How does that whole thing work? Do they go because they have to as part of the the film deal? Are they paid for going? How does the process of rounding up celebrities to attend film festivals play out?
They usually aren’t paid up front, though most of their expenses (travel, accomodations, etc.) are taken care of. Typically, if a film is playing a festival, it’s either (a) smaller/more “independent”, or (b) has serious award potential. In either case, the film will usually be a harder sell in the mainstream market, so any additional publicity or buzz they can generate is in everybody’s best interests. Generally speaking, I don’t think most actors are “required” to go (and in some cases, other filmmaking commitments may prevent them from attending), but it can look pretty conspicuous if a top-liner doesn’t show for a movie that, given the glut of films at festivals, usually needs all the help it can get to separate itself from the herd.
I’m pretty sure this is where the “gift bag” comes in as well: some sort of package/basket of high-priced tchotkes usually from recognized name-brand vendors/designers.
These have just recently been deemed income for taxation purposes.
It also appears that the stars will now have to pay taxes on the equivalent rental costs of the clothes and jewelry that they wear at festivals and award ceremonies that are given temporarily to them by clothes and jewelry designers.
There’s a slight difference between the Gift Bag phenomenon (which you’ll find as part of the awards circuit and which has been used as a carrot to motivate stars to present on awards shows) and the Luxury Lounge arrangement (where stars at festivals can drop by a room and pick up any swag they want from a host of high-end vendors). The former counts from the IRS because it is seen as “payment” or renumeration for a specific appearance, but I think the jury is out on the latter, since no star is obliged to take free things and no services are being explicitly offered or expected in exchange for those things (though IANAL so I don’t know the legal nuances).
It’s easy to conflate the two, though. If you saw the Sopranos episode when Christopher goes to L.A. to cast his movie, the swag with Ben Kingsley was a Luxury Lounge, but the swag with Lauren Bacall was a Gift Bag.