Willie Nelson couldn't pay the Internal Revenue Service and just cut a cool deal. His sad song began after he invested in several tax shelters promising $10 in deductions for every $1 invested. Instead of the deductions, he got a tax bill for more than $16 million. The IRS sold his ranch and auctioned his belongings. To keep the agency at bay, he gave it a royalty interest in his album, Who'll Buy My Memories? (The IRS Tapes).

The agency collected $3.6 million from sales of this album and his other assets. At last report, Nelson settled the debt by agreeing to pay only an additional $9 million over the next five years. Not a bad deal for the singer -- $12.6 million for a $16 million debt.

Nelson's settlement probably results from a new IRS policy favoring agreements with taxpayers. With uncollected taxes rising, it expects this policy to boost collections while giving taxpayers a fresh start. But IRS officers are tough negotiators. Don't assume they will settle when they can reasonably get the full amount. They'll expect you to sell that vacant lot and those 10 shares of AT&T.
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