Uber-dealer Thea Westreich and her husband, two of the biggest names in the art-dealing biz, have been hammered for $749,892 in uncollected sales tax and fines, says today's Page Six. This is the latest in an unending stream of art-world sales tax evasion fiascos.
Here's the classic way it works: all work sold by NYC art dealers is subject to New York State sales taxs — but only if the work is sold within New York state. So any work that's supposed to be shipped to Aspen or Kennebunkport or Greenwich, say, is tax-free.
All collectors know this — and NONE of them ever want to pay sales tax, even if they want that pretty painting in their Manhattan pied-a-terre, because it goes so well with the couch. And they're all very cheap — they'll demand outrageous discounts on work, even work on the secondary (resale) market that the dealer has purchased, hoping to profit on a slim margin.
Instead of discounting the work to the greedy collectors and losing their margin, the art dealers see they can save the collectors the 8.625% sales tax — and that's good enough for the collectors, as they know they're not the ones who'll get busted. Next thing you know, an empty box is being shipped out of state, and the actual package gets lugged out the front door by someone's assistant. Pretty sneaky, sis!
Soho Dealer Guilty On Taxes [NYP]