Sprint is on the receiving end of a lawsuit filed by the state of New York. The state accused Sprint of not collecting or paying millions of dollars in taxes for their cell phone service. New York Supreme Court Justice O. Peter Sherwood has denied a motion by Sprint to dismiss the lawsuit.
Sherwood has dismissed a conspiracy claim against Sprint and said that certain claims applying to the periods before March 31, 2008 are barred by a three-year statute of limitations. The lawsuit was filed by New York Attorney General Eric Schneiderman. This was the first tax enforcement that was filed with the False Claims Act.
“Sprint is disappointed in the Court’s decision, and we intend to file an appeal shortly,” stated Sprint. “With this lawsuit, the Attorney General’s office is claiming New York consumers, who already pay some of the highest wireless taxes in the country, should pay even more.”
The False Claims Act allows whistleblowers to receive up to 25% of money recovered by the government as a result of the information that they have provided. Schneiderman said that Sprint has failed to bill customers for over $100 million in taxes for their wireless services in the last 7 years.
Schneiderman said that Sprint’s decision not to collect and pay taxes was part of a way to get customers to switch over from AT&T, Verizon, and T-Mobile. The service becomes $4.6 million less expensive per month. The lawsuit is seeking three times the number of underpaid tax and penalties, according to Reuters. This means that Sprint has to defend themselves from a $300 million violation.