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NY Attorney General sues Sprint-Nextel for $300 million

Suit says company under-collected and underpaid sales taxes

Last week, New York Attorney General Eric Schneiderman sued Sprint-Nextel Corp. for allegedly undercollecting and underpaying $100 million in sales taxes in order to keep its competitive prices low.

The lawsuit, which Schneiderman filed Thursday in New York Supreme Court, is the first to be filed under a 2010 state law that lets the government sue contractors for fraud-related tax losses. Under the law, a company that committed fraud could pay three times the amount it allegedly underpaid in taxes.

Since 2002, New York has required mobile phone companies to collect and pay sales taxes on the full amount of their monthly access fees for calling plans. Schneiderman claims Sprint has underpaid about 25 percent of sales taxes since 2005. The suit seeks $300 million in damages.

According to the Wall Street Journal, Schneiderman and his team want to ensure that Sprint customers affected by the fraud will be able to switch their service contracts to other phone companies without having to pay Sprint’s early contract termination fee, which usually adds up to more than $200.

Meanwhile, Sprint spokesperson John Taylor told the Journal that the “complaint is without merit and Sprint categorically denies the complaint’s allegations.”

Read the Wall Street Journal for more about the lawsuit.

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Cathleen Flahardy

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