CrimeSep 20, 2024
Oregon Jeweler Sentenced to 20 Years for Stealing From, Defrauding Customers CrimeNov 20, 2024
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.
Sotheby’s will pay millions of dollars to New York State to settle a tax fraud lawsuit the state filed against it in 2020. (Image courtesy of Wikimedia Commons/ajay_suresh)
New York—Sotheby’s Inc. has reached a $6.25 million settlement with New York State in a now 4-year-old lawsuit that accused the auction house of fraudulently securing tax breaks for clients purchasing artwork.
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.”
Related stories will be right here …
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.
Editors' Picks
Sponsored by
More on Crime
The Latest
IndependentsJun 05, 2026
Pennsylvania Jewelry Store To Close After 79 YearsJim Springer, owner of Dunkelberger’s Fine Jewelry, is heading into retirement.
SurveysJun 05, 2026
Consumers to Cut Back on Spending Amid Rising Prices, Survey Shows When conducting its May consumer confidence survey, The Conference Board asked extra questions about consumers’ budgeting strategies.
CollectionsJun 05, 2026
Rebel Jewelry’s Charm Symbolizes Perseverance for Pride MonthThe “Tunnel” charm, our Piece of the Week, celebrates Pride Month with its design inspired by hope and the light at the end of the tunnel.
Brought to you by
All Eyes on Gold Prices. Alternatives to Look For. And What to BEWARE of in VegasAs gold prices rise, today’s retailers are looking for alternatives at prices that will appeal to wider audiences.
SourcingJun 05, 2026
State of Diamonds: The Way Forward for Natural DiamondsThe jewelry industry is reassessing its positioning as Gen Z reshapes the retail landscape and lab grown continues to gain market share.
Weekly QuizJun 05, 2026
This Week’s QuizTest your jewelry news knowledge by answering these questions.
AuctionsJun 04, 2026
Treasures from Maurice Tempelsman’s ‘Marvelous’ Life Head to AuctionUp for auction at Sotheby’s, the collection of Tempelsman’s personal effects includes a Cartier Tank watch Jackie O. gifted him.
CollectionsJun 04, 2026
Buddha Mama to Spend the Summer in AspenThe Miami-based fine jewelry brand will host its first summer residency in the Colorado mountain town from June 5 to Aug. 23.
Brought to you by
How Modern Training Is Becoming a Competitive Advantage for Jewelry RetailersWith the trade and customer trust in mind, GIA® developed NextGem™ – on-demand training designed specifically for retail.
MajorsJun 04, 2026
AGS Honors Late Peter Yantzer, Holds Time Capsule CeremonyThe organization also announced its international board of directors for the 2026-2027 term.
MajorsJun 04, 2026
Neiman Marcus’ Downtown Dallas Store to Close in SeptemberSaks Global confirmed the closure this week, spelling the end for a store that’s been part of downtown Dallas for more than 100 years.
ColumnistsJun 03, 2026
Peter Smith: When Top Talent Leaves and What It Says About YouSmith discusses how managers should handle a top performer's exit, warning that a poor response could have a lasting impact.
GradingJun 03, 2026
GIA’s Tracr Investment Is First Step Toward Industry-Owned PlatformThe Gemological Institute of America is now a 30 percent stakeholder in Tracr, the De Beers-backed blockchain for diamonds.
WatchesJun 03, 2026
The 1916 Company Taking Pre-Owned Rolexes on the Road, AgainThe retailer is bringing Rolex Certified Pre-Owned watches to five U.S. cities in 2026 for collectors to see, try on, and purchase.
IndependentsJun 03, 2026
Jessica Alba Is the New Face of Gabriel & Co.The actress and entrepreneur stars in the jeweler’s new campaign that celebrates life’s quiet moments.
TrendsJun 03, 2026
State of Design: Only the Innovative Will SurviveThe price of gold has risen, affecting the number of pieces designers make, the materials they use, and how they position themselves.
FinancialsJun 02, 2026
Signet Jewelers’ Q1 Sales Up 2% As It Focuses on ‘Core Four’ The jewelry retailer is zeroing in on Zales, Jared, Kay Jewelers, and Blue Nile as it looks to create unique brand identities for each.
SourcingJun 02, 2026
Leader Appointed for Botswana’s Diamonds for Development Fund Dr. Akinwumi Adesina, a development economist, will head the fund created to help Botswana diversify its economy.
WatchesJun 02, 2026
Watch Industry Veteran James Marks Joins Sotheby’sSotheby’s has appointed the former Phillips executive as its global head of private sales and retail in its watches division.
AuctionsJun 02, 2026
Sotheby’s to Auction 10-Carat Blue Diamond, 1960s Harry Winston Necklace A private collection of five Paraíba tourmalines also will be up for sale at Sotheby’s High Jewelry auction in New York, scheduled for June 16.
IndependentsJun 02, 2026
State of Retail: 6 Things Retailers Should Know About Consumers TodayFrom Gen Z’s view of luxury to “doom spending,” these are the six consumer trends to note this year.
Events & AwardsJun 01, 2026
Design Atelier Brands Have a Big Night at Emotional Couture Design AwardsThe show started by honoring Mildred Marcano, ended with a tearful Beth Anne Bonanno, and recognized a dozen-plus designers in between.
SourcingJun 01, 2026
RapNet Rebranding as Rapaport TradeThe revamped online diamond marketplace will feature pricing intelligence and data-driven tools for more efficient buying and selling.
SourcingJun 01, 2026
Gemfields’ Higher-Quality Emerald Auction Achieves $26.8MThe miner said demand for higher-quality emeralds is stable, but there is notable caution in the market.
CollectionsMay 29, 2026
Cultus Artem’s Necklace Is the Oasis in Las Vegas’ DesertThe “River of Heaven” necklace, our Piece of the Week debuting at Couture, combines 26 salt and pepper diamonds spaced by Tahitian pearls.
IndependentsMay 29, 2026
Meet the 2026 Retailer Hall of Fame InducteesThis year’s inductees include second-, third-, and fourth-generation jewelers.
Events & AwardsMay 28, 2026
JCK Announces Jesse Itzler as 2026 Keynote SpeakerThe author, speaker, and entrepreneur will give his presentation, “Spiritual Billionaire,” on Saturday morning.
Events & AwardsMay 28, 2026
JCK Rocks To Ride With NellyThree-time Grammy award-winning artist Nelly is set to perform at the annual event at Tao Beach on Sunday night.
