“It’s just a lot easier not to make excuses for who I am and what I do,” Willie Nelson told Esquire in 2007. “It has to do with getting from point A to point B, retaining my sanity, and still progressing; taking some lemons and making some lemonade.”
Music resides on a powerful frequency, one that few other art forms can match. It has the power to heal, to ignite change, to soothe ills, and to free one from the confines of prison — man-made or imposed psychologically. At the 2015 South by Southwest Festival (SXSW), Willie Nelson will headline the Heartbreaker Banquet at his ranch in Luck, Texas, just outside of the festival’s headquarters in Austin, but it was just 25 years ago that the country star almost lost everything he had, including his properties, royalties, studios, and freedom. Music, a bit of savvy finagling, and ultimately karma, saved him.
It was Nov. 9, 1990, when it seemed like the world came crashing down around the music legend. Without warning — but not without forewarning — government officials raided everything in Willie Nelson’s name. His homes in Washington, Texas, Colorado, and Alabama all fell into the hands of the IRS within 24 hours. His band, who was playing in his Texas studio at the time, were evicted from the property. His tour buses were seized by banks, and even his royalties from CBS records were thrown into jeopardy. Nelson owed $16.7 million in back taxes.
The unpaid taxes were a result of Nelson not paying his due during a span of six years, from 1978 to 1982. Roughly $6 million was the exact amount he owed, but more than $10 million was accrued in penalties and late fees. Before the seizure, the IRS had notified Nelson of the back taxes, and the singer had a spoken agreement that they would hold off until he could get restitution from Price Waterhouse (accounting firm “to the stars”), who Nelson placed the blame on for failing to pay the taxes (Nelson claimed that Price Waterhouse invested in tax shelters, which the government would later dissolve). In August of 1990, Nelson sued PW for $65 million, but within months, the IRS reneged on their agreement and seized his assets. He was left with virtually nothing.
Nelson and his family fled to Maui where the country legend put together a plan to save himself from debt, or prison.
“We’re safe here for a while,” Nelson told Entertainment Weekly in 1990. “Unless the lien holders call in the debt (on the house they were staying in). I’m starting all over again. It’s kind of liberating; just me and my acoustic guitar.”
Armed with his trusty guitar, Trigger — and not much else — Nelson had a game plan to secure his legacy that involved using the tool that brought him his fortunes. But he would need access to some of the things that the IRS was keeping from him. They obliged, taking the locks off of his Texas studio so he could dig into the crates of music he had recorded. From previous sessions, Nelson was able to put together a 25-track album. It consisted mostly of just him and his guitar, strumming and wailing away on original songs, his way of reaching out to the masses that had supported him to that point without pretensions and filters getting in the way.
“It’s no overproduced album with millions of dollars of studio costs,” Nelson told the New York Times. “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.”
The plan was simple, but it involved some complicated math. The album — ingeniously dubbed The IRS Tapes — would sell with a predetermined breakdown of the proceeds. With the album selling for $20, Willie would get $6, $9.95 would go to the telemarketing company handling the distribution, $2.40 would go to Sony, $1 would go to funding his legal battle with Price Waterhouse, $2 would go to taxes on the album itself, and the rest — around $3 — would go directly to the IRS to pay off his debt. Yes, the IRS got paid for every sale of The IRS Tapes, which went on sale in June 1991.
There were a few “lines in the water” for Nelson around this time. There were benefit concerts, Willie Nelson Days, and fundraisers all dedicated to preserving Nelson’s way of life and rewarding him for the years of entertainment; they fell short. It was all riding on The IRS Tapes, and by September of 1991, the effort looked dire. The album had sold less than 200,000 copies, much less than the four million the IRS needed to recoup.
“You got to be positive,” Nelson said. “It’s not unheard of. I could sell three million albums. I’ve done it before.”
As the album struggled, Willie saw some strands of hope. Farmers across the nation — the same ones he helped with his Farm Aid performances — came to his side, helping to buy all the memorabilia and property the IRS was selling (for their part, the IRS did sell the merchandise to the group for cheap) into a coalition that would hold the belongings for Nelson. It was then that Nelson’s good will — not just the music — began paying back. “I said that Willie has brought hope to farmers, helped feed farm families and saved farmers from suicide by helping to fund agencies that help us,” said farm activist Wayne Cryts.
When The IRS Tapes finally hit store shelves, business began to pick up. But, from all the album sales, the IRS would only receive little more than $3.5 million. As luck — or perhaps kismet — would have it, Nelson would settle for an undisclosed amount with Price Waterhouse, and the IRS would come down $3 million in their asking price. Perhaps, even the government recognized the greater good that Nelson stood for. The debt — between the album sales, the charities, the money gained from the lawsuit, and the goodwill of the fans — was settled.
Willie Nelson made it through the tax troubles, and his music remains a celebration of freedom, and perhaps how close he was to losing it. Despite the woes, the raids, and the assaults on his way of life, he retains a sense of humor about the whole thing… he made “lemonade.”
