Manhattan’s DA Just Slammed Christie’s With a $16.7 Million Fine for Failing to Collect New York Sales Tax for Years

Christie’s auction house has agreed to pay $16.7 million to the
Manhattan District Attorney for failing to properly collect New
York sales tax between 2013 and 2017. The bombshell settlement,
which follows a lengthy investigation into the company, was
announced by the DA’s office today.

As part of the settlement, Christie’s will pay a lump sum of $10
million, followed by an additional $6.7 million, in sales tax,
penalties, and interest to the DA’s Office. The funds—based on
taxable sales made between 2013 and 2017 that totaled $189
million—will be provided to New York State. In a statement, the
DA’s Office said that Christie’s “admitted to failing to register
to collect and to collect New York and local sales tax” on certain
purchases made in or delivered to New York “despite having a legal
obligation to do so.”

The violations took place in two divisions, according to
documents released by the DA: Christie’s offices overseas and its
private sales department. First, Christie’s failed to collect sales
tax on eligible works sold by foreign offices but delivered to
customers in New York between at least July 2013 and January
2017.

Second, back in 2013, Christie’s sought to centralize its
international private sales operations in a division out of
London—and was advised incorrectly by a lawyer that, as a result,
it did not need to collect New York tax on sales to New York
clients.

According to the DA, even Christie’s own specialists eventually
began to ask why they were not required to collect New York tax on
private sales—especially when some of the private sales took place
in pop-up galleries in New York. But the auction house’s legal team
did not realize its error until 2015, when it sought separate
advice on another new initiative.

To make matters worse, according to internal documents, when
Christie’s tax officials realized their mistake, they sought to
cover their tracks: the auction house’s tax manager misrepresented
Christie’s private sales as sales from Christie’s New York in an
effort to avoid arousing suspicion about its past error and getting
audited. The tax manager and their supervisor are no longer working
at the company as of 2017, when the DA’s investigation began,
according to documents provided to Artnet News.

A spokesperson for Christie’s told Artnet News that the issue
was the result of bad advice. “For the past several years,
Christie’s has worked in cooperation with the Manhattan District
Attorney’s Office to resolve specific issues created as a result of
incorrect tax advice Christie’s received regarding the application
of sales tax obligations for specific non-US affiliates,” the
spokesperson said. “The company has since reviewed its advice and
internal processes to ensure compliance with relevant tax law.
This settlement agreement brings the matter to full
resolution.”

In a statement, Vance thanked prosectors for “completing
this meticulous investigation under the extraordinary
circumstances of the COVID-19 public health emergency” and
“delivering millions of dollars in badly-needed revenue to the
people of New York.” He added: “Aggressive, proactive, white-collar
investigations like this one… have put multinational companies
across the world on notice that the privilege of doing business in
Manhattan comes with the obligation to comply with our tax,
business, and criminal laws.”

According to the DA, the agreement takes into consideration
Christie’s cooperation with the investigation and its adoption of
new measures to comply more carefully with New York tax law in the
future.

The post Manhattan’s DA Just Slammed Christie’s With a $16.7
Million Fine for Failing to Collect New York Sales Tax for
Years appeared first on artnet News.