Gucci doesn’t seem to be doing so well lately. One of the most world-renowned Italian fashion brands has been dealing with some pretty heavy stuff, from the Blackface Jumper to their back taxes crisis.

A Major Fashion Mistake 

Gucci had to pull a controversial jumper from its stores and website after becoming embroiled in a blackface racism row. An image of its women’s “balaclava jumper” received tons of backlash after being shared on social media. It was a black top that features neck with a mouth cut-out outlined in red.

Gucci has since issued an apology “for the offense caused” and has removed the item from its stores and online.

However, the £688 jumper is still available for purchase on the shopping website Spring. It is captioned as being part of the “The Fall Winter 2018 runway show” and was “inspired by vintage ski masks”.

Back Taxes Crisis

If that isn’t enough to deal with, Kering SA, the French owner of the Gucci luxury brand received a government audit. As it turns out, Gucci owes $1.6 billion ($1.4 Euros) to Italy in back taxes. Both Gucci’s chief executive Marco Bizzarri and former chief executive Patrizio Di Marco are under investigation currently.

The probe scrutinized business activities by Kering’s Swiss subsidiary, Luxury Goods International, from 2011 through 2017, according to a company statement. Kering said it contests the findings of the Italian audit. 

While the initial liability is in the expected range and “should not shock,” the company might face additional fines, John Guy, an analyst with Mainfirst Bank, said in a note. The company “has been provisioning ahead for the liability and will be able to offset part of the claim, hence we expect a lower net number.”

The auditor’s report will be reviewed by Italy’s revenue agency. Then a final conclusion will be made, according to the statement. Kering said it doesn’t have the necessary information to make a specific accounting provision for the tax exposure. It has implemented strict monitoring of its tax risks.

French news site Mediapart had reported that the company billed for business carried out in other countries at a Swiss logistics center. As a result, it paid lower tax rates than it would have in Italy.

*Information from Retail Gazette and AccountingToday

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Jeffrey Schneider, EA, CTRS, NTPI Fellow has the knowledge and expertise to help you reach a favorable outcome with the IRS. He is the head honcho at SFS Tax Problem Solutions as well as an Enrolled Agent, a Certified Tax Resolution Specialist and Advanced Crypto Tax Expert.
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Author of the Now What? Help!  series. Jeff defines and deconstructs the scary and confusing letters in a fashion that mixes attention to detail with humor and an intricate clarification of what is what in the world of the IRS.

The books are available in paperback and eBook on Amazon.
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