Sotheby’s Inc. has agreed to pay $6.25 million to resolve a lawsuit filed by the New York Attorney General’s Office, which accused the auction house of helping wealthy clients evade sales taxes by falsely claiming art purchases were for resale purposes, Bloomberg reports.
Attorney General Letitia James announced the settlement on Thursday, emphasizing that Sotheby’s employees allegedly encouraged clients from 2010 to 2020 to make these false claims, fully aware that the artworks were intended for private collections or as gifts.
“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,” James said. “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, filed in 2020, stemmed from accusations that Sotheby’s assisted a shipping executive in using a fraudulent resale certificate to avoid paying taxes on art purchases. Following the initial complaint, the scope of the investigation expanded to include allegations against seven additional collectors and various Sotheby’s employees, including those in its tax department.
In response to the settlement, Sotheby’s released a statement reiterating that it admitted no wrongdoing. The auction house expressed its commitment to adherence to legal standards moving forward.
“These allegations relate to activity from many years ago – in some cases over a decade – and Sotheby’s provided much of the evidence which the Attorney General used to obtain a settlement with the taxpayer referenced in the complaint six years ago,” the company said.
