It's been revealed today that Sprint is being sued by the state of New York for allegedly not collecting or paying millions of dollars over the past several years. According to New York Attorney General Eric Schneiderman, Sprint didn't bill customers for over $100 million dollars over a span of seven years, which he claims was part of an effort by Sprint to try to tempt customers away from AT&T and Verizon and make its service less expensive. The case is being filed under New York's False Claims Act, and New York is seeking three times the amount purportedly skipped out by Sprint as well as other penalties for an amount totaling more than $300 million.
So far Sprint has yet to issue a statement on the lawsuit, but it should be interesting to see how the carrier reacts to Schneiderman's claims. While being sued for over $300 million for not paying taxes is never good, the suit is especially not awesome for Sprint as it's busy paying for things like the ability to sell the iPhone and its move to 4G LTE. We'll be sure to update you with more on this case as we get it, so stay tuned!
UPDATE: Sprint has issued a statement on the situation, saying that the suit is "without merit" and that it has collected and paid everything that it owes according to New York state law. The carrier's full release:
Sprint Issues Statement in Response to New York Attorney General Lawsuit
Company Categorically Denies the Complaint’s Allegations and States Intent to Stand up for New York Consumers’ Rights
OVERLAND PARK, Kan. (BUSINESS WIRE), April 19, 2012 - Sprint (NYSE: S) today issued the following statement in response to the New York Attorney General’s lawsuit alleging Sprint did not collect the proper New York state taxes from Sprint’s New York customers:
“This complaint is without merit and Sprint categorically denies the complaint's allegations. We have collected and paid over to New York every penny of sales taxes on mobile wireless services that we believe our customers owe under New York state law. 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. We intend to stand up for New York consumers' rights and fight this suit."
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 55 million customers at the end of 2011 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Newsweek ranked Sprint No. 3 in its 2011 Green Rankings, listing it as one of the nation’s greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.