Owe The IRS? Release An Album!

 

Before starting with this week’s blog, we’d like to take a moment to give a tax update to those affected by the 2016 floods.  Due to the flooding, the IRS has announced tax relief for taxpayers in the following counties: Harris, Fort Bend, Liberty, Montgomery, San Jacinto, Austin, Colorado, Fayette, Grimes, Parker, Walker, and Wharton.

The tax relief postpones multiple tax filing and payment deadlines that occurred starting April 17, 2016.  Individuals and businesses now have until September 1, 2016 to file their returns and pay any tax due.  This includes the April 18th and June 15th deadlines for making quarterly tax payments.  A variety of business tax deadlines are also affected, including the May 2nd and August 1st deadlines for quarterly payroll and excise tax returns.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after April 17th, as long as the deposits were made by May 2, 2016.

If you receive a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment, or deposit due date that falls within the postponement period, you should call the telephone number on the notice to have the IRS abate the penalty.

If you were affected by the floods but you or your business resides outside of the covered counties, you need to call the IRS Disaster Hotline at 866-562-5227 to request this tax relief.

For more information, please go to the IRS’ statement on the disaster here.

An acoustic guitarNow, on to the blog!

Owe The IRS?  Release An Album!

Despite their image in popular culture, the IRS will quite often allow for creative arrangements with taxpayers to settle a debt.  Perhaps the most interesting arrangement is the one they entered into with outlaw country icon Willie Nelson.

Willie Nelson’s tax troubles began in the early 1980’s.  Nelson had switched accountants to Price Waterhouse in 1980, and, upon their recommendation, invested heavily in several tax shelters.  In 1984, the IRS audited Nelson, and disallowed the deductions for 1980, 1981, and 1982, resulting in an initial tax bill of $16 million ($6 million in taxes and $10 million in interest and penalties).  After years of legal wrangling, the final amount was reduced by Nelson’s lawyers to $6 million – which Nelson did not pay.

In 1990, the IRS seized nearly all of Nelson’s assets (including his home, recording studio, ranch, over twenty properties in four states, and most of his instruments, recordings, and memorabilia).  The IRS auctioned these items off, but the proceeds were still far from enough to satisfy Nelson’s debt.  So what’s a red-headed stranger to do?

Nelson and the IRS negotiated a novel agreement – Willie Nelson would release an album and share the proceeds with the IRS.  The album, which Nelson titled “The IRS Tapes:  Who’ll Buy My Memories?”, was released in 1992 and sold enough to earn $3.6 million for the IRS.  By 1995, Nelson’s tax debt had been cleared.

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