Hank is enjoying a golf tournament on TV, when he suddenly hears that Bill needs help, who is pinned down under his couch after looking for change. Later in the alley, Dale explains that the tournament Hank missed was perhaps the "greatest", further angering Hank. Soon, the group's scalps start to itch, and Bill reveals that he has contracted lice (which has now spread lice to his friends), in an attempt to attract a woman who was specialized with lice. Angry, the group leaves Bill and goes to Boomhauer's bathroom to kill off the lice with a prescribed shampoo. However, the shampoo fails and further irritates the scalp, causing Dale to itch tremendously.
The next morning, Peggy, while wearing a shower cap, explains to Hank that lice is nothing to be ashamed of, but Hank complains further about Bill and being fed up with his antics. As soon as Hank, Dale, and Boomhauer meet (with Bill shunned from the group and standing in front of his house), Hank explains that the same woman that Bill was trying to meet said the only solution was to shave their heads. However, Dale decides to use the same chemicals he uses to kill pests to kill the lice, but only succeeds in temporarily blinding himself and seriously irritating his scalp. A depressed Bill purchases a pack of beer gets drunk and pours the contents of a beer can into a mailbox while in the presence of a police officer, and gets arrested for public drunkenness. Bill phones Hank (who is in the process of having his head shaved) to ask to bail him out to which Hank angrily refuses. Before his head is shaved, Peggy tells Hank that there is a tattoo on the back of his head, which is revealed to be the name "Bill".
Hank, confused and disoriented, questions Dale about how he got his tattoo, only to get a ridiculous answer. Meanwhile, Bill is talking with the other inmates and befriending the prisoners, who are impressed by Bill's lifestyle. Hank gets his tattoo removed and goes on to Boomhauer to find out how the tattoo got on his head. Boomhauer is surprised and finds it amusing that Hank has finally learned about the tattoo's existence.
Boomhauer explains that when the men were high school students, they all wanted to commemorate Bill joining the military by driving to Dallas to celebrate. They happened upon a bar known as the "Chainsaw", not realizing that it is a popular spot for punk rock (Hank assumes that it is a bar for the lumber industry). Hank becomes drunk and offends some punks and Bill is forced to protect him while Boomhauer and Dale escort Hank out. As Dale is vomiting outside with Bill watching over him, Hank decides to get himself a tattoo with Bill's name to show his respect. Boomhauer opposes the idea. Before Hank gets the tattoo, he passes out. Boomhauer asks to the tattoo artist (who feels honor-bound to tattoo Hank after he paid) to print it on the back of his head (where no one would know about it).
Hank feels guilty about not helping Bill after he learns how Bill had protected him on that night. The next day, Hank attempts to visit Bill, but he is not allowed to. Bill plans to (falsely) confess to being the infamous Northside Burglar, with the expectation that he will be locked up for a extended period of time with his new friends. Hank realizes that the only way for him to get access to Bill is that he must be arrested himself. After attempting to violate several laws, he is finally arrested for ramming his truck into a police vehicle. From an adjoining cell, Hank explains to Bill about the tattoo, but Bill is annoyed to learn that Hank had it removed. Hank gets his cellmate to give him a new tattoo and shows it to Bill. Bill is then convinced and is happy to hear that Hank cherishes his friendship. Bill is released and decides to wait until Hank is also released before he'll leave.
- Bill & Inmates (singing): "There's a hole, there's a hole, there's a hole in the bottom of the sea."
- In the bar scene, the Punk rock band is seen playing "Nazi Punks", a censored version of the Dead Kennedys song.
- Dale's bug spray contains both Malathion and Lindane, which is ironically used to kill lice. However, in Dale's statement that it is harmless is somewhat vague; Malathion does not cause cancer while Lindane does. Both, when sprayed upon the human body, causes the following symptoms: eye and skin irritation, dizziness, cramps, nausea and even death.
- The Quarterflash song "Harden My Heart" is heard in this episode despite it being released in 1981.
- The song playing when the guys are entering Dallas is "China Grove" by The Doobie Brothers.
- The store Liquor Trunk had previously been seen in the episode "Full Metal Dust Jacket". After Peggy gives up on the bookstore, Hank puts a "Out of Business" sign on the window and has a brief conversation with the new owner who is shown hanging up a sign that reads "Coming Soon: Liquor Trunk."
- When Dale said "My spider-sense is tingling", it is a reference to Spider-Man's catchphrase.