Sprint-Nextel sued for NY taxes

Apr 19, 2012

New York's attorney general is suing wireless carrier Sprint for allegedly failing to pay sales taxes for the past seven years. Hudson Valley Bureau Chief Dave Lucas reports.

Attorney General Eric Schneiderman is suing Sprint-Nextel Corp., claiming it under-collected and underpaid $100 million in sales taxes to keep prices down.

The tax suit, the first filed under the state's False Claims Act, could require the company to pay triple the amount it is accused of underpaying, or $300 million. Schneiderman says Sprint was informed and has not changed its practice, while competitors Verizon, AT&T, T-Mobile, and MetroPCS pay the tax.

Since 2002, New York tax law has required mobile phone companies to collect and pay sales taxes on the full amount of their monthly access fees for calling plans. Schneiderman says Sprint since 2005 underpaid the tax and submitted false records.

The AG's office furnished some numbers: rough estimates of what some counties could have been entitled to, had taxes been properly collected.

 For example:

Schoharie County:  $59,000

Albany County: $535,000

Westchester County:  $1,300,000


New York City:   $28,613,000

In a response to the Associated Press,Sprint says the AG's complaint is "without merit" and it paid all taxes it believes its customers owe. The company then issued a statement, denying any wrongdoing alleged in the attorney general's lawsuit.