(4 of 15)
Apparently on its own initiative, IRS began looking into O'Brien's tax status when it learned from its investigation of Billionaire Howard Hughes' income taxes in late 1971 or early 1972 that O'Brien had received "fairly substantial amounts of money" from Hughes. O'Brien concedes that he was paid roughly $180,000 for public relations work he did for Hughes. According to Walters, Ehrlichman asked Secretary Shultz to get the IRS to find out if this money had been properly reported. At Shultz's request, the IRS checked and found that O'Brien had reported it for the years 1970 and 1971, had paid "a small deficiency" and that "the examinations were closed."
Ehrlichman was angry at IRS response and insisted that tax agents interview O'Brien again before the election. They did so, reporting no damaging information. When Ehrlichman learned of this, he scolded Walters in a phone call on Aug. 29, 1972. With Shultz listening in on Walters' line, Ehrlichman told Walters: "I'm goddam tired of your foot-dragging tactics." Reported Walters to the Judiciary Committee: "I was offended and very upset .. . Following the telephone conversation, I told Secretary Shultz that he could have my job any time he wanted it." Though Shultz wanted him to stay, Walters quit on April 30, 1973.
The Judiciary Committee is greatly interested in whether Nixon knew of these tactics to manipulate the IRS.
There is evidence that he did. The released tape transcripts show that Nixon told Dean on Sept. 15, 1972, to keep notes "on all those who tried to do us in" because "they are asking for it and they are going to get it." On March 13, 1973, Nixon seemed to be offering the use of the IRS to investigate the financing of McGovern's campaign and raised no objection when Dean said that he already had access to such information from IRS.
Earlier, when Commissioner Thrower told then Treasury Secretary David Kennedy in January 1971 that he planned to resign, Thrower asked for a chance to protest to Nixon "about White House attitudes toward the IRS." Kennedy said he would arrange a meeting with the President, but according to Thrower, "Haldeman told him that the President did not like such conferences." Persisting, Thrower expressed his concern to Attorney General John Mitchell, warning that "any suggestion of the introduction of political influence into the IRS would be very damaging to him [Nixon] and his Administration, as well as to the revenue system and the general public interest." Thrower said he next got a call from Nixon's appointments secretary, Dwight Chapin, who reported that Mitchell had passed along Thrower's complaint and therefore no conference with the President was necessary. "Thereupon," said Thrower, "I submitted my resignation."
Still resenting his experience with the White House, former Commissioner Walters last week explained what he felt had been at stake in his dispute with Nixon's aides. "The very base of the democratic way of life and the republican form of