Blog Tax News Sprint-Nextel faces $300 million alleged tax fraud lawsuit

Sprint-Nextel faces $300 million alleged tax fraud lawsuit

Sprint-Nextel is facing a lawsuit for USD 300 million brought by the New York attorney general claiming in the third-largest US wireless carrier deliberately failed to pay sales taxes, according to Bloomberg. New York Supreme Court Judge O. Peter Sherwood denied Sprint-Nextel's bid to dismiss the case in a ruling dated 27 June 2013. He ordered lawyers for both sides to appear at a hearing on 24 July 2013. 

Attorney General Eric Schneiderman in 2012 took over the whistle-blower lawsuit filed in New York in 2011, claiming Sprint didn't collect and pay some taxes on flat-rate access charges for wireless calling plans, costing state and local governments more than USD 100 million. "Sprint is disappointed in the court's decision, and we intend to file an appeal shortly," John Taylor, a spokesman for Overland Park, Kansas-based Sprint said in an emailed statement. The attorney general seeks three times Sprint's alleged underpayment of more than USD 100 million plus penalties under the state's false claims act.

The complaint "satisfactorily alleges that Sprint knowingly submitted false monthly tax statements," Sherwood wrote. Wireless carriers selling a set number of minutes of calling time for a fixed charge must collect and pay taxes on the entire charge, Schneiderman claimed. Sprint treated a portion as nontaxable and withheld about 25 percent of the taxes it was supposed to collect and remit to state and local governments, according to the attorney general. The case is New York v. Sprint Nextel, 103917-2011, New York Supreme Court (Manhattan).


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