Did a Small Clarification of Tax Law Have a Major Impact on the Art Market?
Art Business

Did a Small Clarification of Tax Law Have a Major Impact on the Art Market?

Photo by Richard Baker / In Pictures via Getty Images. There are three words that send shivers through the art market, while making the eyes of everyone else glaze over: tax compliance investigation. Periodic forays by attorneys general into the ledgers of galleries, collectors, and auction houses to ensure taxes have been paid properly only tend to attract attention for the big names felled by allegations of evasion. One example came in July 2016, when Gagosian agreed to a $4.28 million settlement with Eric Schneiderman, then New York’s top prosecutor, following an investigation that found, among other things, that the gallery failed to collect required tax on art purchased in New York and sent to out-of-state clients. The case was premised on a new tax guidance that applied to the entire art market, one that suggested a change in how fine art shipping companies are classified under tax law, causing more paperwork and hassle for galleries and collectors. That guidance, issued by New York State’s Department of Taxation and Finance the prior year, addressed when art sellers should collect New York sales tax on work shipped to out-of-state clients, who are not necessarily required to pay in-state levies. The […]

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