July 5, 2013
Sprint Fails to Dismiss a New York Tax Fraud Case, May Have to Pay $300 Million
Sprint, the third largest wireless carrier in the country, has been charged with tax fraud for willfully failing to pay a portion of sales taxes owed, according to the complaint filed by the state of New York. Sprint tried to have the case dismissed, but the judge refused the dismissal and instead requested a hearing with the attorneys from both sides later this month. Sprint intends to appeal the decision.
The complaint alleges that under a recently revised New York law, Sprint was to collect sales tax on the entirety of a post-paid subscriber’s bill (that is a subscriber paying a fixed monthly charge for a fixed allotment of minutes per month on contract). However, the state of New York alleges that 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.”
Sprint argues that this suit is, in fact, an attack on New York taxpayers who already pay one of the highest tax rates for wireless service in the country. In spinning it as an attack on their customers, Sprint has vowed “to stand up for New York consumers’ rights and fight this suit.” The hearing is currently set for July 24th.