Art Collector to Shell Out $7M for Unpaid Tax

     NEW YORK (CN) — Prosecutors said Tuesday that a major contemporary art dealer will pay $7 million for not paying sales and use taxes on acquired art, including pieces by Jean-Michel Basquiat and Andy Warhol.
     Aby J. Rosen used two companies — 22nd Century Acquisitions and Lever House Artwork — to buy contemporary artwork, “claiming an exclusion from sales tax on the basis that the purchases and commissions were for resale,” according to New York Attorney General Eric Schneiderman.
     Between 2002 and 2015, Rosen didn’t pay sales and use taxes on more than $80 million worth of art purchases, prosecutors claim. The purchases reportedly include more than 200 works of art, furniture, jewelry and decorative items.
     New York law requires vendors to pay sales tax, as well as a “compensating use tax” if they use a purchased item exclusively for resale.
     Additionally, a separate use tax applies when a vendor “diverts inventory for use that was initially intended exclusively for resale and purchased with resale certificates,” according to a press release from Schneiderman’s office.
     Rosen allegedly used the art he bought for personal enjoyment and to enhance his real estate business brand by displaying art in offices and properties.
     His collection included works by Jean-Michel Basquiat, Alexander Calder, Damien Hirst, John Currin and Andy Warhol, prosecutors claim.
     Prosecutors say Rosen’s companies should have paid sales or use tax when they purchased the artwork or when they diverted the pieces to taxable uses other than resale.
     “We are committed to rooting out tax abuses wherever we find them, especially in the art world, where the difference can be hundreds of thousands—if not millions—of dollars in lost tax revenue per sale,” Schneiderman said in a statement. “When art collectors don’t pay their fair share, law abiding New Yorkers should not be stuck footing the bill.”
     In addition to the $7 million settlement payment, Rosen agreed to a certain code of conduct, according to prosecutors.
     He agreed to only use a resale certificate if artwork is bought exclusively for resale. Rosen will also report and pay compensating use taxes when applicable, and his companies will hire professional accountants, Schneiderman said.

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