Next week, nominees for this year's Emmy awards can expect the usual "gift basket" full of award season freebies: lavish jewelry, plasma TVs, Celine Dion backstage passes, gold-plated cellphones. But there will be a lump of coal at the bottom of each one: an IRS tax form.
Tax forms will be available at the Emmy "swag suites" too. "We'll be giving them the necessary paperwork for what it's valued at," said Gavin Keilly of GBK Productions, who put together a suite at the Sofitel Los Angeles hotel where, starting Wednesday, selected celebrities can "shop" for free stuff, including special goggles for watching movies on an iPod, Lasik eye surgery and a $22,000 Caribbean cruise.
But after Thursday's announcement by the IRS that it will seek out taxes on the swag that increasingly rains down on celebrities during awards season and at film festivals, merchandise valued at $100,000 will cost an A-list actor in the top tax bracket some $40,000 in taxes.
That's a lot of change, even for multimillionaires.
Though marketers like Keilly are jumping to make compliance as easy as possible for their celebrity beneficiaries, the industry's chattering class was split on whether the development would deal a fatal blow to Hollywood's freebie mania. Many in Hollywood, meanwhile, expressed relief that a practice seen as part of an unsavory culture of greed would, if not fade out, at least diminish.
The swag machine works this way: High-end companies press free goods and services on stars with the hope of creating buzz, and ideally generating pictures in magazines such as Us Weekly or People, which will in turn spark sales. It's hard to tell how many millions of dollars' worth of product corporations actually shell out on celebrities, but one company estimates that the value of its gift bags for this year's Emmy's nominees will total $2 million -- and that's just one purveyor at one awards show.
Giving out gifts to celebrities isn't new in Hollywood, but competitive swag -- in which marketers compete to create increasingly outlandish gift baskets -- is a product of the last five years, as corporations desperately try to ride the public's all-consuming interest in all things celebrity.
"I think it's going to have a cataclysmic effect on a certain segment of the entertainment industry," said veteran publicist Ken Sunshine, who represents Leonardo DiCaprio and Ben Affleck. Sunshine is advising all his clients to confer with their tax attorneys before accepting any more free gifts from marketers.
