There should be nothing less taxing than a luxurious
spa weekend.
But try telling that to the IRS.
The Academy of Television Arts and Sciences reminded a number of celebrities last week that the swag-stuffed gift bags they receive on Emmy night are considered taxable income, and should be reported accordingly to the proper authorities come tax season.
Stars scheduled to present statuettes Aug. 27 at the 58th Annual Primetime Emmy Awards received a letter from ATAS, politely asking for their compliance with federal, state and local tax guidelines, along with a waiver to sign acknowledging that they received the letter in the first place. (So just in case Matthew Fox or Patrick Dempsey wants to thumb his nose at the government and not report his new cufflinks, the TV Academy won't be blamed.)
The total value of the goods in this year's presenter bags--or, great big boxes of stuff--has been estimated at somewhere between $27,000 and $33,000. Included are a variety of objects (Dooney & Bourke luggage, Fresh skincare products), edibles (Dove chocolates) and vacations (six days and five nights at a New Zealand country manor, a golf or ski getaway in Whistler, British Columbia).
When the 2006 Academy Award gift bags weighed in at more than $100,000 apiece, with no single gift being worth any less than $500, the IRS issued a statement wishing the Oscar nominees luck and reminding them to include their $25,000 four-night Hawaiian vacations and $7,000-worth of Victoria's Secret undies on their income tax returns.
If they choose to keep the gifts, that is. Charitable donations are usually tax-deductible. The IRS couldn't be reached for comment, but it was reported earlier this year that the government agency stood to collect almost $1.2 million from Oscar bags alone.
"As the world watches the glamour and glitz of the Academy Awards, it's important to keep in mind that movie stars face the same tax obligations as ordinary Americans," IRS commissioner Mark W. Everson said in a statement in March. "We want to make sure the stars 'walk the line' [that means you, Reese Witherspoon] when it comes to these goodie bags."
"This has become big business for companies promoting their products. These things aren't given without pride and prejudice. There is a tax implication for them. We just want to make sure no one crashes into the tax code."
Because the vendors contributing items to the Oscar and Emmy gift bags can deduct advertising costs from their tax returns (because, technically, you're giving Jennifer Aniston a watch to wear for publicity, not out of the goodness of your heart), tax laws do not recognize the items as gifts. Per 2006 income tax rates, a $100,000 "gift" basket could warrant up to $45,000 in taxes for a recipient in the highest earning bracket (i.e. what actors make).
But while the decision of whether to accept-and-pay or give away is up to the actor, companies are having a great time putting a batch of high-end products together--for whomever gets to enjoy them in the end.
In the spirit of small business entrepreneurship, product-placement company Madison & Mulholland--which is prepping Ultimate TV Nominee Bags for Emmy attendees like Teri Hatcher, Eva Longoria and the rest of the Housewives; Sandra Oh and other Grey's Anatomy residents; various Lost castaways, Hugh Laurie, Kiefer Sutherland and Adrian Grenier--has gone "beyond bling" this year and is focusing largely on the up-and-coming names in luxury.
For the Oscars, "we looked for the most expensive stuff," said Jane Ubell-Meyer, president of Madison & Mulholland, "but [for the Emmys] we're going out of the box."
Which isn't to say there's nothing to ooh-and-ah over. Ubell-Meyer, who also teaches a class at New York's Fashion Institute of Technology called "The Art of the Goody Bag," said that there's a basic formula for putting together an appealing box of swag: include at least one big, wild item (for the Ultimate TV Nominee Bag, it's a $2,000 gift certificate for a Diamo USA scooter); put in at least five certifiably "awesome" items (vacation at Casa de Campo in the Dominican Republic, St. Tropez's Red Door Spa Treatment); and then fill the rest up with "fabulous finds."
"Not over the top, but so great that we love them, too," Ubell-Meyer said.
This year, those swoon-worthy items include a "Baby Bling Bag" containing everything from designer pacifiers to the Butler Bag über-tote to Bella Blue Leopard Knitting Needles. Then, when mom gets tired, there's a year's worth of chocolate from Hershey's and a bottle of caffeine-infused p.i.n.k. vodka to dip into.
Even this year's lucky losers will have a chance to take home $42,000 in consolation prizes from entertainment marketing and corporate gifting firm Distinctive Assets. A VIP-caliber weekend in Vegas, a little life-coaching and LASIK eye surgery will have you forgetting in no time that you didn't bag an Emmy.
Additionally, nominees and "special guests" can visit the GBK Productions gift suite and help themselves to gold-plated Nokia cell phones and a lease for a Ford hybrid. Groovy.
Meanwhile, here's a complete rundown of the final list of goodies heading into the ultraswank 2006 Primetime Emmy Presenter Gift Bags:
Five-day stay at Old Bahama Bay on Grand Bahama Island, plus access to all water sports; One-year bicoastal membership to the Sports Club/LA (which, contrary to its name, has locations in San Francisco, Miami, New York and various other hotspots); Sprint Fusic mobile phone, retails for $329; Two nights at the US Grant in San Diego, including spa treatments; One-year bicoastal membership to YogaWorks; Five-day golf or ski getaway at the Adara Hotel in Whistler; Six days at the Wharekauhau Country Estate in Featherston, New Zealand; Four days at the Dolphin Bay Hotel & Residences in Pismo Beach, California; Six days at The Lodge at Molokai Ranch on Molokai, Hawaii; Babystyle gift card, Lulu the Lamb original stuffed kids' chair and personal shopping consult; Gift certificate for two-day "Emmy Crush Camp" wine appreciation at the Napa Valley Hotel; Food & wine pairing for six people from the Crustacean Restaurant in Beverly Hills; Spa gift certificate and products from Fresh; Gingi skincare products; Ike Behar silk tie, button-down shirt and lapis cufflinks; Morton's Steakhouse gift certificate (last year's was for $1,500); String of pearls from Pearl Paradise; Prive Salon and Ona Spa gift certificate; Dooney & Bourke leather roller luggage; "365 Days of Dove" chocolate assortment; Gift certificate for linens from DreamSleep Studio; Instructions on how to donate gowns, tuxes and other Emmy goodies to the Clothes Off Our Back Foundation to benefit relief efforts in Darfur, Sudan, the Children's Defense Fund and Cure Autism Now. Sure, that's pretty cool stuff, but we have a suggestion for next year. How about a complimentary visit to H&R Block?