Sprint Nextel Corp. has asked a judge to throw out a $300 million lawsuit the state of New York filed against the telecom giant over uncollected taxes and penalties.
New York Attorney General Eric Schneiderman filed the suit in April, alleging Sprint undercollected and underpaid sales taxes in an effort to keep its prices competitive. It was 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.
In its request for dismissal, Sprint said New York was trying to levy taxes on services that are, by law, excluded from sales tax. "The New York Attorney General's complaint seeks to impose liability for practices that do not violate New York law," Sprint’s motion said.
The case centers specifically on Sprint’s business practice of unbundling its monthly plans to allow its customers to pay taxes only on calls made to people in New York, but not on calls made to other states. Schneiderman argues that New York law requires customers to pay taxes on their total monthly bill, while Sprint says the law exempts interstate calls from the New York sales tax.
Read Thomson Reuters’ story about the case.