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IRS Settles Golden Globese Gift-Bag Disput
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Movie stars collecting gift bags worth hundreds of thousands of dollars for making a 30-second presentation? That�s income for work, IRS said. And the tax-collecting agency got a piece
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By Darrin T.Mish
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In Hollywood, movie stars can scale skyscrapers, run out of burning buildings, dodge bullets and find lost love.
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But they can't, as it turns out, escape the Internal Revenue Service.
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After watching movie stars receive well-publicized gift bags worth tens of thousands for making presentations at such events as the Academy Awards and the Golden Globe Awards, the IRS stood up and asked for its share.
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Recently, the IRS announced an agreement with the Hollywood Foreign Press Association, which organizes the Golden Globe Awards, regarding the taxability of gift bags and promotional items.
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The Hollywood Foreign Press Association agreed to resolve outstanding tax responsibilities with respect to Golden Globe Awards presenter gift baskets. The Hollywood Foreign Press Association voluntarily approached the IRS last year seeking to clarify the tax issues surrounding the gift baskets, as well as to ensure that any obligations for the prior years were met.
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Under the agreement, the Hollywood Foreign Press Association and the IRS have settled the tax obligations with respect to gifts given through 2005. Recipients of 2006 gift boxes will be issued appropriate informational tax forms by the press association and will be responsible for satisfying their tax obligations.
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Last year, the IRS started an outreach campaign aimed at the entertainment industry. This effort is focused on distribution of celebrity gift bags and goodie bags in conjunction with appearances by the stars at award shows and other gatherings. Such bags can include luxury trips, jewelry and electronics. Dozens of the award shows take place each year.
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"The fact this gift bag practice grew so quickly is stranger than fiction," said IRS Commissioner Mark W. Everson said in a statement. "We're happy the Hollywood Foreign Press Association stepped forward to resolve this issue."
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"We are pleased to have reached an agreement with the IRS which resolves all income tax obligations on the part of our presenters," said Philip Berk, president of the Hollywood Foreign Press Association.
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Last September, the press association discontinued the practice of thanking presenters with presenter boxes.
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Since August, the IRS has contacted entertainment industry groups and others to focus attention on tax guidelines for gift bags and other promotional items.
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What does that mean for you?
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Nothing, unless you're a Tinseltown mogul, right?
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Wrong.
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For the past few years, the IRS has vigilantly increased audits and enforcement. This settlement with the Hollywood elite represents just one part of that vigilance.
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The next part could involve you.
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Darrin T. Mish is an attorney who lectures nationally to practitioners in the area of IRS Problem Resolution. You can contact him at (813) 229-7100 to obtain a free subscription to his newsletter entitled The IRS Times & Inquirer or visit his website at www.getIRShelp.com
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