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David Burnham
David Burnham
A Law Unto Itself: Power, Politics and the IRS
ISBN: 0394560973
A Law Unto Itself: Power, Politics and the IRS
Author David Burnham called the Internal Revenue Service "the single, most powerful instrument of social control in the United States." He examined the organization in his book A Law Unto Itself: Power, Politics, and the IRS. Burnham, a former journalist of the New York Times, compared the IRS to the New York Police Department, which he covered in the 1960s and 1970s. He compared the authority vested in a police officer to the authority of IRS agents. He stated that any organization with such authority delegated at low levels is subject to abuses and a prime candidate for poor management. A four-year project, Burnham's work was highly researched and documented. It covered the history of IRS from the Civil War era to the present.
A Law Unto Itself: Power, Politics and the IRS
Program Air Date: February 11, 1990

BRIAN LAMB, HOST: Dave Burnham, author of "A Law Unto Itself: Power, Politics and the IRS." Why a book on the IRS?
DAVE BURNHAM, AUTHOR, "A LAW UNTO ITSELF: POWER, POLITICS AND THE IRS": Well, I think the IRS is the single most powerful instrument of social control in the United States. I think it's one of the two or three most powerful law enforcement agencies in the world. I also think that the American press -- The New York Times, The Washington Post, The Wall Street Journal, myself -- have ignored this agency, and it desperately needs coverage.
LAMB: Why has it been ignored?
BURNHAM: It's complicated. It requires -- you know, I worked on this book four years; it required a lot of digging. There's a myth out that the tax code is the important part of tax enforcement. And, you know, you talk to academics and you talk to lawyers in this town and they will say, “Oh, the IRS is boring. It's the code. That's what drives this thing.” Well, that's ridiculous. That's arguing to me. I mean, the parallel to that argument is if you were in New York and asked to cover crime control, and you went up to Albany and, you know, you wrote about the legislature changing the crime code a little bit and you didn't cover the New York Police Department; you didn't cover who they're hiring and all of that. And so I thought it was time to take a real detailed, hard-nosed -- I hope -- evenhanded look at this big agency that affects all of us.
LAMB: How big is it?
BURNHAM: It's 123,000 people now. That's five times bigger than the FBI. That's twice the size of the CIA. It has far more formidable legal powers than the FBI. The Congress, in its wisdom, has given the IRS just ferocious legal powers to take documents, to make what they call “jeopardy assessments,” what have you. It has more information about more of us than any other organization. And you put that all together and, as I say, I think you have the single most powerful law enforcement agency in this country.
LAMB: Where is it?
BURNHAM: Where is it? It's everywhere. The headquarters, of course, are here in Washington. There are seven regions around the country. And then there are 63 districts. And one of the problems, I think, is the whole agency is so Balkanized. I think the commissioner here in Washington -- they usually serve for two or three years -- they don't really know what's going on. And the agency is run by old-time government employees who've spent their whole life in this agency. They love it. They're smart, nice people. They, I'm sure, are well-intentioned people, but they've come to care more about the organization, perhaps, than they care about the American people.
LAMB: In the back of your book you do have this chart -- you can't see it very well on television, but you show where all the different service centers are. Where's the most powerful location?
BURNHAM: I can't really answer that. That's the map of how the IRS is organized. Back in that part I have prepared tables showing that if you live in San Francisco, you're five times more likely to be audited than you live in New Jersey -- or three times more -- four times more. And if you live in Nashville, you're six times more likely to have seizures -- the rate of seizures -- and that is six times higher than it is in Richmond, Virginia. And the IRS allows taxpayers who -- when it's decided that a taxpayer owes money, you are able, sometimes, to enter into an agreement of -- installment plan, pay it off slowly. And that makes a lot of sense. I have rates showing that there some districts where you are 10 times more likely to be able to enter into an installment agreement than others.

This raises a question to me about bad management. I mean, this is a national agency enforcing a national law. Why isn't it more evenhanded across the country?
LAMB: Over the years -- first of all, how long has the IRS been in business?
BURNHAM: Well, the IRS dates itself from the Civil War, essentially. That's a continuous agency. The income tax came in just before World War I. In fact, however, one of the first acts of the first Congress was to create a tax agency to go out and collect the whiskey tax, which was one of the first things the Congress passed. And you, I'm sure, remember there was a big rebellion on that, and George Washington, the president, sent a big army out, busted it up, dragged back the whiskey farmers -- the corn farmers -- from western Pennsylvania, and there was a trial in Philadelphia, and they were convicted of tax evasion. It's one of the first formal enforcement acts of the federal government. Taxes are the single most important thing of any government.
LAMB: Over the years have there been people that have become familiar to the American people who have run the IRS, or is it faceless? I mean...
BURNHAM: It's faceless. It's run by the bureaucrats. The commissioners have come and gone. I think old Washington has. I mean, people have been around here remember Morty Kaplan, who was President Kennedy's IRS commissioner. People around in Washington remember Sheldon Cohen, who was Lyndon Johnson's commissioner. But none of them became the figures that J. Edgar Hoover did, and in a way that's good. I mean, J. Edgar Hoover led the FBI in the wrong direction. But in another way, you really have faceless bureaucrats running it. And I think the commissioners, in fact, don't run it. They don't know what's going on. It's run by the senior civil servants.
LAMB: How does the commissioner get his or her job? And has there ever been a woman heading it up?
BURNHAM: Never been a woman. Women don't fare too well in the IRS. You get it by being appointed by the president. In recent years, it's tended to be a tax lawyer. I don't think tax lawyers are always the best kind of administrator. The new man, a guy named Fred Goldberg, is sort of interesting because he taught political science and economics before getting his law degree. And I suspect he may have a broader sort of outlook of taxes and the place of taxes and the importance of the agency than some of his predecessors.
LAMB: Did any of the IRS commissioners talk to you?
BURNHAM: Many did. Larry Gibbs, who just retired, refused to talk to me. He said it wasn't in his interest. But Sheldon Cohen talked to me. Don Alexander, who was the commissioner right at the end of the Nixon administration -- was brought in to sort of clean it up, I think. I went to see him. He's a tax lawyer in this town. And we were just talking very casually and he said, “You know, the tax laws -- it's brought me great despair at some point.” He said, “You know, one of the worst things that happened to me when I was a young lawyer for Covington, Burling ...” -- this was about 1952. It's an astonishing story.
LAMB: Covington, Burling, the law firm here in town.
BURNHAM: The law firm which is the sort of distinguished law firm. And he said, “We are trying to get through a tax ruling and we couldn't get it through for four big corporate -- several corporations.” And he said, “We couldn't get it through and we couldn't get it through.” And Don Alexander said, “We decided to go political.” And he said they approached Alben Barkley's son-in-law, who was sort of a fixer in the Truman administration. He ...
LAMB: Who was Alben Barkley?
BURNHAM: Alben Barkley -- I'm sorry -- was the vice president at that time. And a lunch was arranged with the Treasury secretary -- a man named Snyder. Lunch was held at the Metropolitan Club, the distinguished club. And Don Alexander said a $25,000 bribe was paid and they got the tax ruling the next day.
LAMB: Are there -- and I know you write a chapter on that. Are there many bribes today at the IRS?
BURNHAM: There is a major problem, I think, of corruption that is all across the country. We live in a age of sort of wheeling, dealing. I mean, the whole '80s, the Boeskys and the savings and loan. People don't like to pay taxes, and I think the evidence shows there were big corruption problems in Philadelphia and Chicago and Los Angeles and a number of other places. And more disturbingly, the evidence shows that the IRS sort of backed away from a fierce stance on corruption during that period. Every agency like this has an inspection division, an anti-corruption force. During the '80s, the managers of the IRS allowed the inspection division to get smaller and smaller in relationship to the overall IRS. And that meant, of course, that each inspector had more to do and, therefore, could do it less well. And I think there was a growing corruption problem during the '80s. Now the new man is worried about that and has started putting more people back in.

But there were a lot of cases, Brian, that came out just recently, during my reporting and during a congressional hearing, where senior executives got into corrupt situations, were discovered, were spotted and then allowed to sort of escape punishment. I mean, there's a case in Los Angeles where the man in charge of the criminal investigating unit in Los Angeles was offered a big job by the Guess company, which is a big clothing manufacturing company. He then arranged for the IRS to go into a great raid against Guess' leading commercial opponent, which is Jordache. And just a couple of months ago, the US attorney in New York said the evidence against Jordache did not warrant an indictment and it was thrown away. Nothing happened to the man who arranged this hit for this company that had offered them this major high-paying job. And that kind of thing we see around the country quite a lot. It's worrisome. That's bad management.
LAMB: Fifteen years with The New York Times?
LAMB: During that time a number of things that you wrote about led to investigations. Serpico?
BURNHAM: Serpico. That was very important to this book. I covered the New York Police Department from '67 to '74, and the New York Police Department is very much like the IRS -- or there are a lot of parallels. It's a big, old organization. It's headed by commissioners who come and go. I don't like the civil servants. That suggests that they're servants to the people, and I think they're public employees and some of them are civil servants and some aren't. Both the police department and the IRS have a lot of power down at the bottom. You know, the cop on the street is authorized to shoot you if you do certain things. He or she is authorized to take away your liberty. The IRS agent has a lot of power. And to supervise that is very hard and requires really tough, smart work.

And when I covered the New York Police Department -- I love the big bureaucracies and I understand how hard they are to work and I respect many of the people in them, but I'm pretty hard-nosed about them. And I think the IRS and the New York Police Department have many of the same problems.
LAMB: You also -- and I don't want to take you through the whole story, but just so the audience will know your background -- you were also involved in the Karen Silkwood case and it was a movie.
BURNHAM: Yeah. I covered a lot of stuff on nuclear power and that led to being involved in the Karen Silkwood thing.
LAMB: And when she had her accident, she was on her way to give you documents. Is that ...
BURNHAM: That is true.
LAMB: In the book you write that -- as you talked to hundreds of thousands of people for this book, inevitably somebody, if it was a lunch, would lean across the table and say to you, “You better have a good account.”
LAMB: What were they getting at?
BURNHAM: Everybody would make that little joke. They'd smile and “Hope you've taken care of your tax affairs, friend,” and so and so. And, really, almost everybody did that. I mean, Commissioner Goldberg, when I saw him last week, did not do it. And when I saw the deputy IRS commissioner, he did not make that little joke. But almost everybody else did. And I think it's a really telling commentary on what the American people -- I mean, you know, this is not a scientific survey, but an awful lot of American people think that the IRS would harass someone who was just doing a job of reporting; just being a critic. That's what we think. I mean, that's a lot of cynicism built into that little joke. And that's one of the problems is our cynicism, I think.
LAMB: How did you approach the book? And when did you first get the idea?
BURNHAM: Well, about four years ago -- a little more than four years ago, I was in the newsroom of the Washington bureau of The New York Times and a young reporter named Steve Engelberg looked up at me and he said something to the effect, “Well, Burnham, you worked on the New York Police Department, you've written a lot about computers; you ought to do a book on the IRS.” And I said, “Boy, that's a good idea.” And I decided to quit The Times and go to work on this book.

Doing the book involved things -- like I spent a lot of times in presidential libraries and there was a lot of interesting stuff. For example, I went up to Hyde Park, FDR's library, and I there I found some documents showing that -- and we ought to maybe talk about this some more -- showing that FDR was at least as abusive in his use of the IRS as Richard Nixon. And many other presidents have been very abusive of the IRS, have really used it -- LBJ did; John F. Kennedy. So the presidential libraries were good.

I did a lot of interviews. Don Alexander knocked me off my feet when he told me about, as a young lawyer, how his bosses bribed the Treasury secretary. I have a lot of sort of whistleblowers who talked to me. I had some whistleblowers who gave me internal audit reports within the IRS, which the IRS tries to really keep down. The internal audit reports show, for example, that the IRS is very sloppy in how it protects computerized information. It does not follow its own rules.

The General Accounting Office, which is the investigative arm of the Congress, for the last 15 years has been doing reports on the IRS, and I got all of those. As you know, that's a heavy, heavy reading burdens. They've sometimes done some great reports and they've sometimes done some bad reports. But looking at them over time is really quite interesting. I mean, an example: Just a couple of weeks ago the GAO put out a report saying that one-third of the telephone questions that the IRS gets -- that one-third of them, they answer incorrectly. And at the back of this little report was a letter from the new commissioner saying, “This is no good” -- Mr. Goldberg -- “This is no good and I'm going to really work on this in the coming year.” Well, because I had read a lot of these old reports, I remembered that in 1975 the GAO said the same thing -- 15 years ago. And Don Alexander said, “We're going to deal with this,” and they said it in 1980 and they promised to fix it. And they said it in '87 and they promised to fix it. And they don't.

And so, you see, a New York -- I mean, not The New York -- a newspaper would write a story about this little GAO report two weeks ago and let it go at that. And everyone would say, “Ho-hum.” They've said that before. But the point is, this has been brought to the attention of this agency, and it has failed to deal with it, and it gets serious.
LAMB: Page 142: In conjunction with what you just said about 30 percent or a third of the people that call the IRS for information get wrong information, you write, “Over the past years the IRS has been extremely attentive to the judges, congressmen and the White House staff members who are in a position to influence the fortunes of the agency.” Then you say, “Until very recently, for example, the IRS routinely provided personal tax advice to any Supreme Court justice, member of Congress or White House staffer.” Why just until recently?
BURNHAM: I think they got embarrassed about it. A little of that got into the press, and I picked up this business about the Supreme Court. I had heard about doing the White House staff. As a matter of fact, I found some memos in the presidential library saying, you know, “Next week, the IRS will be here to help any White House staffer who needs assistance.” And I had run across that in Congress when I was interviewing a senior retired official. He said that just a few years ago that he had been called down and had prepared the tax return for a member of the Supreme Court who's on the bench today. And he said he didn't think that was right. And, in fact, that judge, who is a, you know, fine person, has not recused himself on IRS cases, even though he had this thing of value given to him by the IRS. I'm sure it may not have occurred to him, but that actually violates the code of ethics of the Supreme Court.
LAMB: Can any citizen go to the IRS and get the same treatment?
BURNHAM: No. A senior IRS executive comes to your office and helps you write your tax return?
LAMB: Well, let me ask you then...
BURNHAM: I mean, you can...
LAMB: Can you go to the IRS if you're a citizen and get them to help you write your tax return?
BURNHAM: Yes, in theory. But I don't think this tax return done for this Supreme Court justice -- one-third of it was wrong. I'll tell you, I'll bet it was done right. And having a senior IRS official do it, I would bet, would be an absolute guarantee you'd never be audited, too. And, of course, if the IRS gives you the wrong information on the phone or wrong information in letter and you're audited, tough.
LAMB: They don't do it anymore.
BURNHAM: They don't do the Supreme Court or the White House anymore. They still set up an office in the Congress, and members of Congress or staff can come in and get advice. It's not quite as blatant as it used to be, and they insist that it would be open to anyone who happened to come in the Capitol. You know, I mean, any citizen -- I mean, theoretically, I can come in and get tax advice, but I think it's unlikely that I would know what the room number was where the IRS was sitting to help you.
LAMB: Let me go back to how you got this job done. Did you leave The New York Times before you had a publisher?
BURNHAM: No. I went to Random House, my publisher, and we talked about it and they said they would like to do it. And they offered an advance and then I was reasonably confident I could get some additional money from some foundations. I won the Alicia Patterson Fellowship, which is a wonderful foundation that gives five or six fairly substantial grants each year to investigative books. And a couple of other foundations came in -- the J. Roderick McArthur Foundation, Deer Creek Foundation -- and supported me in the writing of this book.
LAMB: You said you visited the presidential libraries. Did you know that it was going to take you four years to get this job done?
BURNHAM: No. It was longer than I thought it was going to take. And I think it would be a better book if I had spent another year. The stories are very hard to tease out. You get a little nibble here and a little nibble there and you put it together, and -- I mean, it's great fun. I was a history major in college and I loved it, but -- and when you sort of dotted an “I” -- I mean, I tell a story in the book about Morgenthau approving what was in essence a bribe to a businessman in Louisiana who was providing them information on Huey Long. The Roosevelt administration was going after Huey Long because he was the major political threat in 30 states.

I ran across the story first in an autobiography written by an old IRS man, "Long Out of Date." Then I found some documents in the Hyde Park where Morgenthau was told about the bribe and it's approved. I mean, it really is quite blatant and interesting. The bribe was a loan from the Reconstruction Finance Corporation to this guy. I then went down to the National Archives and started searching for the record of the actual loan. I found an index card where the loan is described and on the index card it says -- there's a little notation saying, “We're unable to locate the actual records.” And it looks like the actual records of this loan were lifted so that no one could find the story. But the index card was left in there and it confirmed the substantial loan that was made to the Janke brothers in New Orleans, who were apparently providing dirt on their enemy, Huey.
LAMB: After four years of research and writing this book, do you feel differently about the IRS then when you started it?
BURNHAM: Yeah. I think it's a bigger problem than I thought it -- I mean, we are confronted with a bigger kind of challenge than I thought originally. I think the fundamental problem is that both the public and the Congress and the IRS have become so cynical. We also say, “Oh, that's the way it is. What are you going to do? Why bother?” -- that reform is very, very difficult. Simplifying the tax laws almost ... it's a really tough thing to get through Congress for a bunch of institutional reasons over there. Making such an organization work is hard, getting some enthusiasm and some hard work out of an old, tired bureaucracy is really tough.

I am convinced it can be done. I saw this happen in New York City. I saw the NAP Commission and the special prosecutor and the new commissioner, Patrick Murphy, who is a brilliant guy, and I saw him change recruiting, and change training, and change the way management was working, and getting in some new equipment and stuff. And I think it was improved. I mean, the police service was improved. Everybody in New York said that wasn't going to happen. They said, “Eh, there's always going to be corruption. Eh, you know, hey” -- well, I think we can do it, but it's really hard.
LAMB: But you also said that after it was improved in New York City it slid back to where -- at least, I don't know -- you said it went back to where it was, but it went back.
BURNHAM: Democracy is hard. Making democracy work is hard. And this is a big organization that's been given vast powers and to fit it into our due process system requires enormous work. I am very critical of the Ways and Means Committee and the Finance Committee and the members of that for failing to do oversight that is required. The Finance Committee, up until a couple of years ago, when David Pryor took over, had never, ever held a single oversight hearing on the IRS. And ...
LAMB: Never in history?
BURNHAM: Never in history. There have been a few Senate investigations. One was a special committee, one was a judiciary subcommittee and one was an appropriations subcommittee. But the Finance Committee, the committee that's supposed to do oversight, never. When the House Government Operations Committee last summer, under Doug Barnard, started investigating -- well, earlier than last summer -- started investigating corruption, the Ways and Means Committee desperately tried to stop that investigation from happening, and they worked very, very hard to stop it. And Doug Barnard was very stubborn and kept at it and, you know, last summer had a very good and responsible hearing and brought out some things. And the new commissioner is now adopting some changes that should have been done a long time ago.

And, you know, taxes are so vital. I mean, all the congressmen -- and I love them. I love Congress. But they're partly in the business of sending money back to the districts for schools and highways and all of that. And they all are terribly worried about that money machine somehow getting out of a whack. And there's a great temptation, “Don't mess with the IRS. Don't touch it. Just leave it alone. The money's coming in and we'll have it there to vote for all the good things that our constituents want.” And we've got to be much tougher with this agency, I think.
LAMB: You said that Lawrence Gibbs did not cooperate and several other officials. As you worked through this process, did you find people not taking your phone calls at the IRS?
BURNHAM: Oh, yeah.
LAMB: Just wouldn't return the calls?
BURNHAM: Never. I had a very funny occasion. I have a story in here -- it's during the Reagan administration -- where a group of high school science teachers in Minnesota came to the IRS and they wanted to form a little tax-exempt group to promote the idea of Darwinism, of evolution. Pretty controversial, right? And they got a letter back from a man named Peter Broth -- signed by Peter Broth, and it was a written by a crazy -- I mean, it sounded like it was written by a very -- I don't mean crazy, but a very sincere creationist. And he said, “Who are you to say that the creationist view isn't right? And are you going to give equal time to the creationists? And who says that evolution is the true theory?” And the group was very political and you know, smart in a savvy way. And they went to their senator and the senator raised questions and the IRS came back -- the commissioner came back and said, “Oh, they're completely wrong. I couldn't understand that they didn't understand. Of course, they can have tax exemptions and all of that.”

Now what's interesting about this story is I called Peter Broth and asked him to return my call. Now I don't know know, maybe he didn't get the message. Maybe he was at a conference or something. But no one ever called back. And after the story appeared I got a call from, I shall say, a close associate of his. I don't want to sort of -- this was a private call. And the person said Peter Broth had not signed the letter, that he's the head of a large unit in the IRS and he has a whole mess of people under him, and, of course, he was responsible, but he knew nothing about the letter going out or coming in. And I heard that he was very upset that I had used his name. I had the document. It was signed by his name. It didn't say signed for somebody else. But what's interesting is, assuming that story's true, this is an organization that's so big that that kind of letter goes out without the supervisor seeing it. And how can you control an agency of 123,000 people when you have that kind of span of control that the head of a unit doesn't see an important letter like that?
LAMB: Did you find that often people knew who you were and knew what you were working on, but wouldn't talk to you?
BURNHAM: Yeah. Word gets around the IRS -- there's a real gossip link and a lot of people won't talk to you. There are some people who will talk and gossip. I mean, one of the problems was to throw out the untruths. I mean, the criminal division, especially, gossips in just a ferocious way, and they tell terrible stories about each other. I mean, they're always saying that so and so's in organized crime, and so and so's this and everything, and without any evidence of it. And so you had to be very cautious with some of this casual gossip. And then others wouldn't talk to you and were -- you know, Mr. Broth, initially -- he wrote me a letter saying that he didn't say he wasn't responsible, but he said that he hadn't actually signed the letter and why didn't I come to him? Well, I had tried to come to him.
LAMB: In your acknowledgments there are several other names you used. And I asked you about them only because if somebody picks this up and reads it there are certain associations that people automatically make, for instance, with the American Civil Liberties Union. You say here, “Jerry Burman and Morton Hoprin of the American Civil Liberties Union generously offered me a year of office space.” Is that a problem to associate yourself with the ACLU?
BURNHAM: I don't think so. I mean, what happened was I quit The New York Times. I found that working at home was -- I'm glad you brought it up. I found that working at home was difficult, that I kept going down to the kitchen and eating all the time. And I was sort of looking for an office and Jerry Burman, who I'd covered as a reporter for The New York Times a lot, said they had an empty -- it turned out to be sort of a closet -- and would I like to do it. So you know, I put a desk in this closet and I got my own phone line and my own computer and it was very -- I mean, and that's the way I worked for about a year. And it was terrific because their office here in Washington is fairly close to where I live. And then the Advocacy Institute -- Mike Perchuck did the same thing for a period. And when another foundation grant came through, I actually started paying rent to the Advocacy Institute just to avoid that problem.
LAMB: In the front of your book, you have a dedication, and our audience will soon see it. It's to Molly, Sarah and Joanne. Who's that?
BURNHAM: Molly ...
LAMB: Who are they?
BURNHAM: Molly's my youngest daughter, a lovely 22-year-old woman, and Sarah's 26 and my elder daughter, I think, is the proper grammar -- and Joanne is my wife, who is a reporter at The Washington Post.
LAMB: Joanne Omang ...
BURNHAM: Joanne Omang, yes.
LAMB: ... who our audience has seen on many occasions.
LAMB: By the way, are you planning to go back to writing again for a major newspaper?
BURNHAM: No. I've begun work on a project and, I hope, book on the Justice Department.
LAMB: Daily journalism -- you get tired of it?
BURNHAM: You get tired of it. You can't dig in enough. You can't -- daily journalism is often superficial. And there are pressures on most of the papers now to become more superficial, I think. You know, I found it fascinating that neither -- I mean, I can't remember whether we talked about -- neither The Post nor The Times nor The Wall Street Journal has a full-time person assigned to cover the IRS. And I don't think any of the papers have ever covered the Justice Department. They cover handouts from the Justice Department. They don't cover what the Justice Department does. And I'd like to dig into that and sort of look at all of the deals.

You know, covering bureaucracy is really hard. And we just don't do it very much. And one of the reasons it's so hard is that, often, what a bureaucracy doesn't do is more important than what it does do. During the Reagan administration, for example, the IRS was brought overwhelming evidence that the Catholic Church was violating the law in its active involvement in politics on the abortion issue. Now I'm not getting into who's right and wrong on the abortion issue. That's not the question here. But hard, paper, concrete evidence was brought to them over and over again. The IRS acknowledged it, but they did not, and God knows it would have been difficult -- they did not take away the tax exemption of the Catholic Church, as required by law.

Now the pro-choice people had to live within the restrictions of law. And they didn't have this source of considerable funds and backing. So this act -- this non-act had a major political consequence during the Reagan years. And it fit the political agenda of the Reagan years. I'm not saying that President Reagan ordered them to do it. I'm not saying that at all. But I'm sure the IRS was aware of the political reality here and it clearly was a difficult situation for them to be in, but, in fact, they didn't enforce the law.
LAMB: Does the IRS, in your look at the past and present, under a Republican administration and a Democratic administration deal with the law differently?
BURNHAM: Yes. But you don't really say Republican -- under each administration there's a different sort of emphasis. Sometimes it's presidential hits. Sometimes you can really tie it to -- I mean, there's a piece of paper that I can tie JFK to a program to go after right-wing fundamentalist ministers who were criticizing him. There are some papers I can tie FDR to some stuff. Other times the IRS just is sort of -- the bureaucracy does it. I don't think Harry Truman ordered the IRS in the early '50s to try to close down the Communist Party. I think that was a district director in New York on his own who said, “Hell, let's go close down the Communist Party,” and he went and slapped padlocks on it. The charge: The Communist Party had not paid any taxes. Well, that was true. The only problem was that no political party had ever been required to pay taxes -- Republican, Democrat, Socialist -- and that was the agency.

I think Sister Lucy and this group of high school science teachers out in Minnesota -- I don't think that was done, you know, with any kind of White House interv -- I think they just thought that's what they wanted. There was a case during the Ford administration where a serious group of New York people who were gay wanted to form a foundation to do research on gay life. They came to the IRS. The IRS said, “We'll give you tax exemption if you agree never to go on radio or television. We don't want you corrupting the minds of the little children” -- Can you imagine that? -- “if you agree not to quote the American Psychiatric Association's opinion on gay life.” And they said, “No, we won't do it.” And so they didn't get tax exemption. So this research did not go forward. It might have been very well if we'd had that research, given what's happened -- the AIDS business- since. The lawyer who handled that case thinks it was because there was a senior person in the IRS who was a homophobe. He didn't think Gerry Ford said “Don't do this.”

It's just so much power that we need to make it public and get it out and to look at it. Maybe the tax exemption should be taken away from the IRS completely.
LAMB: By the way, how many people are audited every year?
BURNHAM: Tiny, tiny, tiny fraction -- less than 1 percent.
LAMB: And how does that come about?
BURNHAM: Well, if you ask the IRS, they will tell you that it's because they have this computerized system that selects all of these people and then you're audited. That is quite misleading. There is a computerized system that makes the first slice, but the first slice includes about four times more taxpayers than could ever be audited in a given year. And so this big pile of tax returns are taken and put into the district office, and then they sort of go through and by guess and by golly they pull the return that looks interesting or good. And, of course, there are a lot of decent, well-meaning IRS agents and they're selecting returns for good and proper reasons. However, because there's thisgreat discretion, you sometimes get people being audited and harassed just because there's a personal vendetta.

I have sort of two stories of vendettas. One involves a nice, respectable, upper-class -- I guess you would call him -- lawyer in Miami named Dan Heller. Dan Heller represented the Miami Daily News. Fifteen years ago the Miami Daily News ran a story about the IRS and the IRS didn't like it. And the IRS came in and demanded to see the Daily News' notes. Dan Heller said no. There was an angry exchange of words in the process. And two agents in the room at the time was Mr. Plove and Mr. Lopez. Ten years go by and Mr. Plove and Mr. Lopez get the idea that they're going to audit and look at Mr. Heller. They do. They find something that they think looks a little suspicious.

They go to Mr. Heller's accountant. They put a great deal of pressure on the accountant. They threaten the accountant. You know, they say, “You're going to go to jail. You're really in deep trouble, mister.” And the accountant becomes so frightened that he comes into court and he lies about Dan Heller; he perjures himself. Dan Heller's convicted. He spends four months in jail -- federal prison. And at that point a court of appeals looks into it and tells the story and Dan Heller's sprung. But, you know, his reputation has been badly damaged because once the IRS says “That man's a tax cheat,” people don't forget that. That sort of sticks in your head. You know, this innocent until proven guilty is a very fine thing, but anyone who's been accused knows that there are a lot of people who don't believe it. And, of course, his business was -- you know, his law firm was badly interrupted and that kind of thing can happen.
LAMB: Was he able to go back and practice law?
BURNHAM: Yes, the Bar Association has given back his -- you know, he's recovered. He won a large suit. The insurance company of the accountant paid large damages. And he currently is suing the two agency -- what they call a bliven suit. Isn't it bliven? -- I think -- and trying to get damages.
LAMB: I did notice that you said that there was an estimate -- he got $5 million from his insurance company, but there was an estimate that he'd lost $8 million in revenue during the time that he was tied up in all of this.
BURNHAM: Yeah, in jail andtied up in -- and the cost of attorneys.
LAMB: How often have you found that to be the case where even if you get off when you've been wronged, it costs you a lot more money and you're...
BURNHAM: Well, there's an incredible story I came across fairly recently of a nice couple in North Carolina named Kay and Alex Council and the IRS came after Kay and Alex and they said, “You owe X amount of taxes.” They said, “No, we don't.” And they were just discussing it. You know, their accountant was in, they were going back and forth. All of a sudden, without any notice, the IRS seized their assets. Alex was outraged because the law and procedures -- everything says you've got to have notice. So he went into federal court and he started fighting and he fought. And it took a lot of time and a lot of money. After a couple of years, their assets had been seized, they ran out of money.

Alex became distraught, became just thoroughly upset. And one day he went out and shot himself in the woods behind their house. And they had an insurance thing that paid them off, even though it was a suicide. And his note -- Kay showed me the note -- you know, was, “This was the only choice. We have to beat the IRS.” And Kay kept the legal battle going, and the court, about four months after he committed suicide, ruled that they hadn't been a notice, that it was improper, etc. The court gave Kay Council $22,000 in legal fees. That's only half of what she owes at this point. And her lawyers have told her she has no chance of recovering damages. It's a tough agency and the decisions -- I mean, here is -- you know, she won the battle but she lost the war. It's a tragic story.
LAMB: In your opinion, which president was the worse offender or misuse, using the tax law to a political advantage?
BURNHAM: Nixon and FDR ran neck-and-neck in that division, I mean, as far as I can look at the record.
LAMB: Did each president know that he was doing that?
LAMB: And what were the differences in the two -- or what kind of things did they use it for?
BURNHAM: Well, you remember Nixon used the IRS powers to embarrass the governor of Alabama ...
LAMB: Governor Wallace.
BURNHAM: Governor Wallace. Governor Wallace's brother had some tax problems. They got the information and they leaked it and, you know, Nixon used it. I mean, that's very similar to Huey Long -- the same kind of thing. Only in Huey's Long case, they were trying to put Huey Long in jail. It wasn't just a matter of him leaking a little embarrassing information.
LAMB: What about FDR?
BURNHAM: FDR knew about the Huey Long thing. He was involved in the selection of the prosecutor of the first Long -- not the case against Huey, but one of Huey's lieutenants was actually indicted and FDR was involved in selecting the prosecutor for that case personally.
LAMB: Let's say you're president of the United States and you've got the IRS sitting over there. How do you effectively use it? What's the system? Can you just pick up the phone and call the IRS commissioner and say, “I want this done”? How does it actually happen? I mean, you mention the Nixon administration. There was a fellow by the name Clark Mellonhauf. Is that the way it's done? And explain what he did.
BURNHAM: Well, it's interesting. I got to get this right. The Nixon administration asked for and got some information, on Larry O'Brien. And Larry O'Brien somehow heard about it.
LAMB: At the time he was head of the Democratic National Committee?
BURNHAM: Democratic National Committee. And so Larry O'Brien and Sheldon Cohen, who was LBJ's IRS commissioner, and Morty Kaplan, who was Kennedy's IRS commissioner, put out a joint statement saying, “This is outrageous political use of the IRS and we're shocked.” Well, a Republican senator named John Williams, who was from Delaware, was an old, very honorable, very tough, tight-fisted guy and he'd always hated the IRS, and he dug into it. And he discovered that Nixon, in fact, had set up a written procedure under which a given White House person could get information from the IRS. And you can make an argument that, in certain cases, if you're going to appoint somebody that that's all right. But there was, in the Nixon administration, a written procedure for doing it.

John Williams discovered that during the Kennedy administration there was no written procedure at all. It was just done. John F. Kennedy's sort of senior investigator and Bobby's -- the day after they went into the White House, he was at the IRS going through files looking at enemies. And there was no written procedure.

All presidents have done this. I think LBJ probably was right up there. There's some indications of that, but LBJ was much smarter than Nixon and Kennedy in covering his trail. The tracks of it are very slim. There's an early case involving LBJ, where the IRS investigated Brown and Root, which was one of the big political contributors to LBJ and had given a lot of illegal campaign contributions to him. And a hard-nosed IRS agent started investigating this was when LBJ was still a House member -- and started investigating it and made a ferocious case. And Brown and Root was about to get into serious trouble, and it would have been a very upsetting -- it would have ended LBJ's career. LBJ went to FDR personally and begged him to stop it, and FDR called in the IRS agent who had done this and the case was dropped the next day.
LAMB: You suggest that another Texan by the name of Sam Rayburn had a lock on the tax process. How did that happen?
BURNHAM: Oh, that was -- of course, Sam Rayburn, you know, was a very honorable man, and what happened was that one of his Democratic congressmen were being investigated, and he wanted to get the thing done, and he calls up -- I mean, Sam had so much power and authority in Washington, he called up the Republican commissioner at the time and said -- you know, I think the way Sam put it would have been very blunt, but it was something about “Do it or get off the pot.” And they came in and they said, “OK, we will not bring criminal charges against him.” And this was for a Democratic congressman whose vote Sam Rayburn needed. It was a favor that Sam Rayburn did to get this issue resolved, and later on, Sam used that favor to get this congressman -- he was from Albany -- to cast a vote against his constituent in the interests of the gas industry, who Sam Rayburn, as a Texan, of course, was looking out for.
LAMB: There's another story about Eleanor Roosevelt and Frank Gannett, and the reason I bring that up is today, the Gannett name is big in this country in the media world. There's a lot of information about where Frank Gannett came from. It might be a surprise to some people. What was that story all about?
BURNHAM: Now that's an incredible story where a free-lance investigative writer sent Eleanor Roosevelt a book in which he made some claims about Gannett, who was then a young publisher who owned a small chain of papers up in New York state. He also was the vice chairman of the Republican National Committee and also a member of the board of Cornell -- or the chairman of the board of Cornell University. And finally, his newspapers had been raising hell with FDR, and Eleanor read this and some allegations were made about Gannett, and Eleanor said, “Ooh, how interesting.” And she sent it over to Morgenthau.

Now I don't think Mrs. Roosevelt intended for there to be a big IRS investigation, but there was. And at one point -- in fact, looking at the documents, you can see a little handwritten note by Mr. Morgenthau in which he speculated whether it would be possible to take away the tax exemption of Cornell University because of Mr. Gannett's business relations with Gannett. And the IRS came back and said, “No, we can't do that,” and the matter was dropped. But can you imagine if we had evidence that Mrs. Nixon innocently had triggered some kind of investigation of the owner of CBS or something like that? You know, we would be all up in arms, but Mrs. Roosevelt seems to live in a different world.
LAMB: We've got about six minutes left and not nearly enough time to cover everything. Are most Americans honest with their taxes?
LAMB: Do you have any idea what the percentage is?
BURNHAM: Well, it's hard to figure, but something like 90 percent. You know, the IRS collects a trillion dollars a year, so an overwhelming majority of the American people want to pay their taxes and try to pay their taxes. Mr. Goldberg, the new commissioner and -- I had a talk with him a week or so ago, and he said, “What we've got to do is spend a lot more time helping the compliant taxpayer get to pay his taxes. We've got to make sure he gets the right information and that the forms are clear and simple and all of that, and we've got to ...” -- because that's where the money is. Of course, we've got to continue going after the bad guys, but the real problem in the IRS is that they don't do enough helping the compliant news -- why am I saying newspaper man? -- the compliant taxpayer.
LAMB: How long has your book been in the bookstores?
BURNHAM: A couple of weeks.
LAMB: Have you seen any immediate results, any reaction from the IRS or have you heard that people are reading it?
BURNHAM: A lot of people are reading it. It went in the bookstores a couple of weeks ago, and as of now, there's been almost no publicity. I mean, there was one review in Time magazine, and The New York Times and the Post are coming next Sunday -- or this Sunday or when -- but they're coming soon. But two weeks ago, it was on the best-seller list in the Washington Post, I presume, because the IRS is reading it and congressional staffers are reading it and looking at it.
LAMB: That's not a picture of you in this T-shirt on the cover, is it?
BURNHAM: Yeah, sure is.
LAMB: It is you?
BURNHAM: Absolutely. Can't you see? Doesn't it look like me?
LAMB: In the last part of the book, you have some recommendations about what needs to be done in the area ...
BURNHAM: A little feeble if -- I think.
LAMB: Feeble in the sense that you don't have enough or ...
BURNHAM: I don't have enough. I just sort of ran out of steam. I mean, I think we need much better oversight. I think we ought to think about maybe taking tax exemption away from the IRS, putting it somewhere else, putting a distinguished panel perhaps, you know, of educators and church people and everything. I mean, why should this police agency run the charity business? But saying more -- you know, ending cynicism -- I mean, it's fine to say that and I have seen an example where it worked in New York City, I think. And I think it can work here, but I think a lot of people may read this and say, “Now doesn't he have a better remedy?” You know, the problem is us and the remedy is in us, and that's hard.
LAMB: The last line in your book got me thinking. “A massive infusion of new blood is required.” And what came to mind when I read that was, couldn't you apply that to almost any institution in our country?
BURNHAM: Absolutely, but there's no institution in our country that has so much power and so much impact on all of us. And this agency, I think more than most, is inbred. I mean, there are very few middle-level and senior people from outside the agency. They're all people who began there, you know, 25 years ago, and they've just kept in the agency. The Treasury Department put a report out I found saying that and saying that we had to have more people.
LAMB: What's next? You say another book.
BURNHAM: Another book on the Justice Department.
LAMB: What else? What are you doing to pay the bills between now and that book?
BURNHAM: Well, I've set up a new organization called the Transactional Records Access Clearinghouse, -- a big mouthful -- TRAC for short. And what we're doing is using computers -- I've got a partnership with a woman named Susan B. Long, who's a professor at Syracuse University, and we're using computers to pull out statistical information from federal enforcement agencies and sort it out. We just put out a report based on a computer file of five and a half million federal court cases, and we're able to sort it out. And what I hope to do is to look at the NRC, the Justice Department, the Food and Drug Administration, what have you, and I have gotten some funding from several foundations. We're part of Syracuse University, and we're going to make this available to Congress, to newspapers, to public-interest groups and to academics.
LAMB: Living here in Washington?
BURNHAM: Living here in Washington, and Sue stays with the computers humming in Syracuse.
LAMB: And when is the next book expected to hit the stand? I know it's ...
BURNHAM: Four or five years.
LAMB: Another four- or five-year...
LAMB: Our guest for the last hour has been the author of this book, "A Law Unto Itself: Power, Politics And The IRS," David Burnham. Thank you, Dave Burnham.
BURNHAM: Thank you. Great to be here.

Copyright National Cable Satellite Corporation 1997. Personal, noncommercial use of this transcript is permitted. No commercial, political or other use may be made of this transcript without the express permission of National Cable Satellite Corporation.