"There was an awful lot of publicity about the ever-increasing value of these baskets," IRS Commissioner Mark V. Everson said. "And somebody said, 'Why don't we do something about this?' It was just so clearly taxable we felt we had to step in."
The IRS reminded Oscar presenters before this year's ceremony that noncash compensation was just as taxable as a paycheck. Everson said the effort was linked to his drive to bring "a sense of fairness that resonates throughout the system. You can't let the rich get away with something."
Sid Ganis, the academy's president, said the gift baskets had outlived their usefulness. "I don't think a presenter says, 'I am going to present an Academy Award because I am going to get a gift basket.' They do it because they want to be a part of the show."
What may be the IRS' gain is a potential loss to the hundreds of swag purveyors.
"Wow -- this is insane," J. Dubb, the marketing director for Five Four Clothing, the maker of high-end urban apparel, said when informed of the IRS announcement. (At this year's Sundance Film Festival in Park City, Utah, Five Four was handing out cartloads of clothing in its crowded freebie suite.)
"It's hard to say what the impact will be, but it will definitely be a hit," Dubb said. "But we think [celebrities] like our stuff enough that they'd be willing to pay tax."
Britt Johnson, whose Los Angeles events company Mediaplacement organized a freebie suite at last year's Golden Globe Awards, said past recipients of swag may soon hesitate when offered ostensibly free products. "You are going to see a lot of people turning things down," Johnson said, "and a lot more people donating to charity."
One such donor was actor George Clooney, who gave his Oscar gift bag to the United Way Hurricane Response and Relief Recovery Fund, which auctioned it for $45,100.
