“By deliberately evading sales taxes, Sprint cost state and local governments over $100 million that could have been used for critical services and much needed resources that our state and its citizens need given the challenging economic times we are in,” Mr. Schneiderman said in a statement. “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.”
The lawsuit requires Sprint to pay three times its underpayment of over $100 million, plus penalties.
New York State tax law require mobile phone companies to collect and pay sales taxes on the full amount of their monthly access charges for their calling plans. According to Mr. Schneiderman, Sprint failed to and “repeatedly and knowingly submitted false records and statements to New York State tax authorities. Sprint concealed this practice from taxing authorities, its competitors, and its customers.”
The attorney general’s office pegs the figure Sprint has been bilking the state at $30,000 a day.
“The decision not to collect and pay these taxes arose out of a nationwide effort by Sprint to obtain an advantage over its competitors — not by cutting its prices or offering better service — but by failing to collect and pay sales taxes its competitors properly collected and paid. Right before deciding to underpay its taxes, Sprint concluded that this practice would position its calling plans as cheaper than competitors’ plans by $4.6 million per month, collectively, because of sales taxes not collected and paid,” the AG’s office writes in a release.
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