '72 election? No, I think it was afterwards, during the investigations. JW: Probably. JW: Yeah, it should be during the investigations, yes. Because Ehrlichman had testified on the Hill in connection with this, the whole mess that they had given me the Enemies List, so that's when I did it. Once he testified that day, I figured well, I can get rid of this list, and that's when I went. So, it was sometime in '73, probably. TN: Tell us about Bill Simon, your work with Bill Simon. JW: Bill Simon, I liked very much. He was like John Connally. He was decisive, bright, good, wouldn't tolerate incompetence or anything. TN: 'Cause that's, there is a story that when, and this might jog your memory, when the IRS investigators wanted to interview Bebe Rebozo, the President's friend, you had talked to Bill Simon and Simon said you should tell Shultz and you should write a memo to Shultz because he's going to be meeting with the President at Camp David. So, you wrote a memo and you gave it to Shultz and you don't hear anything from Shultz... JW: Yeah. TN: ...about this. So, you go back to Bill Simon and say, "I didn't hear anything," and it's two weeks later and Shultz does not okay this interview until just before you leave. JW: Mm-hm. TN: But your sense was, again from testimony, your testimony from documents that the IRS had every right to interview Bebe Rebozo but that you wanted the Secretary to green light it because this was a particularly sensitive case and it took him quite a few months to green light it but Bill Simon was your ally in trying to get this to happen. So, that's why I asked you about your relationship with Bill Simon. JW: I don't recollect all that, but let me say this, I did while I was at Justice and IRS, on sensitive cases, I tried to let people know that this is coming. So, I'm not surprised but I don't recall all that. TN: Please tell us, before your relationship soured with him, tell us about your friendship with John Dean. JW: Well, he was at Justice when I was there. He was not in a sub-Cabinet role but he was there and just worked as a lawyer in Justice and did his job and everybody liked him. I liked him. I didn't think he should be Counselor to the President. He was too young, too inexperienced. TN: You've used that term for Roger Barth too. Does that imply too susceptible to pressure? JW: No, I didn't mean it that way. I didn't mean it that way. But, you know, a person that's going to be Counselor to the President should have a broad background and wisdom, and I don't think John, at that age, had it. TN: I think it was in your testimony, or it may have been Shultz's, that when you talk to Ehrlichman in August of '72, you had the feeling you had been back-doored. And I guess that means Roger Barth. JW: Mm-hm. TN: Okay, that that's why the information was going... JW: Right. TN: Tell us about a guy named Frank Gable, Geibel? He was the Assistant Commissioner of Inspection. Do you remember him? JW: Geibel? TN: Yeah. JW: That name doesn't... TN: I may be mispronouncing it. JW: How is it spelled? TN: G-E-I-B-E-L TN: He was the gentleman that Barth would go to to get information on tax returns. JW: Oh. JW: I don't really recall him. TN: Because I think, my understanding of the investigation later is that you only learned as a result of the Senate investigations of the kinds of kinds of tax information that Barth was actually acquiring for the White House while you where Commissioner. JW: Right, that's right. TN: That at that point that you had realized that he had wired the system - JW: Right. TN: To get information. TN: Tell us now, what was standard practice regarding tax information? What actually could the White House, in a standard way, ask? What kinds of information could the White House properly ask for in this period? JW: Well, as I indicated earlier when I was asked about Larry O'Brien, did he file returns? There is nothing wrong with checking and saying "Yes, the returns were filed". But, as to details on the returns, no. TN: So the White House... a normal course of events the White House could not ask for a return and read it. JW: No. Normally, that's right. TN: So the returns are supposed to be private? JW: That's right. TN: Except for the use of the IRS. JW: That's right. TN: What is a "full field" investigation? JW: [laughter] JW: "Full field" investigation is one where the agent or agents go out and interview the person, check their books and records, interview others that might be, you know, customers or something. Just do a full investigation, full field investigation. TN: And that's the same as an audit, is it? JW: Well an audit may be, they may audit a return and never see the taxpayer. JW: So, it wouldn't be a... but a field investigation, they're going to interview the taxpayer and his customers and clients and things and check everything. But an audit maybe just a review of the tax return. TN: And the decision to audit, in this period, was made by a group... Again, I want to know exactly what the standard procedure was in this period. The triggering of an audit. Was it if you received an anonymous tip, would that trigger an audit in this period? JW: It might, it depends on what the tip was. If the tipster gave us name, address, and allegations as to what's happening, it might, it might trigger an audit. It might or it might not, depends on the substance of the tip. TN: I see. Was there a, some kind of... [clock chiming] I'll just wait for the... TN: It's just telling us it's 11:00. JW: [laughter] TN: Was there some kind of statistic by which you followed to determine the number of audits? You know, every seventh return or something? JW: At that time what, based on prior statistical studies, we had a program whereby we would select returns, you might say, anonymously to audit, depending on how much was involved, how much income was reported, how much deductions were claimed, and other various trigger points. It was done, you might say, mechanically but to see whether they should be audited. It was not a... We thought it was scientific in the way we went about it but it was not on a personal basis. TN: And what would happen when a famous person's return sort of turned out to be troublesome or required some further investigation? Would that be the sort of thing that would go right up to the Commissioner? You'd hear about it. JW: No, not necessarily. It might be that in the region or the district, they would go ahead and initiate a discussion. If the person were a very sensitive person say, high up in the Congress or something, they might if it was a sensitive case report, report it so I would know about it but that's all. TN: Was it customary for you, for the Commissioner to let the White House know... JW: No TN: If it were a sensitive case? JW: No, no. No. TN: What, what if any protections came about later as a result of this whole period? Do you know of any changes that occurred to beef up the power of the Commissioner of the IRS to make him or her more independent as a result of your experience? JW: No. TN: In this period. JW: I do not. NT: Do you think you could have used more authority than you had at the time? JW: No, I think I had plenty of authority. At one point, Secretary Shultz thought that I was concerned and he offered to give me an office in the Treasury building, and I told him no, I wanted to stay with my people. See, IRS was 80% of the Treasury, people-wise and otherwise who were 80% of the Treasury, and yet, we were relegated to a lower position. For instance, while I was there, they reissued the line of succession in case of a national emergency or something. And I think we were 16th on the list or something, and I objected. I went to the Deputy Secretary and I said, "Look, this is ridiculous. We're 80% of the Treasury Department and you put us down here." So, they moved us up the list. But I think I had plenty of authority. TN: But now he wanted to move you into the Treasury Department? JW: Well, he thought that I would like to be over there in the Secretary's office, so to speak, but told him I wanted to stay where I was with my people. TN: With your people. Tell us a little bit about Harry Dent, please. And I know I'm changing subjects but he's not alive and he's important. He appears all over... JW: Yeah. TN: ...some of these interviews. TN: He's from South Carolina. JW: He's from South Carolina and I knew Harry but just slightly. TN: Oh. JW: I did not have a lot of dealing with him. I mentioned earlier the one phone call I had from him. TN: That's right. JW: And that was basically the only contact I ever had from him. I can't tell you much about him. TN: So, you were clearly not political... JW: No, no. TN: ...in South Carolina. JW: No, I had... I was a member of the Republican local party but I was a tax lawyer, is what I was. And I'd gotten invited up there because of that, because of Gene Bogen and John Alexander knowing me as a tax lawyer - not as a politician. TN: You left before the end of the administration but I'm sure because of the investigations you were observing what did you think as the Watergate scandal became fully revealed? What did you think of what you were seeing? JW: I thought it was very distressing and utterly ridiculous, and there was no need for it. He was going to be reelected. They were just doing all those things trying to make it unanimous, you might say. And I thought it was just totally wrong. While I was still in Washington, I don't remember whether I had left the government or not, I received a phone call from someone, I don't remember who, I think in the State Department, and this man says he was distressed by this whole thing, and he said to me, "Mr. Walters, did anything at all good come out of Watergate?" And my response was yes, by golly, it did. We got rid of a President, a Vice President, and several top officials, changed the government, all without firing a shot. Terrible price to pay but that happened. TN: Did you associate some of the pressure that you had felt with these events, these Watergate events in the sense that the White House had viewed too much through a political lens? I mean, did you see some connection between your own experience, unhappy experience as Commissioner and what ultimately lead to the resignation of the President? JW: Sure, sure. It was part and parcel to the whole canopy, you might say. Very unfortunate but it was part of it. And as I mentioned earlier, I was a target in the grand jury for allegations that IRS might have done something. And I insisted on testifying before the grand jury, against my lawyer's advice, but I wanted to tell the truth and I wanted them to see me and hear me tell the truth, and I did. TN: Well, perhaps under another Commissioner, the story might have been different. JW: Possibly. JW: But you know, let me say here, if you stop and think about it, our tax system is the very basis of our form of government, our whole republican form of government. It's the very basis of it. Now, they collect a little money on the side but most of the money comes thru IRS and if it's not done soundly and properly and gets screwed up, we'll have a real problem. Now, and today as you've read, I'm sure, $350 billion dollars a year of tax is not being collected and that's terrible. We can't afford it. I think IRS is not doing today what it should do and what we were trying to do back then. We had a lot of criminal investigations and other things and we collected some big money. One thing, for instance, I'll tell you is I called John Hanlon who was the Assistant Commissioner of Compliance, in one day and I said, "John, how current are we in auditing returns?" And he said, "Well, we're six or seven years behind on individuals and about twelve years on corporations." So, I said, "I want you to get it current. I want you to do it in three years." And he said, "Commissioner, we'll lose a lot of money. We'll lose a lot of money." I said, "John, I didn't ask you what would happen. I just wanted you to get it... come up with a plan to do it in three years." So he came back about three weeks later with a plan to do individuals returns and to make it more current. That was fine. So, I said to him, "Now, how about the corporations? What are you going to do there?" "Well, if we try to get current there, we're going to lose lots of money." I said, "John, I don't want to treat the little old lady in white tennis shoes differently then I treat General Motors. Now, you give me a plan to bring them up current too." Well, that caused a lot of trouble cause big corporations then were ah, interest was about 16%, as you remember, and they were paying 6%, I think, to IRS at the time. So, they'd let their tax returns run. they were making money, IRS's money. So, he said, "Well, it will take me a while to do that." He said, "Maybe I can have,' this was in October, "maybe I can have you a plan ready by January." I said, "You've got three weeks. Three weeks, I want you back in here." So, he came back in three weeks with a plan and I said, "Okay, let's do it. Institute it." Well, we collected then $50 million from a corporation, I won't name it cause you'd recognize it. Fifty million dollars, it was due on their tax return, we just hadn't audited them. That's one corporation, and we collected a lot of money. But as a result, I was an enemy to big corporations, corporations, big ones. And I never got much business from them later on in. But anyway, it should be done. And we were also doing a lot of criminal investigations, individuals, corporations. We put some people in jail, corporations, their executives. I don't think they are doing that today. TN: Now, when you say that you had this backlog, you mean that this is money the IRS knew was owed it? JW: No, we didn't know it. They filed returns and when the returns were audited, they owed money. And they knew it, of course. TN: But you're saying your backlog was you couldn't audit something for two or three years? JW: Well, I'm saying in large corporations. sometimes it was as many as twelve years. TN: You were still auditing returns from the late 50s? JW: Yeah, we were behind and we brought it up to date, and I think that that's what should happen. TN: After your-- Well, grand jury testimony is supposed to be secret but after... JW: Probably isn't today. TN: Did you, uh. How were you treated, uh, by, uh. TN: How were you treated by the Republican party after this experience in the Nixon White House? JW: I have received no different treatment after, while I was there and since I've been out. It's been independent. I've just been a normal citizen. So, I haven't noticed any change. TN: Well, I just wanted to know if there were some people who... JW: Question. TN: Yeah. JW: Well, I'm sure there are. Roger Barth, I'm sure, if he's still living, would consider me a bad guy. And maybe others are like that too, I don't know. But I've been able to sleep at night because I think we did what was right in every case. Let me tell you about one case that happened at Justice. When I went there, there was a case, and I shouldn't name names, she'll hear. It was a Senator, that had been investigated and was up for criminal trial on taxes. He hadn't done what he should do, they thought. The question was, and the tax division has reviewed it, and it was a split decision of the staff. Three different people review that kind of case and if all three agree, the Assistant Commissioner never sees it. If it's split, then it's up to the Assistant Commissioner to decide what to do. So, it was split and I had to look at it and make a decision. Everybody thought this man should be prosecuted. The Washington Post columnists, they knew it, everybody knew it. Well, it was Senator Dodd, that's who it was, old Senator Dodd of Connecticut. And I reviewed the case and based on regular, standard operating procedures, he should not be prosecuted. But I knew the White House wanted him prosecuted, and I knew that Drew Pearson wanted him prosecuted, and everybody else. So, I called the Attorney General and I told him that I have this case, it's up to me to decide. And he said to me, "What do you think we should do?" I said, "Well, based on my review of the case, we should not prosecute." He said, "Do it." By "do it," do what I thought we should do. And I knew that would displease everybody, [phone ringing off camera] but I did it. Off camera: Should we pause tape? Off camera: Tape is rolling, you have speed. JW: I decided that we should not do it and it went to John Mitchell and I told him because I knew this would be sensitive in the White House and everywhere. So, I told him and he agreed that I should do what I thought we should do. So we did it. Several months later, my secretary one day interrupted me and said, "Mr. Walters, Senator Dodd is on the phone. He wants to talk to you." I said, "Oh, no. I don't want to talk to him." But anyway, he said to me, "Mr. Walters, I'd like to thank you for what you did. I'd like to come by your office and see you." I said, "Senator, there's no excuse to do that. Don't worry, it's over with and done and forget it." So, I think it was the right thing to do, even though I knew it was making the White House unhappy. TN: It's amazing you were named Commissioner after that. JW: [laughter] TN: Well, what can you say about John Mitchell? He's a complicated man. JW: John Mitchell, I think, was a great Attorney General. I'm sorry later on he fouled up and had to pay for it. But, as I've told you, he said to us on our first staff meeting, "Go run your divisions and if you need to consult with me, I'm available but I'm not going to bother you." And every time I consulted with him on sensitive cases, like the one I just mentioned, and told him what I thought we should do, and that was usually because I knew it was going to create waves, he said, "Do what you should do." Every time. Now, let me say also I was not alone, because Dean [Erwin] Griswold who had been the holdover Solicitor General from the prior administration, Democratic administration, he had the same experience. He told me that not once did John Mitchell try to change his mind as to what should be done. TN: Griswold was the Solicitor General. JW: Yeah, yeah, he was Solicitor General. And let me say, John Mitchell was a good man, a fun man, we enjoyed him. And I was, I regret very much he got into trouble but he had to pay for it. TN: Was there any discussion of tax cutting in this period? JW: Not that I recollect. TN: What were marginal tax rates? JW: I don't remember... TN: But they were, they were... JW: Pretty high. TN: Was this a period still when the US government believed in redistributing wealth? Was that the structure? Was the tax system structured in a way... JW: No, I don't think so. No. TN: Is there some other anecdote from this period that you would like to preserve? JW: [Laughter] JW: The only thing I can think of is that, both at Justice and at IRS, when I first went up there in '69, my friends, mainly tax lawyers around the country, said to me, 'Whatever you do, move things along. Don't let them drag out.' So, at Justice, I took the position that we ought to move things and I was told by people in the division, 'Well, we're gonna lose some cases, we're gonna lose.' And I said, "Look, if we lose something, if we make a mistake, somebody will correct it. Let's just don't do it twice. So, let's move things." And I insisted on doing that. So, when I got to IRS, frankly, the top staff had been there a long time. Assistant Commissioners had been there, some of them, almost 20 years. And I decided to get control of IRS. I had to do what I had done at Justice and that is shake it up. So, how to do it? Because, you know, you can't fire civil servants, so to speak. So, I decided that one way to do it is take the position that we ought to have closer coordination with the field and the national office. And that meant some of the people in the national office go to the field and some of the people in the field come to Washington. That didn't go over too well. They didn't like it cause they didn't want to go, and I could understand that. But, nevertheless, I decided that's what I was gonna do, and I did. And two or three Assistant Commissioners left, and that was fine. I had one that who was a friend of mine, had been for years, and I tried to get to him to take other jobs and do different things and he wouldn't do it. So. But in any case, we shook it up and I took the position there, let's don't lollygag. We're government employees but, by God, we're supposed to work and do our job and do it promptly. If we make mistakes, somebody will correct it. If we don't correct it, the judge or somebody will correct it. So, let's move the cases. And that's why I told John Hanlon make those plans and let's get these audits up current. TN: Last couple of questions, which I discovered. One, did you ever interact with either Pat Buchanan or Thomas Charles Huston, Tom Charles Huston? They were both investigating the issue of foundations and whether they should be tax exempt. JW: No. No. TN: And do you recall any concerns about President Nixon's tax returns while you were there? JW: I do not. No. TN: So, that was an issue that arose after you left. JW: I guess so. TN: Well, Mr. Walters, it's been a pleasure and a privilege talking to you. Thank you for participating today. JW: Thank you. I hope that what I've said is helpful and not too harmful. But I've been very honest with you. Used language that I ordinarily don't use. TN: Well, it was other people's... Except in one instance, it was your language. JW: That's right. [Laughter] TN: That's why I pressed you so hard about that. That was very strong language that you used with Shultz. JW: I know. That's right. And I meant it then and I still mean it. TN: Well, I think many people would say thank you for staying in your job as long as you did. JW: [laughter] I paid for it. TN: You did? JW: Well, I paid for it in that went bankrupt doing it because, as I say, with four children in college at the time and making, the most I made was $41,000 at IRS and you can't live in Washington on that and support a family of six. So, I used up all my savings and borrowed money. And, as I said earlier, large corporations haven't flocked to my door because I hurt some of them. The one that paid $50 million, I'd bet you a dollar they wouldn't even let me in their front door. TN: But they owed it. JW: Yeah, they owed it. That's right. TN: Thank you, Mr... JW: My, my philosophy was and still is, IRS is the very basis of our form of government. It better be run right without regard to politics or anything else. Run it right and if you don't, sooner or later, you're gonna... What would happen, for instance, if all of a sudden they didn't have the money to pay the bills? Maybe that's so today. And they couldn't pay Congress, they couldn't pay judges, they couldn't pay IRS agents, couldn't do anything. We'd have civil disorder very promptly, and we can't afford that. TN: So, you have to keep it non-political. JW: Yes, that's right. And also, be aggressive about it, though. Do it right. Because I don't think we should let you get away with not paying your taxes and Bill has to pay his because he's carrying you on his back, and that's not right. TN: I agree. JW: And I'd put you in jail and without... In fact, one night at home while we were living up there, and I was Commissioner at the time, I got a phone call, I had unlisted my telephone number, I don't know how this judge got a hold of my phone, but he got it. Judge from Florida called up crying, and said, "The IRS is selling my house, taking my house away from me." And I said, "Judge, if IRS is doing that, it's the last straw and it's because you haven't done what you should do. We're gonna sell your house." And we did. But that's what, you know, in some cases you've got to be tough to do it right. Now, you don't like that. I'd like everybody to pay but you take today with $350 billion not being collected. Somebody ought to be out there prosecuting somebody to collect that money. In fact, I'll tell you what I would do if it were up to me today. I'd do away with the Internal Revenue Code, and substitute a sales tax, national sales tax. And I'd get all that money that we aren't getting today. Those people who are avoiding paying taxes would have to pay. They would pay. TN: So, you would make it a... But that would be a regressive tax. JW: Oh, I knew you'd say that! Not necessarily. [phone ringing off camera] JW: Is he going to turn that off anyway? If he hasn't already? So what? The people who are getting the most benefits today are the people that you're worried about. They should pay taxes too. TN: Well, everyone should pay taxes. JW: Yeah, that's right. TN: Above a certain... JW: So, if we had a national sales tax, we'd get all of those folks, and that's what we ought to do. Now, this idea of a flat tax sounds good but you still have the same problems - what's taxable. JW: So. TN: Mr. Walters, thank you very much. JW: Thank you. TN: It's been a pleasure.
