Taxman takes his cut of the Oscars 'swag bag'

Presenting an award at the Oscars has always been an unpaid celebrity gig - unless, of course, you count the camcorders, BlackBerry handheld devices, free cruises, holidays, plasma televisions and jewel-encrusted watches that fill out the so-called "goody bags" at the Academy Awards and other Hollywood prize shows.

For years, these things were regarded as justifiable swag for the celebrities, a way for organisers to show gratitude for their appearance and an opening for sponsoring companies to engage in some shameless name-brand marketing.

Now, though, with the value of the swag bags accelerating faster than an open-top Porsche, the tax authorities are taking a keen interest: from now on, the goodies are to be regarded as taxable income.

Celebrities can still take home that $10,000 watch, but now they'll have to give $4,000, or thereabouts, to the government.

Still worth it? The Academy of Motion Picture Arts and Sciences, which runs the Oscars, has already thrown in the towel - no more goody bags as of next year's ceremony. Others, meanwhile, are still considering their options.

For next weekend's Emmy television awards, presenters have been asked to a sign a letter agreeing to abide by tax obligations if they want the goodies. No letter, no goodies. "It has gotten out of hand," Kevin Brown, an Internal Revenue Service (IRS) official, told Variety - a sentiment echoed across the entertainment industry. Goody bags were intro-duced in the 1970s as just that, a little assortment of treats. As companies have seized on the celebrity factor to create greater product visibility, their value has gone from a few hundred dollars to tens of thousands.

As the IRS put it in a delightfully understated written statement yesterday: "Organisations and merchants who participate in giving the gift bags do not do so solely out of affection, respect or similar impulses for the recipients."

Under an agreement reached on Thursday between the IRS and the Motion Picture Academy, there will be no further tax liability on goody bags handed out up to 2005. Now, recipients will have to fill out individual tax forms - unless, like George Clooney, they choose to auction their bags for charity.

Hollywood did not appear to shed tears for the demise of the goody bag yesterday. There was more a sigh of relief. At this year's Golden Globes, Gwyneth Paltrow sounded more bewildered than pleased to be offered a $20,000 cruise to Antarctica and Tasmania.

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A spokeswoman for the Sundance Film Festival, where celebrities bagged plasma televisions and $10,000 discounts on Las Vegas holiday homes, was "thrilled" by the news.

"We welcome anything that is going to discourage parasitic marketers from coming to town," Elizabeth Daly told Variety. "It completely takes the focus off everything we are about, as well as from our official sponsors, who are the backbone of the festival."

The Motion Picture Academy banned goody bags in April, weeks after the orgiastic excess of this year's freebie bonanza.

The academy's president, Sid Ganis, said: "The intention of the gift baskets was to thank people who helped make our show a success. Over the years, the baskets began to receive more attention in terms of their contents and value, and our message of thanks was lost."

Stories abound about awards-show presenters arguing over whose freebie was whose, or movie executives surreptitiously walking off with bags bulging with cosmetics, or relatives of presenters trying to sell valuable items back to posh Beverly Hills boutiques.

In a prophetic episode of the television mob drama The Sopranos this year, Lauren Bacall played herself in a scene in which two gangsters punched her in the face and tried to steal her $30,000 goody bag.

The fictional Variety headline in the episode read: "Swag Grab Nabs Industry Blab." The real-life Variety headline yesterday was sweeter, and more to the point: "Goodie Bagged."