| Earlier gifts: Cellphones, chocolates and spa services
Los Angeles, Jan. 11 (Reuters): The gift bags for celebrities who take part in Hollywood award shows are likely to be noticeably lighter after a crackdown by US tax authorities on extravagant gifts — including jewellery and luxury trips — at awards like the Oscars and Golden Globes.
The Internal Revenue Service (IRS) yesterday announced an agreement with the Hollywood Foreign Press Association — which will hand out the Golden Globe movie and television awards on Monday — after a campaign reminding the entertainment industry that bags stuffed with goodies such as electronics, designer fashion goods and cellphones are taxable as income.
Last year’s Golden Globe gift bag for presenters included a trip to Antarctica and a diamond ring, and was valued at $40,000.
The Hollywood Foreign Press Association said that it had agreed to pay taxes on gift bags for 2004 and 2005, and that 2006 recipients will have to pay tax on those gifts themselves. Oscar organisers reached a similar deal last year.
Both the Academy of Motion Picture Arts and Sciences, which awards the Oscars, and the Hollywood Foreign Press Association decided quietly in the past nine months to discontinue from 2007 the practice of thanking presenters with gift bags.
“The fact this gift bag practice grew so quickly is stranger than fiction,” said IRS Commissioner Mark Everson. “We’re happy the Hollywood Foreign Press Association stepped forward to resolve this issue.”
What started in 1989 as discreet thank you gifts from Oscar organisers to the unpaid presenters of the Academy Awards has become a multimillion dollar industry in which companies pay to put their products into the hands of music, movie and TV stars in the hope of invaluable publicity.
Last summer, organisers of television’s Emmy Awards asked presenters to give written acknowledgement of responsibility for paying tax on their goodies.
It is not clear how far the IRS crackdown has affected private companies who organise the gift-giving and do big business on the sidelines during the awards season.
Lash Fary, founder of Los Angeles-based Distinctive Assets, which has arranged gift bags and lounges for Grammy and Oscar gift-giving, has accused the IRS of bashing celebrities and of creating confusion for companies who organise the gift-giving.
“Why should an entertainment celebrity (pay tax) on an unsolicited gift more onerously than a corporate executive who receives a Christmas present' ... Our celebrities should not be punished for their fame,” Fary said in a statement on his company’s website.
IRS spokesman Beth Tucker said officials had tried to clarify the issues with many organisations and companies and were “heartened by the positive response”.