New York AG: Sotheby's helped rich art lover skirt taxes

Soby's helped an art collector dodge millions of dollars in New York sales taxes, state attorney general said in a lawsuit filed Friday, accusing prominent auction house of accepting bogus documentation to spare a top client a tax bill. case involves $27 million worth of purchases of pieces by such artists as painter Jean-Michel Basquiat and sculptor Anish Kapoor, and it portrays Soby's as so er to keep a top client's business that staffers enabled him to pass himself off as an art dealer for tax purposes.

“Soby’s violated law and fleeced New York taxpayers out of millions just to boost its own sales," Attorney General Letitia James, a Democrat, said in a statement.

A mess seeking comment was sent to Soby's. lawsuit comes after collector's art holding company, a British Virgin Islands-based concern called Porsal Equities Ltd., settled with attorney general's office in 2018. Porsal agreed to pay $10.75 million in taxes, dams and penalties over allegations that it skirted sales tax on more than $50 million in art buys from various entities in New York.

attorney general's office hasn't publicly identified collector. lawsuit describes him as someone who runs a successful shipping business, fancies Latin American art, lives outside U.S. and has homes around world, including a New York City apartment.

According to lawsuit, he me a 2010 visit to Soby's New York City hequarters and met a junior staffer keen to cultivate him as a client. After collector asked why some art purchases aren't subject to sales tax, she provided him with what's kwn as a “resale certificate” form and partly filled it out. document is meant to provide a tax exemption only to art dealers buying items for ir business inventory and resale. Or buyers generally owe New York state and city sales tax on art purchased and delivered in city.

staffer — and, over time, more than 20 colleagues — knew client was buying art for his own enjoyment, according to lawsuit. She arranged to have some pieces installed at his Manhattan apartment, and she and some coworkers went re to see a $5.7 million Basquiat painting he bought via Soby's in 2012.

collector, sometimes through Porsal Equities, bought $27 million worth of artwork through Soby's tax-free from 2010 to 2015, thanks to resale certificates, lawsuit said.Among purchases was a $1.4 million piece by Kapoor, whose work includes stainless steel sculpture kwn as Bean in Chicago's Millennium Park. Sales tax on collector's 2010 Kapoor purchase alone would total over $126,000, according to lawsuit.It seeks unspecified dams and penalties.

(Im Credit: AP) 

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