USA: Emmy nominees indulge in free 'swag' as the IRS sets its sights on Hollywood

Emmy nominees enjoyed themselves at the Silver Spoon and Kari Feinstein gifting lounges in Los Angeles on Thursday (August 24) as the Internal Revenue Service (IRS) sets its sights on Hollywood "goodie bags". The IRS unveiled a new "outreach campaign" to remind the entertainment industry that the troves of goods and services celebrities receive in exchange for appearing on awards shows are taxable as income. American television stars such as Allison Janney of the Emmy nominated "West Wing", Kathy Griffin, Jerry Ferrare of the Emmy nominated "Entourage" could pick free gifts from such lines as Tsubo shoes for men and women, Kirsten Jade dresses, Henry III jeans, Toy watches, Gypsy clothing, and Franco Sarto boots and bags. "We love to gift celebrities because we find it is a great way to get attention to our product because all of our customers they like to emulate celebrities so when we see celebrities wearing our product it is just a home run for us, " Maggie Laver, Director of Public Relations for Franco Sarto said. Silver Spoon Entertainment Marketing, producers of the event held at a Hollywood mansion, explain that this is not new territory to them because their events are hitting a much smaller pay out scale then the actual Emmy or Oscar show gift bags. "When they leave with the 10 or 20 things it is not like they are leaving with anything majorly expensive. We are not here to give away diamonds and trips and cruises. It is really very simple... Here it is more of a party it is not a hotel suite it is a buffet which is really a whole environment you know," Melissa Lemer of Silver Spoon Entertainment told Reuters. Silver Spoon picked the TOMS Shoes charity which is 'shoes for tomorrow' for every pair purchased one pair is given to a child in South America and this year the charity is focusing on Argentina where Silver Spoon's Lorena Bendinskas is from. Blair the owner and founder of TOMS Shoes has actually already sold 10,000 pairs of shoes and will hand deliver the same amount to needy children in Argentina this October. "Now we have Tobey Maguire, Robert Downey Jr., Sienna Miller, Jude Law all of them wearing our shoes and more and more of them ordering pairs for their friends. One thing about TOMS is that people love to give them as a gift because you are giving a gift of a pair of shoes and you are giving a gift to child at the same time," Blake said. The gift bags typically handed out at major awards shows have widely been reported worth between 40,000 and 100,000 U.S. dollars. According to Daily Variety, this year's Oscar swag included a BlackBerry 8700c, a Canon DC10 camcorder and a six-night stay in Marriott Ihilani Resort & Spa in Hawaii. "Well you know I think it is all so new now everyone is just reeling from it and everyone is like what does that mean to me? It has kind of thrown Hollywood into a tizzy because that is kind of how it works. It has always worked. I think the dust will settle and people will find a way around it and obviously you need to pay your taxes for being compensated," said three time Emmy winner Allison Janney after scoring a pair of Franco Sarto boots. At the same time, the IRS announced a deal with the Academy of Motion Picture Arts and Sciences settling the tax obligations of past Oscar gift-basket recipients through 2005, essentially letting those stars off the hook. Gifting was in full swing at the Kari Feinstein Pre- Emmy lounge held in West Hollywood, California with such high profile guests as Emmy nominated actress Cheryl Hines of "Arrested Development", Rex Lee from the Emmy nominated show "Entourage", and actress Illeana Douglas. "I think the celebrities in checking out the different companies especially when they get the invites it shows what brands are going to be at the event and if its brands that they either already familiar with or look interesting I think they come. But also I have been doing these events for several years so I think I have a good reputation and people know they are going to have a good time and feel conformable at the style lounge," Kari Feinstein told Reuters. The suite offers everything from cosmetics by Dermalogica, Tocari diamonds, Tundra hats, Hope & Glorie clothing, Magic Bullet blenders, to Lorac make up worn by celebrities like Debra Messing . "I have worked with Debra for years and I have done her in every way. But usually really like to play up her eyes she has the most beautiful eyes in Hollywood. I mean she is gorgeous. We just give her beautiful glowing skin, and gorgeous glossy lips," Carol Shaw, founder of Lorac said after hugging client and actress Fran Drescher. The IRS's Oscar campaign, part of a larger effort to boost tax collections from high-income earners, is likely to have ripple effects throughout Hollywood, where lavish gifts and perks have become increasingly embedded in the unofficial compensation structure. "What I have done is I have consulted with my CPA and my tax attorney because I was not really sure what the tax laws meant for me and now I am aware that it's my responsibility to make the vendors aware. If they are giving away gifts that are over 600 dollars (USD) I believe they have to have the celebrity fill out a tax form and then vendor will have to submit that and the celebrity will have to claim it", Feinstein told Reuters Next year's Oscar talent won't have to think about it. The academy's governing board quietly voted in April to discontinue its gift baskets starting in 2007 after the IRS issued an earlier notice warning of a crackdown on "swag" bags. A spokeswoman for the Academy of Television Arts & Sciences, which is due to present the Primetime Emmy Awards on Sunday (August 27), said it was "premature to comment" on whether her organization would seek its own deal with the IRS. "I would assume in every line of business that gets you know gift baskets would have to be taxed on it so that's what is a little confusing. So they have to decide is it just actors or is it your know when you visit Chrysler and somebody gets a car do they get taxed? Or is it just the poor actors?" said Actress Illeana Douglas from "Six Feet Under" and "Law & Order: Special Victims Unit". Emmy organizers recently sent notices to its presenters informing them they would go without a gift bag unless they had signed and returned a form acknowledging personal responsibility for paying taxes on the goodies. According to the Motion Picture Academy, the tradition of Oscar gift baskets became well established by the early 1970s as a way of thanking stars who served as presenters without pay and those who received "only the minimum union payment" for performing on the show. The gifts have grown more extravagant over the years as hotels, resorts, fashion lines and even consumer electronics makers clamor to link their brand names with the film industry's highest honors. "It's a little bit odd this is the first time I have ever really thought about paying taxes on all this stuff so I am just going to consulate with my tax guy and figure it all out. Figure out what needs to be reported and what needs to be paid," said actor Rex Lee, from "Entourage" which is nominated for five Emmy awards, while shopping at the Kari Feinstein lounge.

ITN Source | August 31, 2006

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