"Washington - Movie stars enjoying the lavish gift bags handed out at this year's Oscar awards will get some decidedly unglamorous notices: don't forget to pay tax on the windfall.

""There's no special red-carpet tax loophole for the stars,"" Internal Revenue Service Commissioner Mark Everson said on Thursday.

The Academy of Motion Picture Arts and Sciences, in an accord with the IRS, agreed to pay taxes due on gift bags handed out through 2005.

But responsibility for paying taxes on this year's swag falls on the recipients.

The agreement marks the beginning of an IRS effort to reach out to the entertainment industry with reminders that award show gifts and promotional giveaways are considered taxable income.

The value of the gifts must be reported on a celebrity's tax return. That includes gift certificates or vouchers if they've been redeemed. The gifts count as income because the IRS does not believe they were given ""solely out of affection, respect or similar impulses"".

Celebrity gifting has become more lavish as marketers try to harness some star power to advertise their goods. The giveaways often include luxury trips, jewellery and electronics.

George Clooney donated his Oscar swag bag to United Way. It fetched $45 100 at auction, benefiting the United Way Hurricane Response and Relief Recovery Fund. Clooney may be eligible for a tax deduction.

The bag, given to presenters at the 78th Annual Academy Awards, included a BlackBerry 8700c, a Kay Unger kimono and a cultured Tahitian-pearl necklace.

The Internal Revenue Service said it is not conducting a special audit initiative in this area, but questions about gift reporting might arise during an examination of an individual's tax return.

Donors giving gifts to celebrities will be reminded to fill out special informational forms reporting the gifts to the IRS.

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