New York sues Sotheby’s for helping important client escape sales taxes on artwork – art and culture


Sotheby’s used to be sued on Friday by New York’s attorney general, who accused the auction house of defrauding the state by helping the most important client steer clear of millions of dollars of sales taxes on art he purchased.

Attorney General Letitia James said Sotheby’s helped the client, a collector of modern art, obtain false tax exemption certificates referred to as resale certificates by letting him painting himself as an art dealer reasonably than as a collector.

James said this enabled the client, who runs a shipping commerce and lives chiefly out of doors the country, to steer clear of sales taxes on more than $27 million (£21 million) of art he bought for personal use between 2010 and 2015, including for his Manhattan apartment.

The complaint said Sotheby’s accepted four resale certificates despite “overwhelming” evidence the purchases were for personal use, including when senior Sotheby’s personnel visited the apartment “to admire his artwork on the walls.”

In a commentary, Sotheby’s said it “vigorously refutes the unfounded allegations made by the Attorney General, which are unsupported by both fact and law.”

The lawsuit used to be filed in a New York state court in Manhattan, and seeks damages plus civil penalties for violations of the state’s False Claims Act.

It used to be filed two years after some of the client’s companies, Porsal Equities, reached a $10.75 million settlement to get to the bottom of related state allegations over the usage of resale certificates.

“Millionaires and billionaires cannot be allowed to evade taxes,” James said in a commentary. “Sotheby’s violated the law and fleeced New York taxpayers out of millions.”

(This story has been published from a wire agency feed without modifications to the text.)

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