Sotheby’s helped wealthy art collector avoid sales tax on $27M in art: suit

Sotheby’s allowed a wealthy art collector to avoid paying sales tax on $27 million worth of artwork, a new lawsuit by the New York Attorney General alleges.

“Millionaires and billionaires cannot be allowed to evade taxes while every day Americans pay their fair share,” AG Letitia James said in a statement. “Sotheby’s violated the law and fleeced New York taxpayers out of millions just to boost its own sales.

From 2010 to 2015, Sotheby’s “enabled a valued client,” to file false paperwork stating that he was an art dealer — a middleman position which allows a person to avoid paying sales tax  — rather than what he truly was, an art collector, a Manhattan Supreme Court lawsuit from Friday alleges.

Instead of selling the works to others, the collector — who isn’t personally named in the suit though his company Porsal Equities is — purchased the art “for display and enjoyment at his vacation homes in New York and his other properties,” the court documents say.

Sotheby’s accepted the man and Porsal Equities’ false paperwork, “even though Sotheby’s in fact possessed knowledge that the collector and his company were purchasing for the collector’s personal use and enjoyment, nor for sale ‘in the normal course of business,’” the suit charges.

Sotheby’s employees even went to the collector’s apartment to help him hang up artwork and view the works on his walls, the court papers claim.

“The sales force, on the one hand, competed fiercely with rival auction houses for sales, and learned to extend whatever accommodations they could to keep clients happy,” the court documents allege.

Porsal Equities reached a settlement with the AG’s office in 2018 admitting to falsely filling out the paperwork that let the company avoid paying sales tax, the AG’s office said.

“Sotheby’s vigorously refutes the unfounded allegations made by the Attorney General, which are unsupported by both fact and law,” the company said in a statement. “This is an issue between the taxpayer and the state dating from between five and ten years ago, which, as the Attorney General noted in her complaint, was settled two years ago.”

Credit: NYPOST

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