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Sprint Faces $300 Million Tax Fraud Lawsuit in New York


April 23, 2012
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New York officials have brought a $300 million tax fraud lawsuit against Sprint Nextel Corp., which has been accused of tax fraud. Officials allege that Sprint has underpaid and under-collected roughly $100 million in state and local taxes on flat-rate access charges for wireless plans. In addition, officials say that the debt to New York increases by nearly $210,000 each week. Under the state’s tax law, the company may be forced to pay out three times more than it owes in penalties if found guilty. A whistleblower, who has not been named, tipped officials off to Sprint’s alleged tax fraud, but the company has said the accusations are “without merit,” according to the Los Angeles Times. The company argues that the state should only tax calls included on flat-rate plans that are made and end within the state of New York. “We have collected and paid over to New York every penny of sales taxes on mobile wireless services that we believe our customers owe under New York state law,” the company said in a statement. “We intend to stand up for New York consumers’ rights and fight this suit.” However, the state says the company is responsible for all monthly charges, noting that all other cellphone carriers have complied with this law. In addition, officials allege that Sprint “repeatedly and knowingly submitted false records and statements” and used this practice to gain an unfair advantage over its competitors by marketing its calling plans as more affordable. The lawsuit will be the first of its kind under New York’s False Claims Act, according to ABC News. Under the program, whistleblowers are also entitled to up to 25 percent of the funds recovered by tax agencies.