Sprint loses bid to dismiss $300M tax fraud lawsuit

Sprint Nextel (NYSE:S) failed in its attempt to get a $300 million lawsuit filed by the New York attorney general dismissed. The lawsuit, filed by the New York attorney general, claims the company deliberately failed to pay sales taxes.

On June 27, New York Supreme Court Judge O. Peter Sherwood denied Sprint's bid to dismiss the case and now the company must appear at a hearing July 24.

The lawsuit filed last April by New York Attorney General Eric Schneiderman claims that Sprint failed to collect more than $100 million in taxes from customers. The AG is seeking three times that amount plus penalties. At the time the case was filed, Schneiderman noted that carriers that sell calling plans for a fixed monthly rate must collect and pay sales taxes on the entire charge. The lawsuit alleges that Sprint deliberately did not pay about 25 percent of the taxes it was supposed to pay to state and local governments, which made Sprint's services less expensive than those of its competitors.

In a statement to Bloomberg, Sprint said that it is disappointed in the court's decision, and it intends to file an appeal shortly. Sprint spokesman John Taylor noted the attorney general's office is claiming New York consumers, who already pay some of the highest wireless taxes in the country, should pay even more. "As we have in the past, we will continue to stand up for New York consumers' rights and fight this suit," Taylor said.

For more:
- see this Bloomberg article

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