CrackBerry Genius of Geniuses
| | 04-20-2012, 05:15 PM Thread Author #1
Sprint hit with $300 million tax fraud lawsuit
saw this on cnn. if it proves true its another bad story for sprint.
NEW YORK (CNNMoney) -- New York's attorney general filed a tax fraud lawsuit against Sprint Nextel on Thursday, accusing the wireless carrier of intentionally underpaying sales tax in the state for seven years.
Starting in 2005, Sprint stopped collecting and paying New York sales tax on around 25% of the revenue from its fixed-price monthly cell phone plans, according to New York Attorney General Eric Schneiderman.
Its goal, he says, was to give itself a price advantage over its rivals. Verizon (VZ, Fortune 500), AT&T (T, Fortune 500), T-Mobile and MetroPCS (PCS) all collect the taxes Sprint is accused of shirking, according to Schneiderman.
He says that Sprint's "unlawful actions" cost the state more than $30,000 per day -- a $100 million underpayment, in total. Under New York state law, Sprint could be on the hook for as much as $300 million, plus penalties, if it is found liable.
"Sprint did not correct its sales tax practices when it was informed of its illegality, and it has not corrected them even today," a statement from Schneiderman's office alleges.
Shares of Sprint Nextel (S, Fortune 500) fell 5% on the news.
The company released a statement saying the case is "without merit."
Sprint says it "categorically denies" the allegations, and added: "We have collected and paid over to New York every penny of sales taxes."
If the state's case is proven and back taxes are owed, Sprint customers could technically be on the hook, a point the state makes in its lawsuit. But Schneiderman's office made clear that wants the company itself, not its customers, to foot the bill.
It's also seeking to let Sprint's current New York customers end their contracts early without having to pay termination fees.