Collectors in Washington State targeted in art tax enquiry

Agents are looking at art in museums to determine whether “use tax” was paid

Art collectors in Washington state are coming under the close scrutiny of tax officials seeking to collect unpaid revenues on imported works of art.

“Our job is to make sure that people pay their fair share of taxes”, said Mike Gowrylow, spokesman for the Department of Revenue. “We are concentrating on art collections”, he said. The agency will first launch an educational campaign to inform collectors of their obligations.

He said a “use tax” of 8.8% applies to anything Washington state citizens buy out of state and bring home without paying an equivalent tax at point of purchase.

Mr Gowrylow dismissed media reports that art worth $300 million a year is imported into the state, and he declined to speculate on the potential tax value of art in Washington. He said state tax agents are working with US Customs officials to determine the value of imported works of art.

Tax officials may also use powers of subpoena to obtain records of companies that import works of art in the effort to track down owners who have not paid the tax.

More controversially, agents will also attend exhibitions at museums and art galleries to determine whether the tax has been paid for works on display.

It is “unfair to use public museums to target generous individuals”, said Richard Andrews, director of the Henry Art Gallery at the University of Washington in Seattle.

Mr Andrews said such inspections would undoubtedly create “an impediment to the showing of art by generous collectors–even if they have paid the tax”.

Richard Hines, a Seattle art dealer, agreed that the tax would be a nuisance, but he insisted that ultimately it will not deter “passionate collectors” from importing works of art. In 1994, Microsoft co-founder Bill Gates bought the Codex Leicester for $30.8 million, and initially his lawyers tried to have him excused the tax, in return for loaning it to a museum. Mr Gates later paid the tax and lent the manuscript to the Seattle Art Museum.

Appeared in The Art Newspaper Archive, 160 July 2005