Willie Nelson, who saved his career and his house with IRS tapes, turns 80
Today – or maybe tomorrow, depending on who you ask – is country music legend Willie Nelson’s 80th birthday (he says today but his birth certificate says tomorrow). He’s been making music since 1956 and his songs are so ubiquitous that even people who don’t like country music can name a few. And in small towns in America, it’s impossible to walk into a bar and not hear at least one version of Moms don’t let your babies become cowboys.
In total, Nelson has recorded over sixty studio albums, ten live albums, thirty-seven compilations, two film soundtracks and twenty-seven collaborations. And if he has a lot of albums that he can credit for boosting his career, he has one he can credit for saving him: Who will buy my souvenirs? (IRS bands). This album was recorded as part of an unusual deal with the government to pay off Nelson’s tax debt.
Nelson’s tax woes are almost as legendary as his career. After a lengthy investigation, Nelson was struck with a staggering multi-million dollar tax bill. It was one of the biggest federal income tax bills the IRS ever generated at the time. The debt, which was estimated at $ 16.7 million with interest and penalties, was negotiated at just $ 6 million by Nelson’s attorney Jay Goldberg. There was just one big problem: Nelson didn’t have the money to pay off the negotiated debt. So he didn’t.
On November 9, 1990, authorities raided Nelson’s home, taking everything he owned. All that is, except Trigger. The trigger was Nelson’s favorite guitar that he had brought his daughter, Lana, out of his house in preparation for the raid. “As long as I have my guitar,” said Willie Nelson, “I’ll be fine.”
It turns out he was right. Nelson lost almost everything (except Trigger) in the raid, including his Pedernales Country Club and Recording Studio; his Dripping Springs ranch; twenty other properties in four states; and most of his instruments, recordings and memorabilia. But it wasn’t so bad: Friends and fans came to the rescue, with fundraising and efforts to buy back his property – including his home – for him.
How did Nelson end up in all this trouble in the first place? In 1984, the IRS began reviewing Nelson’s returns. Most interesting to the IRS was a substantial deduction for investments in tax shelters. The deduction was denied and Nelson was assessed $ 6 million in taxes and $ 10 million in interest and underpayment penalties for six years. The real refuge that Nelson claimed to have been promoted by his former accounting firm, Price Waterhouse, was ultimately ruled illegal (for the record, Nelson sued Price Waterhouse for $ 45 million for his role in his financial woes and came to a settlement. not disclosed). He was hit for another tax bill shortly after he appealed, but the Tax Court ruled for the IRS.
By 1990, the tax debt had nearly doubled as penalties and interest continued to accumulate. Nelson was not making large payments and the IRS had had enough. They seized his property with the intention of putting everything up for auction. However, the IRS changed its mind at the last minute on some items, allowing the purchase of posters, musical instruments, gold and platinum records and other sentimental items for just $ 7,000. by the Willie Nelson and Friends Showcase.
When the auction didn’t cut Nelson’s bill, the two sides came to a rather unusual compromise: Nelson would release a compilation album and share the profits with the IRS. The album, titled IRS Bands: Who Will Buy My Memories?, was written entirely by Nelson and recorded with – what else – Nelson’s trusty guitar, Trigger. It was the first (and perhaps the only) album to ever be released under a strict IRS revenue sharing agreement. The album, which could be purchased by calling (800) IRS-TAPE, cost $ 19.95. Of that amount, about half ($ 9.95) went to the telemarketing company promoting the album, $ 1.60 covered other expenses related to the album, and $ 2.49 went to at Sony Records. Nelson received $ 6 from the sale of each album: $ 3 went to the IRS to pay off his existing debt, $ 1 went into a fund to pay for Nelson’s lawsuit against Price Waterhouse (Nelson’s attorney has successfully argued that the proceeds of this lawsuit could be used to pay off tax debt) and $ 2 went to pay the tax that would be generated by the sale of the album (we can’t forget that!).
The album was not a huge success. The telemarketing scheme was not very successful, but sales eventually picked up once the album hit stores. Under the deal, the collection was to sell at least four million copies to pay off the debt. This does not happen. The IRS only collected $ 3.6 million from sales of the album. However, by this time Nelson had settled his lawsuit with Price Waterhouse and with other ongoing projects Nelson was able to fully repay his debt within a few years.
An IRS spokesperson said of the deal at the time:
We’re trying to work with taxpayers… And if we’re going to come up with a creative payment plan, that’s what we’re going to do, because it’s in everyone’s best interest.
And he did. As for Nelson? Almost twenty years later, he is still as successful as ever. Last year he released an album of original songs, covers (including songs originally recorded by Coldplay and Pearl Jam) and duets with artists as diverse as Sheryl Crow, Snoop Dogg and her old friend. Merle Haggard; the album, titled Heroes, spent four weeks near the top of the charts. And last week Nelson released another album, Let’s Face the Music and Dance, with great reviews.
Nelson remained philosophical about his trials, saying, “There are bigger problems in life than financial problems, and I’ve had a lot. I’ve been broke before and will be again.”
Hopefully not, Willie. Happy birthday.
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