Art market

Art buyers are coming forward to authorities to pay unpaid sales tax following the claim that many buyers have been evading sales tax on art

There have been no prosecutions, but some cases remain in litigation

Art buyers are continuing to come forward voluntarily and pay unpaid New York sales tax on art, the Office of the Manhattan District Attorney, Robert Morgenthau, has told The Art Newspaper. In March, the Office said that 34 buyers of art had voluntarily come forward to pay $6 million in unpaid New York sales tax. (See The Art Newspaper No.135, April 2003, p.38). The tax is due on art purchased whether in New York or outside of New York for possession in the state. The number of persons flocking silently to pay their unpaid tax has gone up, the District Attorney’s Office now says. Fifty or more people who had bought art have admitted to having evaded paying sales tax, and have now paid over $7 million, the Office says. There were no prosecutions. Attention has been called to the criminality of evading sales tax on art after recent criminal indictments for failure to pay the tax in New York of two prominent executives, Dennis L. Kozlowski, former CEO of Tyco International, Ltd., and Samuel Waksal, former president and CEO of ImClone Systems, Inc. Mr Kozlowski’s case remains in litigation and he is arguing that only the art dealer, not the buyer, is criminally liable for nonpayment of the tax. Mr. Waksal entered a guilty plea to wire fraud in a scheme to evade the tax. In a separate case, he was recently sentenced to seven years in prison and over $4 million in fines, for insider trading.

Originally appeared in The Art Newspaperas 'Yes, Virginia, there is a sales tax'

Appeared in The Art Newspaper Archive, 138 July 2003