Future Forum: Guilt, Innocence, and the Death Penalty 
Poor Willie
The IRS nailed him for millions, only to find that Willie Nelson had already given it all away.
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But it came too late for Willie. The IRS was quickly closing in.
It’s true that the IRS was legally empowered to seize the properties of Willie Nelson. It’s equally true that the action was drastic, a show of force that garnered enormous publicity, capturing the attention of middle Americans who might feel the urge to fudge on their taxes now and again. Perhaps the IRS was making an example of Willie Nelson. Had that crossed Willie’s mind?
“Sure it has,” he said, grinning. “But I have no facts.”
To hear Willie’s Family tell it, the seizure was a full-blown federal conspiracy. The feds regarded Willie as an outlaw, they say, a pot-smoking liberal whose Farm-Aid benefits embarrassed the government into canceling scheduled aid cutbacks. Only a few weeks before the seizure, Willie was in Kentucky, driving a bus with the word “Hempmobile” painted on it, in support of a fringe gubernatorial candidate who advocated the legalization of marijuana. That broke the camel’s back, say the loyalists. The last flaunting of Willie Nelson’s reckless spirit persuaded the feds to break Willie, once and for all.
But there is a far less hysterical explanation for the seizure of Willie’s property: The IRS took action not out of malice but because it had little choice.
By the spring of 1990, according to attorney Jay Goldberg, Willie’s tax tab had escalated to $32 million. When Goldberg successfully negotiated that sum down to $6 million in taxes, plus $9 million in interest and penalties to be held in abeyance, the message from the IRS was clear: Willie had to ante up a significant sum, say, $2 million, by September 6, ninety days after the June 6 tax order.
After electing not to pursue bankruptcy, the Nelson organization began to scurry around for cash. It was like chasing leaves in a hurricane, for Willie’s money flew in all directions. He continued to support his adult children from his first marriage (Lana, Billy, and Susan), plus two daughters from his marriage to Connie who was now divorcing him—an endeavor that carried heavy financial overtones. In the meantime, Willie had a new girlfriend, Annie D’Angelo, and had fathered two children by her. Then there was the extended Family, itself multiplying daily.
As Willie’s beneficiaries had proliferated, the entertainer’s earning power had declined steadily. According to Pollstar, a concert industry publication, Willie was the seventh highest-grossing touring act in 1985, taking in $14.5 million. In 1986, he was twenty-second, at $10.1 million; in 1987, twenty-seventh, at $7.7 million; and in 1989, forty-sixth, at $4.7 million. Excluding his performances with Highwayman (also featuring Waylon Jennings, Kris Kristofferson, and Johnny Cash), Willie’s concert earnings last year sank to a mere $3.3 million. And those were gross earnings, not net. “He had more expenses going out than he had concerts coming in,” confirmed Lana Nelson. “We’ve been living hand-to-mouth for the last couple of years.”
Record sales were equally discouraging. Since “Always on My Mind” had topped the charts in 1982, the old Nashville renegade had been supplanted by sexier turks like Dwight Yoakum, George Strait, and Randy Travis. His annual artist royalties hovered in the $300,000-to-$400,000 range—a fine income for anyone not supporting an entire community. In the meantime, Willie owed CBS Records more than $3 million in recoupable advances.
In August 1990, at the behest of his advisers, Willie Nelson sold his publishing company, Willie Nelson Music. All of his songs and the royalties they earned now belong to a company called Fuji Pacific. The notion of selling one’s music catalog in order to pay the taxman would horrify most songwriters. But the financial security that steady royalty checks had brought meant nothing to Willie, and he had already proved that he could live with himself after selling his hits for dirt. After all, he had pawned off two of his earliest classics, “Night Life” and “Family Bible,” for $150 and $50, respectively, in the fifties.
Willie Nelson Music had been earning about $225,000 annually in publishing royalties. Willie’s financial managers were therefore pleased with the Fuji Pacific offer, which totaled $2.27 million. Such a sum might have satisfied the IRS for a time. Unfortunately, $480,000 of the deal went to the tax agency to satisfy an entirely different tax claim concerning Willie Nelson Music. About $1.2 million went to pay off Nashville bank loans for which the publishing company had served as collateral. Another $360,000 went to Paul English, who owned 20 percent of Willie Nelson Music. At the end of it all, after the pot was split and all dealmakers were paid, Willie Nelson had sold off his birthright for a negative $35,000.
In the meantime, the IRS deadline of September 6 came and went. Admitted Jay Goldberg: “There were no substantial payments made.”
Many offered to help. Tim O’Connor suggested a Fourth of July fundraiser, but Willie—a man used to giving but never to receiving—quietly discouraged the idea. Others didn’t ask permission to declare themselves Willie benefactors. James White hosted a Willie-Aid benefit at his Broken Spoke in Austin, promising “very special surprise guests” and not volunteering the information that Willie had nothing to do with the concert—he was holed up in Hawaii and would not be among the night’s surprises. A West Lake Hills barber named Jim Hataway took it upon himself to establish a bank account for those who wished to contribute to Willie’s tax fund. Hataway didn’t know Willie, but he had shaken his hand once and was willing to talk at length to any reporter about the kind of guy Willie Nelson was. Sincerely intended or not, the effect of such schemes was to confuse rather than inspire the public. Was Willie behind all this? Was he trying to get fans to pay his taxes for him? In the end, IRS Tapes may not make a dent in his tax debt and in the end, Willie may not care. “Willie just didn’t want to be the object of any charity,” said Larry Goldfein, Willie’s current financial adviser, and if nothing else, the recording proves that sentiment.
For now, the spread is safe. The IRS placed the Briarcliff property on the auction block at the end of January, but aside from the sale of a few souvenirs, no one had offered the minimum bid. Meanwhile, an Arkansas attorney representing several foreclosed farmers bought Willie’s ranch house, where Lana resides, and pledged to return it to the Nelson family. On March 5, former University of Texas football coach and longtime Willie crony, Darrell Royal, purchased the Pedernales Recording Studio, the country club, and the pro shop for a total price of $117,375 (its appraised value was more than $1 million). Royal didn’t say what he would do with all the property nor did he have to. Willie had told me during our conversation on the bus, “I have friends who’ve offered to buy the property for me and save it until I can afford to get it back from them. I was assured of all that months ago.”
In the first week of April, Goldfein (an adjunct professor of tax law at New York University and an ex-IRS attorney) persuaded the IRS to cut Willie some slack. Under this new agreement, 75 percent of the net earnings from IRS Tapes will be earmarked for tax repayment, with the other 25 percent to cover Willie’s legal fees for the Price-Waterhouse lawsuit. Willie will be allowed, according to Goldfein, “a very liberal sharing of the proceeds” earned on the road. The full band will be able to tour, and the IRS won’t send an agent along to tour with them. The show will go on. But the IRS will receive a full account, every month, of how the money is being parceled out. That means the party’s over.
A few, though not all, of Willie’s Family members have started to get this message. “I’m pretty frustrated personally by the outer layers of bark and moss that have grown around Willie’s tree,” said Tim O’Connor. “And I think it’s burdened the tree. As far as I’m concerned, this is a great shakedown. Everybody should give the man some room to breathe for once.”
They talk about that over in Briarcliff—about the changes: a smaller roster, maybe a few old hands cut loose, or maybe the whole Willie community gradually disintegrating. “This is a test for everyone involved to see how we can react to a crisis,” said Lana Nelson. “As for me, this isn’t the brokest I’ve been. I remember as a child how I’d sit in the middle of a room and watch my mother and my daddy packing things with the midnight moving company. We’d move every month, when the rent came due.
“As for Daddy—what’s wrong with him just going on the road with his guitar? You know, he hasn’t cleaned house in seven years or so. And one thing he talks about is that everything happens for the best, no matter what. If he listens to himself, then maybe the positive side he’ll see is: ‘I won’t have all this responsibility to keep all these people on my payroll.’
“Then he can start small again.” Lana laughed, just slightly exasperated. “And it’ll take him another twenty years to build it all up again. See, he’ll be the same. He’ll still be generous. He’ll still want to give more than he actually has.”
Jody Fischer still aches inside with the memory of the day the IRS came to find out just what Willie had. “Where’s the fleet of cars?” the agents demanded of her last November. “Where’s the vault?” From behind her desk, the small dark-haired woman with the plaintive face could only gape. They weren’t making any sense. This had to be some other Willie Nelson.
“We know all about Willie Nelson,” one of them had told her, waving a stack of government documents for effect. What Jody Fischer wanted to say in response was what anyone—not just those in Willie’s Family, but anyone with ears—would say: that any man who makes Willie Nelson’s kind of music will never be remembered for his tax liabilities. But the words just wouldn’t leave her heart. Faith can be such a clumsy language.
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