“We try to work with taxpayers,” Internal Revenue Service spokeswoman Valerie Thornton told The New York Times in the autumn of 1991, “[a]nd 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.” The creative payment plan to which Ms. Thornton was referring in her statement to the Times involved a unique revenue-sharing agreement negotiated between the IRS and the beloved country singer Willie Nelson, who was then struggling to repay a $16.7 million dollar tax debt that had led the federal government to seize all of his assets one year earlier, on this day in 1990
Willie Nelson landed himself in tax trouble as a result of investments he made in the early 1980s in a tax shelter later ruled illegal by the IRS. With interest and penalties on top of his original unpaid taxes, Nelson was facing a tax bill in excess of $16 million, and though his lawyers convinced the IRS to accept a $6 million cash payment to settle the entire debt, even this was more than Nelson was able to pay, despite being perhaps the most bankable country-music star of the day. “He didn’t have $1 million—he probably didn’t have $30,000,” his daughter, Lana Nelson, told Texas Monthly magazine of her famously generous and free-spending father. In anticipation of negotiations with the IRS breaking down, Willie Nelson had his daughter remove his beloved guitar, Trigger, from his Texas home and ship it to him in Hawaii, where he was golfing when the feds raided his home on November 9, 1990. “As long as I got my guitar,” Willie Nelson said, “I’ll be fine.”
Ultimately, Nelson did get to keep his guitar and even got his Texas ranch back, but not before the government auctioned his home to the highest bidder in January 1991. That bidder, however, was a Nelson fan who purchased the ranch at the behest of a group of farmers who threw their support behind Nelson in thanks for his work in organizing the Farm Aid charitable concerts.
In June 1991, Nelson released a compilation album entitled The IRS Tapes: Who’ll Buy My Memories?, the first and perhaps last major-label record album ever released under a strict revenue-sharing agreement with the Internal Revenue Service. While the revenues generated by The IRS Tapes did not come close to settling the debt on its own, Nelson did manage to retire his debt to the federal government by 1993.