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Will The Taxman Kill The Swag Bag?

8/16/2006 9:40 AM PDT BY TMZ STAFF

The celebrity swag haul this year at the Emmys – whether you're a winner, loser, or just a presenter – could top $100,000 per person. But with the federal government and IRS in the midst of a vigorous push to get stars and Jane Q. Citizen alike to pay taxes on gifts and winnings, it might just behoove celebs to lay off those tempting gift bags altogether and avoid the hefty 50% tax bill, not to mention the prying eyes of the taxman.

This year, the Academy of Television Arts and Sciences, the group that gives out the Emmys, has a bag valued at anywhere from $27,000 to $33,000 to thank the presenters in the Aug. 27 ceremony. Distinctive Assets is giving away a $42,000 trove of consolation prizes (above), including wine club and gym memberships, a VIP package at Caesar's Palace in Las Vegas, and gift certificates for life coaching, LASIK eye surgery, and something called "Fan Database Management Services" – and that's for the losers. And GBK Productions is setting up a gift "suite" for nominees and special guests that features a gold-plated Nokia cell phone and a lease on a Ford hybrid car -- $50,000 worth, all told.



Sounds pretty good to us. And yet, Paul Caron, a tax law professor at the University of Cincinnati law school and creator of the blog TaxProf, tells TMZ that given their income bracket, stars could end up paying half the value of the gift bag just in taxes-and that more than ever before, the IRS will be watching very closely.

What all this swag-giving and -gathering amounts to, admits Distinctive Assets president and gifting guru Lash Fary, is stars getting a discount -- a hefty one -- on some nice stuff. "I think paying 40 cents on the dollar for this merchandise is a pretty good deal," says Fary. Not that most of these stars – who make as much as $20 million per year – are that worried, he says: "I honestly think that Jennifer Garner has bigger tax issues than her $30,000 gift bag."

Still, Fary says that he's trying to effect change in the relevant tax codes for such giving, because he doesn't think it makes sense that a celebrity who's had LASIK eye surgery, for instance, courtesy of a gift bag from a year ago, should have to pay taxes on a non-transferable gift certificate for LASIK eye surgery that he or she gets in this year's Emmy haul. "There needs to be a legal loophole," says Fary. "It's silly and preposterous."

And yet, as Professor Caron points out, it's loopholes and a fair amount of hush-hush that's forced the IRS to get tough on gift-takers and prizewinners in recent years, making high-profile examples out of "Survivor" winner Richard Hatch, some of the families of "Extreme Makeover: Home Edition," those Pontiac G6 winners on "Oprah" -- and now, gift bags. Caron thinks that what the gift-givers might end up having to do, if the tax burden and IRS vigilance gets too onerous, is just include a check for the tax to help keep celebs happy – the cost of giving stuff away, as it were. (George Clooney gave his 2006 Oscar basket -- worth a reported $100,000 -- to charity, a cost-free option for celebs.)

Of course, as Caron puts it, there's a couple groups of people that benefit regardless of what celebs decide to do with their swag. "The accountants and the lawyers end up coming out ahead in the end," he says. "They get the biggest bag of all."
15 COMMENTS

No Avatar

1.

kathryn    

Waah, the celebs will have to "pay" for their free stuff. The world is cruel.

2898 days ago
2.

get a life people    

Why are these people given all this free stuff...They can afford to buy there own.......I think it is very tacky and selfish.....

2898 days ago
3.

texasbush    

I think it's a load of crap. The government comes around and wants to tax us on everything, nickle and diming us left and right on EVERYTHING. Meanwhile we're footing a huge bill because of a government that's spread us so thin, militarily that if we get into a shouting match with Canada over our shared power grid, they'll annex Michigan with their mounties. It's a sad state of affairs when you can't win a prize without Uncle Sam putting his scotch-taped hand in the change tray. Where's MY tax money? Where's the help with the rising gas prices? Where's the help with the convalescing Social Security program? They should stop worrying about taxing people for gifts they won and start worrying about blowing our hard-earned, highway robbed money, pampering foreign diplomats with fruitless banter and photo ops.

-Eddy

2898 days ago
4.

showers of Blessings    

we pay tax if we have winnings in las vegas. taxpayers are required to report gambling winnings. i encourage the IRS to have a ruling to make these people who get swag bag to report as income.
why should these people get exempt??????? they are rich already !!!!!

2898 days ago
5.

peskey    

It's about damn time. These celebs with their fat bank accounts don't need huge gift bags. How about donating them to charity? What a bunch of assholes. Fucking hollywood.

2898 days ago
6.

anon    

They should pay taxes on it
The govermnent is in enuff trouble ...thank u George W
Why do ricjh people get handed everything?

2898 days ago
7.

Princess Poon    

why should you have to pay taxes on a GIFT? somebody gives something to you that cant be transferred or sold for cash, and you have to pay a tax on it? its insane. it makes no difference whether the stars are rich or not--fair is fair. its like having to write a check to the IRS after you open your christmas gifts.

2898 days ago
8.

spin sycle    

sorry but you only get to call it a gift up to a certain amount.....then taxes get involved! that's why it sucks to win a car! Make them pay taxes, it's only fair....non-celebs like free stuff too.

Get the dogs of taxation on them!!!

2898 days ago
9.

nikita    

It's not fair to pay taxes on gift's period, people in america get more and more ridiculous!!!

2898 days ago
10.

nikita    

It's really sad that people in America are so envious that even if somthing is not fair because they are jealous they justify it....If all gifts have to be taxed in this country then fine, But if they are just over doing theyr'e jobs then they need to be fired!!! taxing on gifts is crazy, because no one would accept them...and what about xmas will all xmas be taxed> not fair no way

2898 days ago
11.

Missy    

I agree Andrew...the government has to ruin everything...don't they? If they could manage to effectively budget the TRILLIONS of dollars they already choke out of every person in this country they wouldn't have to follow people around taxing GIFTS. Rich or not rich...a gift is a gift and the IRS should stay out of it. Bastards.

Missy

2898 days ago
12.

cameron    

I FEEL IT IS SO RIDICULOUS THAT CELEBS RARELY PAY WHEN THEY ARE FULLY CAPABLE OF IT. THEY GET ALL THESE FREE GOODY BAGS AND DO NOT EVEN NEED IT!! TRIPS?? CELL PHONES?? EYE SURGERY? GIVE ME A FREAKIN BREAK. TAX THEM! THIS WORLD IS SO FREAKIN STUPID

WHATEVER MAN

2897 days ago
13.

Barbara    

Just a thought.
It’s something that the rich get all these nice gifts. Especially when the stars have most of what is in the bag already or the items would just be a drop in the bucket for them to get. Why not give a few away to normal people who would never have the chance to buy anything in the bags because we/ they have family to raise and bills to pay.

2896 days ago
14.

g grant    

for those who think our government has ruined everything remember you are FREE to leave anytime. what is ruined however is the system that allows millions to be payed to those who pretend to do something as opposed to those who do the real job. the next time someone puts a gun in your face or pulls your child from a burning building remember that the person you call for help makes nothing compared to those who pretend to do the same thing.. the people who are already overpaid to entertain us are given these items so the public will purchase them only the general public cant afford most of them. its absurd for them to bitch one iota about paying taxes on anything given to them.and you people defending the cry babies that is your right..and it is a right given to you by our government..we need a comparaitve worth system in this country. entertainers are just that..there are people far more deserving of the money and perks these people receive and i doubt they would whine about paying taxes ..

2887 days ago

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