Sotheby’s to Pay $6.25M Settlement to NY State for Alleged Tax Fraud
The auction house was accused of helping clients avoid paying taxes on millions of dollars’ worth of art purchased from 2010 to 2020.

The auction house allegedly helped clients avoid paying taxes on tens of millions of dollars’ worth of art purchased between 2010 and 2020, New York Attorney General Letitia James said when announcing the settlement last week.
The lawsuit, brought by James’ office in November 2020, claimed Sotheby’s encouraged clients to use tax exemption forms known as resale certificates, which certify that a buyer is exempt from paying sales tax because the purchase is for resale only.
It then accepted these certificates, even though the auction house allegedly knew these clients were buying the art for themselves, not to resell it.
Sotheby’s did not respond to National Jeweler’s request for comment but a Reuters report said the company did not admit or deny wrongdoing, and said it “settled to avoid the time, expense, and distraction of litigation.”
James said one of Sotheby’s clients, referred to as the “Collector,” purchased $27 million worth of art from the auction house between 2010 and 2015 using these forms.
She said Sotheby’s accepted resale certificates from the Collector even though it knew they were not buying art for resale but for a personal art collection, some of which Sotheby’s employees helped to set up for display in the Collector’s home.
James previously had secured a settlement with the Collector’s company, Porsal Equities, requiring it to pay more than $10 million in taxes, penalties, and damages for being in violation of tax laws and the New York False Claims Act.
“No one should be allowed to cheat the system and escape paying the taxes they owe,” she said.
“Sotheby’s intentionally broke the law to help its clients dodge millions of dollars in taxes, and now they are going to pay for it. Every person and company in New York knows they are required to pay taxes, and when people break the rules, we all lose out.”
The attorney general’s office also claimed that from 2012 to 2020, Sotheby’s improperly accepted resale certificates from at least seven other clients on millions of dollars of purchases despite knowing they were buying art for their personal collections.
In several instances, Sotheby’s did not just accept the false resale certificates, but suggested its clients use them, said James, providing the forms and filling out portions of it for them.
“In this case, a prominent auction house went out of its way to help wealthy clients avoid paying millions of dollars in sales taxes on their art purchases,” said Amanda Hiller, acting commissioner and general counsel of New York State Department of Taxation and Finance.
“Thanks to the diligent efforts of Attorney General James and her staff, this fraudulent activity has been stopped and Sotheby’s is being held accountable.”
In addition to paying $6.25 million, Sotheby’s has to undergo reforms as part of the settlement, including creating new measures to ensure employees are educated properly on New York tax law and reviewing information about whether a client intends to resell the art being purchased.
The Latest

The National Retail Federation expects retail sales growth to return to pre-pandemic levels as consumers continue to face inflation.

The 4-carat, old mine brilliant-cut diamond engagement ring was co-designed by Willis and New York City-based brand Karina Noel.

Rio Tinto unearthed the diamond at its Diavik mine in Canada’s Northwest Territories.

Bench jewelers spend years honing their skills, Jewelers of America’s Certification validates their talents.

The multisensory experience, open April 8-13, will feature the brand’s silver creations among dream-like scenes of natural landscapes.


The virtual event will take place April 7 at 3 p.m.

The pieces in “Animali Tarallo” portray animals from stingrays to elephants through portraits and interpretations of their patterns.

Natural diamonds mean more than lab-grown, but when every cut is ideal, they all look the same. Customers want more—Facets of Fire delivers.

Parent company Saks Global said the iconic location will be open through the holiday season as it decides what to do with the space.

Ronald Winston, son of Harry Winston, donated the diamonds to the Smithsonian National Museum of Natural History in Washington, D.C.

The educational event will take place in Charlotte, North Carolina, this May.

The independent jeweler first opened its doors in 1888.

The layoffs come amid the TV shopping channel’s efforts to restructure and focus on live shopping through social media.

The debut event will take place in Miami’s Coconut Grove neighborhood this fall.

The roundtable will take place May 17 ahead of the trade show’s welcome dinner.

The “Peanuts x Monica Rich Kosann” collection features the comic strip’s classic vocabulary across 10 bracelet designs.

Three industry experts dive into the complexities of the material often marketed as an “ethical” alternative for metal in jewelry.

Diamonds are not only one of the most prominent gemstones, but the birthstone for those born in April.

The Utah-based company known for making wedding bands has acquired Doubloon Golf.

The longtime luxury executive led one of LVMH’s watch brands, TAG Heuer, for 12 years before taking over Bulgari in 2013.

Lotus Gemology founder Richard W. Hughes has translated Heinrich Fischer’s 1880 book “Nephrit und Jadeit” from its original German.

The ring's design features contrasting lines influenced by work from architecture-inspired photographer Nikola Olic.

The Conference Board’s index fell as consumers continued to worry about the impact of tariffs, the labor market, and the price of eggs.

However, two medieval jewels surpassed estimates at Noonans Mayfair’s recent jewelry auction in London.

The Oscar-nominated actor debuted in the campaign for the new “Top Time B31” collection, which introduced Breitling’s Caliber B31.

The Congress is scheduled to take place May 19-22 in Brasilia, Brazil.

The family-owned retailer is the new owner of Morrison Smith Jewelers in Charlotte, North Carolina.