Sprint loses appeal against claims it failed to collect taxes from NY customers
Sprint looks to be open to a $300 million lawsuit from the state of New York, which claims the wireless carrier did not collect taxes from customers on their wireless service over a seven-year period.
According to reports, a New York state appeals court ruled Sprint will have to defend itself against a lawsuit that alleges the carrier failed to collect more than $100 million in taxes from New York customers. As the case was initiated based on “whistleblower” information, prosecutors can go after the defendant for triple damages and penalties.
The case, which was initiated in 2012, alleges Sprint used a loophole in New York tax code to evade collecting taxes from consumers in a move to undercut pricing from rivals.
“After the New York Tax Law amendments were enacted in 2002, Sprint paid sales tax on all of its receipts from its flat-rate plans,” the decision explains. “In 2005, however, Sprint began a nationwide program of ‘unbundling’ charges within these flat-rate monthly plans. Specifically, Sprint unbundled the portion of the fixed monthly charge that it attributed to intrastate mobile voice services, and did not collect taxes on the portion that it attributed to interstate and international calls. For the tax years at issue, the percentage of the fixed monthly charge on which Sprint collected sales tax ranged from 71.5% to 83.6%. Sprint did not separately state on customers’ bills the charges for interstate and international voice services included in the flat-rate plan.”
Sprint had previously reported in a Securities and Exchange Commission filing that the investigation had been closed on July 2, 2013, with the SEC recommending no enforcement action be taken against the company.
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