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|Christie's to pay up to $16.7 million fine over tax violations|
In this file photo auctioneer Jussi Pylkkanen leads the auction during the Post-War and Contemporary Art Evening Sale at Christie's Auction House in New York. Kevin Hagen/The New York Times.
by Julia Jacobs
NEW YORK (NYT NEWS SERVICE).- As part of an agreement to avoid prosecution, Christies will pay up to $16.7 million for failing to properly collect New York sales tax from 2013 to 2017 on private purchases made in the state or ultimately delivered there, the Manhattan district attorneys office said Thursday.
The fine comes after a yearslong investigation into the tax-collection practices of the auction houses London-based private sales arm, as well as those of other Christie's-affiliated companies overseas including ones in Amsterdam, Dubai and Hong Kong conducting business with clients in New York. The settlement requires $10 million to be paid up front and the remainder to be paid in about two years.
According to public documents describing the agreement, the tax violations arose from bureaucratic changes and flawed tax advice.
In 2013, Christies started operating a separate company called Christies Private Sales that would centralize private purchases. When planning for the new companys launch, prosecutors said, a senior tax adviser told executives that the new company, based in London, would not have to register to collect state and local sales tax in New York.
At the time, Christies sales specialists expressed concern that sales at pop-up retail stores in New York were not being taxed. Even some customers questioned why tax was not being collected on their purchases, according to the documents.
After in-house legal personnel in New York began objecting to the situation, the companys general counsel announced that Christies Private Sales would start collecting New York sales tax, prosecutors said.
But according to internal documents obtained by the district attorneys office, a second tax adviser recommended that Christie's Private Sales avoid registering to collect sales tax in the state because it could prompt audits, funneling the tax returns through Christies in New York, which had long been registered.
Prosecutors said that other overseas offices also did not properly take in taxes. Between July 2013 and January 2017, those affiliates delivered about $189 million worth of goods in New York that should have been subject to local and state taxes, according to documents. None had registered to collect sales tax in the state until the district attorneys office started investigating.
This weeks settlement required that Christies ensure compliance with state and local tax law by conducting an internal investigation, re-educating staff on tax policies and procedures and possibly firing certain employees. (The two tax advisers no longer worked at Christies as of July 2017.)
Christies said in a statement that it has worked with the district attorneys office for years on problems stemming from the incorrect tax advice, and that it has since reviewed its internal processes to ensure compliance with relevant tax law.
© 2020 The New York Times Company
April 11, 2020
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