Different Circles

Jake and Celia looked at each other in surprise, and then at Pauline, and then back at Matt. “Uh ... we’ve read about your tax situation in the papers,” Jake said. “It seems you owe a bit of money. But what does Pauline have to do with that?”

Now it was Matt who looked surprised. “You didn’t tell them about it?” he asked in disbelief.

“It wasn’t their business,” Pauline said. “I’m a lawyer and things that are said to me remain confidential unless there is a reason for them not to be.”

“What the hell is going on here?” Jake asked. “Are you saying that Matt hired you as a lawyer?”

“He did not hire me,” she said. “And I was not taking care of legal issues for him. He simply called me up and asked me to recommend a good tax attorney, which I did. He did explain his situation to me during the conversation, but it was not anyone here’s business, so I did not discuss it.”

“Not even with Obie?” Celia asked.

“Not even with Obie,” she confirmed. “It’s not his business either.”

“Damn,” Matt whispered, actual respect showing in his eyes for the first time.

“Perhaps you could explain the situation to us now, Matt,” Celia suggested. “Tell us how it relates to your proposal to sign on our label.”

Matt looked at the Venezuelan singer for a moment and then sighed. “I was given really bad advice by my accountant, and I was dumb enough to believe him,” he said. “He told me that since I owned a house in Mexico, I could claim that I was not subject to American or California taxes for everything I put out after Intemperance.”

Jake’s eyes widened. “And ... you believed that?”

“Yeah, yeah, fuck you,” Matt said sourly. “I know how fuckin’ dumb it sounds now. At the time, it seemed pretty fuckin’ reasonable though, especially since it meant I’d get to keep most of my money and buy all kinds of cool shit like yachts and crews to staff it and helicopters. And everything was cool until the fuckin’ state franchise tax board audited my ass and found out about it. And once they found out about it, they ratted me out to the fuckin’ IRS. Between the two of them, they hit me with about thirty million in back-taxes, interest, and fuckin’ penalties. They garnished my royalty and endorsement and touring income so they can take fuckin’ half of everything I bring in—and then I still have to pay fuckin’ taxes on the original fuckin’ amount. I had to sell my LA condo and my yacht and most of my fuckin’ guitar collection and I still owe those fucks more than twenty-four million bones.”

“That is unfortunate,” Jake said. “And I sympathize. You did put yourself in this situation, however. How is signing with us going to help rectify it?”

“By providing me with fuckin’ money so I can pay those fucks off,” Matt said.

“National is willing to give you money if you tour for them,” Celia said coldly.

“At the cost of putting out a shitty, substandard CD just so I can tour,” Matt said. “And if I put out a shitty, substandard CD, it won’t sell very much. Not only will it be crappy work that I have put my name on, not only will I be a fuckin’ sellout if I do it, it will not bring in enough royalties for me to keep my head above the fuckin’ water.”

The three owners nodded their heads in unison, starting to understand where Matt was coming from now. He was talking about the ebb and flow of royalty income that occurred due to the circle of life of an individual CD. When first released—as V-tach’s CD would soon be released—sales were generally slow, which meant the royalty rates in the first few quarters were correspondingly low. But as a few hit songs were heard on the radio, those sales would start to pick up exponentially, thus putting the CD into its most profitable run and increasing those royalties to their highest level. Eventually, however, most everyone who wanted to own the CD would own it and the sales would drop back down to a stable background level of a few thousand per month. That was where Matt was now. He no longer had any tour or endorsement income coming in and his quarterly royalty checks—in which he was paid for sales of all the Intemperance albums and all of his solo albums—would be a mere pittance compared to what they would be at the height of a CD’s popularity. Matt had nothing else to draw on, but he had the same expenses, bills, and obligations to fulfill.

“I need more royalty income,” Matt explained. “I’ll fuckin’ drown without it. If I can’t slap down at least three-quarters of a mil on my tax debt every quarter, the fuckin’ penalties and interest add more to the debt than I’m able to pay off. It will end up not getting any smaller no matter how much I pay and will probably even grow. If that happens, I’ll never be able to pay it off. The shit will hang over my head for the rest of my fuckin’ life.”

“That is a very depressing situation,” Jake had to agree, “but I must ask you one more time: How will signing with KVA help you out? You understand that we are in the business of making money as well, right?”