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By Angelia Sampson
Designer brand jeans. Mikimoto pearls. All-inclusive getaways. Things we all get … or you do when you happen to be famous.
“SWAG” is the favored buzzword amid a large number of of Hollywood’s affluent and famous. However the end of swag may be in view. Stars are at the mercy of the Internal Revenue Service and the federal gift tax in relation to award ceremony swag bags and gifting suites.
When presenting swag and “gifting” celebrities, suppliers will offer tens of thousands of dollars in wares and programs expecting the stars would go with their goods. Presenters at shows including the Academy Awards or the Emmys have acquired lavish products such as designer wrist watches, 7-day island vacations, and work out center subscriptions. It is infrequent in Hollywood to spot a swag bag priced at less than $20,000. At the 2010 Oscars, presenters were presented bags worth greater than $100,000.
However, federal gift tax laws are precise in the total amount a person is permitted to give without it being taxed. As of January 1, 2009, a citizen is allowed to impart up to $13,000 in either money or items at fair cost.
The IRS has begun to put scrutiny on untroubled gifting. In place of losing almost $1.9 million to untaxed gift bags, the Internal Revenue Service now insists that swag needs to be measured as earnings. In March at the Oscars, celebs getting swag needed to sign a legal contract expressing they regarded these swag bags as income and are likely to be taxed on it. These complications by the IRS have caused the Academy of Motion Picture Arts & Sciences, producers of the Oscars, to bring a close to gift bags in the award show in the coming year.
Could stars write these off as business deductions? All things considered, their persona is their business and their persona must be managed. Very few personalized things can be written off as “business” deductions: Professional athletes might write-off workout gear; musicians can deduct their instruments, etc. Nevertheless, stuff like personal trainers, bodyguards, and fashion stylist aren’t able to be deducted due to the personalized aspect of the services. Taking into account the hundreds of thousands of dollars invested every single year on those, it’s good to think a couple of stars are crying into their cocktails.
It is hard to suggest if this signifies the final days of gift bags. With an ever-growing list of delinquent celebrity taxpayers, giving the IRS more possibilities to tax them appears to be counterproductive. But what’s a super star to do? Actually buy his custom-made Fendi eyeglasses?
There are methods that celebrities can offset the revenue of giveaways. Many sports superstars have given cars and noncash prizes that they win to charities, counterbalancing the income with the cost of the contribution.
I will not say that the IRS likes focusing on stars, but high-profile tax seizures and liens on stars give the tax agency media exposure they couldn’t get. The PR they get from slamming A-list celebrities like Pamela Anderson and Sean Combs down a peg only seems to bolster the American population’s general anxiety of the Internal Revenue Service.
No publicity is bad publicity that’s what they say in Hollywood.
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Source:
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