Sprint Nextel Corp Must Face NY Suit Over Tax Fraud-Reuters

Reuters reported that a judge has ruled that 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. In a decision made public on Monday, New York Supreme Court Justice O. Peter Sherwood denied a motion by Sprint to dismiss the lawsuit. 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 limitations. 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 years. The lawsuit seeks three times the amount of underpaid tax, plus penalties.