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KOZLOWSKI SETTLES TAX CHARGES

May 15, 2006

Former Tyco tycoon Dennis Kozlowski was a busy man - so busy that he forgot about $25 million in income when he filed his 1999 return. One nice thing about being a tycoon is that "your people" can remind you of the little things. Little people like Robert Morgenthau, the Manhattan district attorney.

Mr. Morgenthau last week agreed to settle sales and income tax evasion charges with Mr. Kozlowsky for payment of $21.2 million:

In June 2005, Mr. Kozlowski, and Tyco's former financial chief, Mark H. Swartz, were convicted of stealing $600 million from the company and were sentenced to up to 25 years.

But Mr. Kozlowski was initially indicted in June 2002 on charges of failing to pay sales tax on millions of dollars in artwork.

In the settlement of that case yesterday with the Manhattan district attorney, Robert M. Morgenthau, Mr. Kozlowski agreed to pay $3.2 million in sales tax and interest on the 12 paintings, of which more than $2 million is sales tax.

He also agreed to pay $17.9 million in state and city income tax, interest and penalties, of which $8.3 million represented the tax liability. Though he was never charged with income-tax fraud, it is part of the agreement.

Actually, there may have been more than forgetfulness involved here. The indictment said that when Mr. Kozlowski bought expensive artwork for his Manhattan digs, he arranged for the galleries to ship empty art crates to Tyco's New Hampshire offices so it would appear the artwork was shipped out-of-state - and therefore not subject to sales tax. "Oh, I forgot to put the painting in the box. What the heck, I'll just drive it home..."

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