In March of this year the IRS began a campaign to force presenters at entertainment-industry award shows to include the value of gift baskets they receive in their taxable income. The government effort might force celebrities to cut some big checks to Uncle Sam (in March the Academy Awards thanked its Oscars presenters with gift baskets worth an estimated $100,000), but the marketers and publicity firms that put the high-priced goodie bags together see the recent tax actions in a positive light.
"It definitely brings attention to our product and the value of the product," said Angie Read, public relations manager at Sprint, which has a deal in place to have the company's Fusic phone included in this year's official Primetime Emmy Awards gift bag. She said reports in the media about the IRS crackdown typically mention the phone's $329.99 price tag. "Everything that I've seen so far has said how much the phone retails for. I don't think it's negative attention for us."
Gift-bag companies aren't feeling any negative feedback from the IRS buzz, either. In fact, demand for gift services seems to be on the rise. Karen Wood, president of Backstage Creations, a Los Angeles-based company that organizes lounges, retreats and gift baskets, said the number of queries sent to the company last weekend via her website doubled. The increase, she said, could be due to her recent work on gift bags and the gift-retreat room for last weekend's Teen Choice Awards -- or to the IRS buzz.
"I'm definitely enjoying the additional exposure that this has given to the gift bags," Ms. Wood said.
Tax forms handed out
The awards shows themselves have made efforts to help celebrity presenters comply with IRS demands. Last week, the IRS and the Academy of Motion Picture Arts and Sciences came to an accord: Celebrities who received gift baskets at the Academy Awards presentation this spring will be sent appropriate informational tax forms and will be responsible for satisfying their income-tax obligations, the Academy said in a statement. The Academy Board of Governors in April voted to stop giving out Oscar gift bags.
In addition, before receiving gift bags at next week's Emmy Awards, presenters will be asked to sign a letter confirming awareness of potential tax liability, said Pam Golum, a spokeswoman for the Academy of Television Arts & Sciences.
The IRS attention might also create a new method for celebrity philanthropy. Ms. Wood said City of Hope was positioned at the Teen Choice Awards' gift-giving retreat so the charity could accept donations and celebrities could accept their charity tax forms on the spot.
Fortunately, charitable giving doesn't de-value the product promotion, both marketers and gift bag companies say.
Added media attention
"The media loves to know what the celebrities are getting. And, in return, when George Clooney gifted his Oscar bag to United Way, that didn't hurt the people that gave him the goodies to him in the first place," said Jane Ubell-Meyer, president of Madison & Mulholland, a gift-bag company that will soon be handing out the Ultimate TV Nominee gift basket.
So who's the real loser in the IRS crack down? "I think it's unfortunate more so for the celebrities, because they are so used to getting so much stuff for free," said Ms. Read of Sprint. "I don't think [gift giving] will ever stop, but I think it may hinder it to some extent. Or celebrities will think twice about what they take."