The New York state attorney general has arrived at an agreement with the Gagosian Gallery—one of the most renowned dealers in the world—to recover US$4.28 million in penalties, interest and back taxes.
Taking a hard line on inter-state sales and shipping, New York determined that the gallery, when shipping art from California to New York buyers via independent carriers, averted millions of dollars in taxes.
Larry Gagosian, the gallery’s founder, is also the president of California gallery Pre-War Art Inc. After investigators established a “substantial nexus” between the two entities, they discovered that Pre-War shipped US$40 million worth of art to New York buyers without paying any taxes over a 10-year period.
The attorney general determined by not using “non-common carriers” like Federal Express or DHL, the art was effectively delivered to New York buyers upon receipt by the independent carrier given that the carrier was paid by the buyer.
This ruling potentially affects not only art galleries but also dealers in other high-end goods such as furniture, jewelry and other luxury items.
Under the agreement, the Gagosian Gallery also agreed to provide a detail of the transactions to the attorney general for the next six years. The gallery will also establish its own shipping company to ensure that all sales are properly recorded.
Should you be concerned about interstate deliveries or shipments, contact your advisor to discuss your options.