Sunday, April 13, 2014

The Art of Saving Sales or Use Tax

At Business Insider, 9 Pieces of Good Advice From Notorious Business People reminded me of Tyco's former CEO, Dennis Koslowski, and his tax evasion conviction.

To avoid New York State sales tax, Koslowski had paintings that he or his wife purchased for his New York apartment (the one with the $6,000 shower curtain) shipped to his New Hampshire home. The shipments turned out to be empty boxes.

Even if Koslowski (who recently finished his jail term for his misbehavior at Tyco) had been a New York resident who purchased art in another state, he would have been subject to NY use tax. Today's art collectors  are luckier.

As The New York Times reports, collectors have discovered a "send it out of state" strategy that works. See Buyers Find Tax Break on Art: Let It Hang Awhile in Oregon.

To avoid use tax, purchased artworks are shipped to museums in Oregon or other tax friendly states (New Hampshire qualifies) on loan. After a period on exhibit, the purchases drift home tax free. The Times diagrams it for you here.

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