In 2006, Crash took home the Academy Award for Best Picture, Reese Witherspoon waltzed off with an Oscar for Best Actress and Philip Seymour Hoffman surprised no one by winning an Oscar for Best Actor. And in the midst of the glitz and glamour, the IRS was quickly working its own magic… taxing the swag.
For years, the elite of Hollywood had shown for awards shows and taken home “gift bags” or “swag bags” worth, in some cases, hundreds of thousands of dollars. It was, of course, their “thank you” for just being so darn fabulous.
And it was all tax free.
Only it wasn’t. The IRS figured that literally millions of dollars were escaping taxation as stars were not reporting their accession to (more) wealth on their tax returns. So they decided to do something about it. In 2007, the IRS announced that it was ramping up education about “swag” as part of an agreement with the Hollywood Foreign Press Association (HFPA) on an “outreach program aimed at the entertainment industry.” That was, as I previously noted, clearly a nod to those poor movie stars who apparently can’t afford tax advisors like the rest of us.
As a result of the agreement, the HFPA promised to ensure that forms 1099 would be issued, where appropriate. Further, the HFPA would help educate the recipients of such wonderful trinkets that they would be responsible for income attributable to the gifts in the bags. Board members of the Academy also officially voted to end the Oscar
not a gift gift basket program as a result of the settlement.
That same year, 2007 was a high (low?) mark for acting swag with Victoria’s Secret offering nominees a “free” strapless bra together with a white gold chain with bearing 14 diamonds and a pavé diamond circle at the center of the bra. The nominees that year (and thus, recipients of the bra) were Helen Mirren, Penélope Cruz, Judi Dench, Meryl Streep, Kate Winslet – not exactly the lot you’d imagine in a diamond bra. Just saying.
Reportedly, this year, many recipients of the swag have decided to donate the contents to charity. That’s great. Cause nothing says, “I’m sorry that you’re having trouble feeding your family” like certificates for fake tans and Gucci sunglasses. Although in fairness, most auction off the contents, like George Clooney did in 2006, raising more than $45,000 for the United Way.
Others, like Michael Cera and Zooey Deschanel, are taking an easier way out. Both reportedly said a polite “no thank you” to swag at this year’s Sundance Festival. Thespian great Paris Hilton, on the other hand, snatched up 30 (not a typo) of the Sundance bags. I guess she’s trying to offset her theft/casualty loss this year with some hefty 1099 income for her “free” mesh fabric (her swag of choice, not kidding).
Who else hasn’t said no to the bling this year? Debra Messing and Jessica Alba were seen scooping up swag, including shoes and diamonds, at the pre-festivities for the Golden Globes. I guess even Hollywood is doing what they can to “save” in a bad economy…Want more taxgirl goodness? Pick your poison: You can receive posts by email, follow me on twitter (@taxgirl) hang out with me on Facebook and check out my YouTube channel.