I think it was common knowledge to the musicians once it became an issue. A lot of the initial blame fell on a man named Abe Turchin who "managed" the band for quite awhile. He was withholding taxes from the band members' checks, but instead of turning this money over to the IRS he gambled it away. When Abe passed away it became Woody's responsibility, and I think Woody had been only marginally aware of the depth of this hole he was in. He was very loyal (to a fault) to those that worked for the band, and most likely looked the other way to some degree. He trusted his management because he wasn't as interested in the business end of things but didn't always put this trust in the best of people.
Even as late as when I was on the band (80s) there were problems, and I learned later that band manager Bill Byrne was frequently paying the guys out of his own pocket. Bill really held the band together during the last 20 years or so- it probably would have not lasted as long as it did.
Woody's age and health problems were catching up with him by the time I joined the band, and I can't help but think he continued to tour when he would liked to have been taking it easy. Unfortunately his debt to the IRS meant that they could seize assets at will, so he was better off staying on the road where he could at least stay in nice hotels, eat nice meals etc.
Did he bring this hardship upon himself? To a significant degree, yes.
Did he deserve the treatment he received in his last years? Definitely not IMHO.
Sorry for the off topic...........