New York sues Sprint for $300M for evading taxes

NEW YORK – New York Atty. Gen. Eric Schneiderman is suing mobile phone company Sprint Nextel for $300 million for underpaying its taxes, the Financial Times reported.

The suit claims that, starting in 2005, Sprint illegally failed to collect and pay New York sales taxes on some of the money it made from its fixed monthly access fees, the Financial Times reported. Sprint “repeatedly and knowingly” submitted false records and statements to New York tax authorities to obscure the fact that they were not handing over the full amount they owed, the attorney-general said, according to the Financial Times.

“The message of our office is clear – tax dodging is not acceptable and we will use every tool in our arsenal to make sure that taxpayers’ money is protected, and that honest businesses and consumers are not placed at a disadvantage for collecting and paying their fair share of taxes,” Schneiderman said today, according to the Los Angeles Times.

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New York requires that mobile phone companies pay sales tax on the monthly fees they charge for their calling plans, the LA Times reported. However, Sprint has argued that New York should only tax calls that begin and end within the state.

Schneiderman claims Sprint owes New York more than $100 million, and its debt is growing by $210,000 a week, the LA Times reported. The suit is the first of its kind to be brought under the state’s False Claims Act, which means Sprint could be forced to pay three times its underpayment in penalties.

“Sprint categorically denies the complaint’s allegations,” the company said in a statement today, according to the Financial Times. “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.”

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