Paying for Nixon's Taxes

Of all the presidential misdeeds in the era of Watergate, none was easier to understand and harder to swallow than the fact that Richard Nixon cheated on his income taxes. Because of Ford's pardon, Nixon is beyond the reach of the law, but those who abetted him are not. Edward Morgan, an Assistant Secretary of the Treasury in the Nixon Administration, is serving a four-month jail term for his part in the fraud. Last week Frank DeMarco, 49, a Los Angeles tax attorney, and Ralph Newman, 63, a Chicago appraiser, were indicted by a federal grand jury in Washington for their role in the affair. If convicted, De-Marco faces a maximum 15-year sentence and $25,000 in fines; Newman could get eight years and a $15,000 fine.

The pair is accused of engaging in the kind of scheme they probably would never have undertaken for anyone less than a President; it would be too easy to be found out. As the April 15, 1970 deadline approached for filing 1969 returns, the White House wanted to take a tax deduction for Nixon on the donation of some of his pre-presidential papers to the National Archives. The trouble was that the White House had never got around to donating the papers formally, and Congress had passed a law prohibiting tax deductions for that kind of gift made after July 25, 1969. Nevertheless, DeMarco, who was Nixon's tax attorney, got in touch with Newman, a well-known appraiser of historical papers, in late March and asked him to select papers for deeding to the U.S. in a hurry.

Newman, in turn, phoned Mary Livingston, an employee at the Archives, where the papers were stored, and persuaded her to do the choosing for him. Then, sight unseen, he signed an affidavit certifying the collection. The deed granting the papers was back-dated to

April 1969, and Richard and Pat Nixon signed the joint return. Had the scheme not been discovered, the President would have avoided paying $235,000 in taxes over a period of several years, since the deduction was taken only in part on the 1969 return, and was spread out over the returns of subsequent years.

Missing Material. But when an IRS employee leaked to the press that the First Family had been paying suspiciously modest taxes, investigations were begun by both the IRS and Congress and the truth quickly came out. The typewriter used by DeMarco to make out the deed was found to have been purchased several months after the date on the document. Mary Livingston, who had been troubled by the request made of her, and will be a key witness at the trial, told investigators of how she had been used in the undertaking. On top of that, Nixon's personal papers were in many cases not worth the paper they were printed on. Crucial material that might have proved useful to historians was missing. Gone, for example, were files of correspondence with Presidents John Kennedy, Lyndon Johnson and Herbert Hoover, Chief Justice Earl Warren, House Speaker Sam Ray burn and the Rev. Martin Luther King Jr. Some boxes were filled with nothing but newspaper clippings. Newman proved to be an accurate prophet when he once wrote about his profession: "I assure you that there isn't any dodge that some sharp mind in the Internal Revenue Service hasn't heard about. The day of reckoning is drawing closer. When it comes, all of us, the calculating and the naive, the bad and the good, will be asked to pay the price."

The price that Nixon had to pay was $386,721.42 in back taxes for the false returns for 1970-72. Though the ex-President cannot be put in the dock, he can still be brought into court. Barring another illness, he is likely to be called as a witness in the trial of his subordinates, and subjected to the kind of tough cross-examination he has so far escaped in the Watergate trials.

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