Art | Improper Practices
ArtAssure Ltd. is assembling a series on common legally dangerous practices prevalent in the art market today for use by art professionals.
Recently we have learned of a very odd practice, seemingly oft repeated, in the importation of valuable art objects. Certain art dealers and shippers have been declaring zero value for import purposes on highly valuable art objects. Curiosity caught our attention and a quick look on why revealed two interesting details. First, goods declared at zero are not likely to be inspected by customs or other agencies. Second, a zero declaration eliminates certain incoming fees. We also learned that this is not condoned by the authorities who suspect money laundering. This practice, when discovered, enables an insurance company to deny coverage on the artwork, as well as to cancel the policy.
Another practice, recently clarified, that of selling art to New York residents from other states. Dealers are not exempt from collecting and paying over New York State sales tax.
Most importantly, one must not pay to or receive funds on sales of art from or to third parties. The sources of funds must always be identifiable by the recipient and payments must go to known parties.
As the art business has grown the laws, as mentioned here, have the attention of the authorities and enforcement is severe – a reason the community should consult with competent counsel as to their business practices.
We would appreciate your input to our series as we develop these memorandums for the community’s benefit.