NEW YORK, July 1 Sprint Nextel Corp must
face a lawsuit brought by New York state accusing the company of
deliberately not collecting or paying millions of dollars of
taxes for its cell phone service, a judge has ruled.
In a decision made public on Monday, New York Supreme Court
Justice O. Peter Sherwood denied a motion by Sprint to dismiss
Sherwood, however, dismissed a conspiracy claim against
Sprint and ruled that certain claims applying to periods before
March 31, 2008 are barred by a three-year statute of
"Sprint is disappointed in the Court's decision, and we
intend to file an appeal shortly," Sprint said in an emailed
statement. "With this lawsuit, 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."
The lawsuit brought by New York Attorney General Eric
Schneiderman was the first tax enforcement action filed under
the state's False Claims Act.
Under the False Claims Act, whistleblowers may be eligible
to receive up to 25 percent of any money recovered by the
government as a result of information they have provided.
Based on whistleblower information, Schneiderman alleged in
the lawsuit that Sprint failed to bill customers for more than
$100 million in taxes for its wireless services over seven
He said Sprint's decision not to collect and pay taxes was
part of a nationwide effort by the Overland Park, Kansas-based
company to lure customers from rivals such as AT&T Inc and
Verizon Wireless, and make its service $4.6 million less
expensive per month.
The lawsuit seeks three times the amount of underpaid tax,
A spokesman for Schneiderman applauded the ruling in a
statement, saying it "sends a message that tax dodgers will be
exposed and prosecuted to the fullest extent of the law."