IRS Looks at Taxing Academy Awards Swag

The Internal Revenue Service is cracking down on the entertainment industry's practice of showering celebrities with freebies. Actors and directors nominated for an Academy Award can receive gifts worth more than $100,000 from adoring companies. The IRS thinks such gifts, knows as swag, ought to be treated as income and taxed.

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STEVE INSKEEP, host:

And next, let's add another name to this year's list of Oscar winners: the Federal Treasury.

Five months after the Academy Awards presentation, the IRS has struck a deal that will make it easier to collect taxes on the lavish gift baskets given to presenters at the Hollywood bash.

NPR's Scott Horsley reports.

(Soundbite of Oscar telecast)

Unidentified Announcer: Ladies and Gentlemen, the 78th Annual Academy Awards.

(Soundbite of applause)

SCOTT HORSLEY reporting:

Ah, the Academy Awards. The glamour, the glitter, and the goody bags.

For years, the Academy has thanked stars who present its awards with a gift basket, and as companies have recognized the marketing value of having celebrities seen with their products, the value of those baskets has soared to as much as $100,000.

This year's goodies included a pearl necklace, a cashmere travel blanket, and a four-night stay at a Waikiki resort. All that swag caught the attention of IRS Commissioner Mark Everson, so the next envelope these stars open may contain a tax bill.

Mr. MARK EVERSON (Commissioner, IRS): We expect the stars to pay their taxes just like the rest of us. There's no red carpet treatment for the stars.

HORSLEY: Everson says the gift baskets aren't really gifts at all, but rather non-cash compensation. And that means they're taxable.

Yesterday, Everson announced a settlement in which the Academy of Motion Picture Arts and Sciences agreed to send 1099 forms to this year's presenters, letting the stars know about their tax obligation.

The Academy also agreed to pay some back-taxes for previous years' gift baskets, although Academy President Sid Ganis won't say how much.

Mr. SID GANIS (President, Academy of Motion Picture Arts and Sciences): We settled in a good, solid way that was very good for our Internal Revenue Service and very good for the Academy. So we worked it out.

HORSLEY: Everson says the IRS is now working with organizers of other award shows, like the Grammys and the Golden Globes, to ensure the tax man gets a share of their five-figure gift bags as well. He says the people behind the Oscars have set the standard for the whole entertainment industry.

Mr. EVERON: I'll probably never get the chance to say this, but I want to thank the Academy.

HORSLEY: Oscar organizers have already decided not to give out gift baskets at next year's awards show. Academy President Ganis says, even without the pricey perks, he doesn't expect any trouble finding presenters.

(Soundbite of Oscar telecast)

Mr. JACK NICHOLSON (Actor): And the Oscar goes to...

HORSLEY: Scott Horsley, NPR News.

(Soundbite of applause)

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