Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts

April 11, 2020

Christie's admits to failing to register to collect New York and local sales tax despite legal obligation to do so


The tax collectors, unsigned
Oil on panel : 78,2 X 100 cm, 16th century
In a Deferred Prosecution Agreement, the auction powerhouse Christie's has agreed to pay up to $16.7 million in sales tax, penalties and interest over a two-year period to the state of New York.  The firms unlucky legal happenstance has been brought about by failing to register, and to collect, New York and local sales between 2013 to 2017 despite a legal obligation to do so. 

In a statement released by the New York District Attorney's Office, Manhattan District Attorney Cyrus Roberts Vance, Jr, praised his office's tax probe saying: “Thanks to our unique expertise and our prosecutors’ hard work, the Manhattan D.A.’s Office is again delivering millions of dollars in badly-needed revenue to the people of New York.”  In addition to thanking his team, Vance thanked  the New York State Department of Taxation & Finance, the City of London Police Department, and DANY Supervising Rackets Investigator Matthew Winters who is embedded overseas. 

While shaving a little bit here and there on taxes is without a question a known problem in the art market, this instance is a bit different that when the average schnook, agrees to participate in a so called "box trick" scam to cheat on his taxes.   In that practice a vendor, knowing that he does not need to collect sales tax on sales purchases when the object being bought is to be shipped out of state,  agrees, and sometimes even suggests, that he can whittle the price of the object down by fudging the books a bit.  To do so, the vendor agrees to allow the purchaser to take the artwork home, while documenting the sale as out of state, shipping an empty box to an address outside the state where the purchaser resides. 

Back in 2004 then contemporary art consultant Thea Westreich and her former New York company, Art Advisory Services, Inc., pled guilty to filing a false business tax return and failing to collect New York City sales tax on $5 million worth of art over a four-year period, and was sanctioned with a $250,000 fine as well as the back taxes. 

But Christie's evasion problem was more extensive. 

According to the Deferred Prosecution Agreement, Christie’s London, Christie’s Private Sales and other affiliated Christie’s entities admitted to:

failing to register to collect and to collect New York and local sales tax between 2013 to 2017 on purchases made in and/or delivered to New York despite having a legal obligation to do so. In addition, Christie’s Private Sales also admitted that once certain employees finally determined in 2015 that the entity had an outstanding obligation to register to collect and to collect New York sales tax with the New York State Department of Taxation & Finance (“NYS Tax”), it failed to register the entity to collect tax with NYS Tax because of the perceived audit risk. Subsequently, Christie’s Private Sales began collecting sales tax from its customers without registering, and Christie’s New York, who were long registered to collect sales tax in New York, falsely reported and remitted this sales tax to NYS Tax as its own.

Sales taxes are big bucks for most states, and in some, like New York, they can be the second-largest source of revenue.  For this reason this kind of tax avoidance has serious consequences. 

November 21, 2014

Artnet news highlights report in Le Point about France's anti-fraud brigade raid on the Musée de Lettres et Manuscrits on Nov. 18

by Catherine Sezgin, ARCA Blog Editor

Artnet.com's headline yesterday: "€500 Million Ponzi Scheme Suspected at Paris Museum pointed to an "exclusive" article in LePoint.fr reported by Mélanie DeLattre, Christophe Labbé, and Laure Rougevin-Baville: "Descente de police au musée de Lettres et Manuscrits" (originally published Nov. 18 and updated Nov. 20):
The cosily niche books and manuscripts market may be about to be hit by one its biggest scandals in recent years. And Paris's Musée des Lettres et Manuscrits, as well as its sister organization the Institut des Lettres et Manuscrits, is in the eye of the storm. 
Le Point reported that on November 18, France's anti-fraud brigade raided the museum and the various branches of Aristophil, a company owned by the museum's founder, Gérard Lhéritier. 
The company is suspected by the tax authorities and Tracfin—a public body fighting money laundering and terrorism financing—of “deceptive marketing practices," and “gang fraud." At time of writing, the Aristophil website as well as the websites for the museum and the institute appear to have been taken offline.
The Musée de Lettres et Manuscrits is a small building located at 222 Boulevard Saint-Germain (near Rue du Bac) in the 7th arrondisemont. I have often passed it walking from Cafe de Flore to Musée d'Orsay but in the last 20 years the closest I have come to entering the museum was to grab a pamphlet last January. The entrance itself is off of the street so I always thought the institution was a bit exclusive although according to the brochure, for less than 10 euros you could visit the collection from 10h - 19h every day with the exception of Mondays and three national holidays (Christmas, New Year's Day, and the first of May).