New York Attorney General Eric Schneiderman got the attention of the Securities and Exchange Commission (SEC) when he filed suit against Sprint Nextel Corp. over the company’s collection of sales taxes. In its quarterly filing yesterday, Sprint disclosed that the SEC has launched a formal investigation into the company over Schneiderman’s allegations.
Schneiderman filed a $300 million suit against Sprint in April, alleging the communications giant undercollected and underpaid sales taxes in an effort to keep its prices competitive. It was the first to be filed under a 2010 New York 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 June, Sprint asked a judge to dismiss Schneiderman’s suit.
In its filing, Sprint said it is cooperating with the SEC and doesn’t expect the matter to have an adverse effect on its financials or its operations.