26 Years Ago: Willie Nelson Settles With the IRS
On Feb. 2, 1993, 26 years ago today, Willie Nelson reached an agreement on how to settle his outstanding debt with the IRS. The deal involved both cunning negotiations and clever repayment methods, and was a long time in the making.
Nelson had originally been slapped with an eye-popping $32 million back taxes bill in 1990. The legend managed to get that amount reduced to $16.7 million, a number Rolling Stone notes included $10.2 million in interest and penalties.
Unfortunately, that bit of good news was only a reprieve. Because Nelson was unable to pay up, the government placed liens on his property and then, in November of 1990, seized his assets -- including gold records, a piano and his Texas ranch. (His beloved guitar, Trigger, was saved after Nelson's daughter smartly sent it to Hawaii before the property seizures.)
Although his studio was also locked up, Nelson had a plan on how to generate money: a new album. Enter 1991's The IRS Tapes: Who'll Buy My Memories, a stripped-down acoustic record.
"It's no overproduced album with millions of dollars of studio costs," Nelson told the New York Times that same year. "But I think it's the best stuff I got. I've always wanted to put out an album with me and my guitar doing my original songs. And my fans like it because it sounds like it's just me in my living room singing."
In an interesting twist, Nelson sold The IRS Tapes: Who'll Buy My Memories via a heartstrings-tugging TV commercial. Fans could purchase the 24-song effort for just $19.95 (plus $4 shipping and handling). Readers can watch that ad above.
"Willie Nelson: He's been there for those who've needed him," says a voiceover in the spot. "And he's helped thousands of people across this land. Now, Willie needs your help -- and he's reaching out the best way he can: through his music."
Of the $6 Nelson received from the sale of each album, half went to the IRS, and $1 went into a fund to pay for a lawsuit Nelson filed against his ex-accountants -- the people who allegedly got him in this financial mess in the first place, because they put his money in shady tax shelters. (According to the New York Times, that firm, Price Waterhouse, issued a statement that read, "Mr. Nelson and his advisers made all of the decisions regarding tax shelters in which Mr. Nelson invested. Those decisions and the economic consequences that resulted from those decisions were Mr. Nelson's responsibility and not that of Price Waterhouse.")
"We try to work with taxpayers, not just Mr. Nelson," IRS spokeswoman Valerie Thornton told the New York Times about the intriguing deal with Nelson. "And if we have to come up with some creative payment plan, that's what we're going to do, because it's in everyone's best interest."
Sales of The IRS Tapes: Who'll Buy My Memories helped chip away at the amount Nelson owed, and his debt also decreased after the IRS auctioned off his assets and property. In another fortuitous move, the Washington Post reported in 1993 that "Nelson's friends organized and bought up much of the booty with low-ball bids, and held it for him so he'll eventually get it back." That included his Texas ranch, which a fan bought as a way of thanking him for Farm Aid.
Finally, after years of this wrangling, Nelson and the government reached a payment agreement in 1993. He would pay $2.4 million, spread out over three years, and then tack on a final lump sum payment of $3 million. The Chicago Tribune reports that Nelson coughed up this last payment in 1995. The total Nelson eventually paid? A cool $9 million.
It would be understandable if this turmoil caused Nelson issues. But as he told Rolling Stone in 1995, he wasn't affected that much by his financial headaches.
"By the time everybody else heard about it, I was already on to other things," he said. "Mentally, it was a breeze. They didn't bother me, they didn't come out and confiscate anything other than that first day, and they didn't show up at every gig and demand money. I appreciated that. And we teamed up and put out a record."
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