Sotheby’s has reached a $USD6.25 million ($AUD9.57 million) settlement after being accused of fraudulently securing tax breaks for clients purchasing artwork.
New York Attorney General Letitia James alleged that the auction house helped clients avoid paying taxes on millions of dollars of purchases between 2010 and 2020.
“No one should be allowed to cheat the system and escape paying the taxes they owe,” James said.
“Sotheby’s intentionally broke the law to help its clients dodge millions of dollars in taxes, and now they are going to pay for it. Every person and company in New York knows they are required to pay taxes, and when people break the rules, we all lose out.”
The lawsuit claimed the auction house encouraged clients to use tax exemption forms known as resale certificates. These forms certify that a buyer is exempt from paying sales tax because the purchase is for resale.
These certificates were accepted despite the auction house allegedly knowing these clients were buying for private collections. As part of the settlement, Sotheby’s must undergo reforms, including new measures to ensure employees are educated on tax law.
According to reporting by Reuters, Sotheby's did not admit or deny wrongdoing and settled to “avoid the time, expense and distraction of litigation”.
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