Art dealers who think they can swindle the city and government out of sales tax revenue are discovering they are gravely mistaken

Art Business News, Sept, 2003

* Art dealers who think they can swindle the city and government out of sales tax revenue are discovering they are gravely mistaken. Four Manhattan art dealers have plead guilty to sales-tax avoidance. Rather than charging New York sales tax--a national high of more than eight percent, due on sales to New York residents--the dealers had been shipping empty containers to New Jersey, Connecticut and points elsewhere.

One enterprising dealer even sent boxes of chocolate out of state, while the art items stayed in town. Macklowe Gallery Ltd., a specialist in 20th-century decorative arts, was fined $95,000; S.J. Shrubsole Corp., the antique silver dealer, was fined $150,000; Bob P Haboldt and Company, a specialist in Dutch and Flemish Old Master paintings and drawings, was fined $400,000; and Otto Naumann Ltd., an Old Master dealer, was fined $500,000. According to the D.A., the series of prosecutions has so far yielded almost $13 million in unpaid taxes and fines to the city and state. In all, as many as 20 art dealers have had their records subpoenaed in the probe.