The Oscar winner says the Empire State has it all wrong when it comes to the sale of part of the Sundance Channel in 2005 and his taxes. In a July 30 filing, Robert Redford is going after the New York State Department of Taxation and Finance claiming that he doesn’t owe the state $1,568,470. Or to put it in legalism terms, the Sundance Film Festival founder wants “a declaratory ruling on a pure question of law concerning the constitutionality of imposing on plaintiff, a nonresident of the State of New York, a personal income tax on the gain derived from the sale of an ownership interest in a limited liability company.” NY State told Redford this spring that he owes $845,066 plus a further $727,404 in interest on the 9-year old sale. Redford’s response is that he doesn’t owe the dough because as Utah resident he paid the taxes on the sale of his stake in Sundance Channel and should not be taxed again
At its heart, this whole matter is about the fact that Sundance Television Ltd was an S Corporation. Such a status means that the privately held entity doesn’t pay federal taxes because its profits and losses are directly passed on to it small group of shareholders. They, like Redford in this case, report that information on their personal income tax filings. Redford owned all of Sundance T.V., which owned 20% of Sundance Channel before the 2005 sale. “Plaintiff did not use his ownership interest in INC, nor did he use his indirect ownership interest in Limited or Channel, in any trade or business carried on by him in New York,’ the July 30 filing for Redford by Stephen Solomon of NYC firm Hutton & Solomon says. “Further, plaintiff did not have any property, payroll or receipts located in or deemed attributable to the conduct of a trade or business in New York.’ Redford’s lawyer wants a ruing that his client doesn’t owe NY the money plus all legal fees paid for by the state.
What makes this more complicated is that in 2008 Sundance T.V. and its Sundance Channel co-owners CBS and NBCUniversal sold the outlet to the Cablevision owned Rainbow Media. Now known as AMC Networks, they gave the Channel the new moniker SundanceTV starting in February this year. In that 2008 sale the state of New York agreed with the very argument that Redford is making now over the 2005 partial sale.