The United States Supreme Court on Tuesday rejected Sprint’s bid to appeal a $300 million tax fraud lawsuit filed by New York State that alleges the carrier failed to bill customers for taxes on its interstate wireless services.
The Supreme Court’s denial lets stand an October 2015 decision against Sprint from the New York Court of Appeals. Sprint was seeking to dismiss the case on the grounds that New York’s law taxing interstate wireless services was unconstitutional.
Originally filed in 2012 by state Attorney General Eric Schneiderman, the complaint accused Sprint of intentionally omitting nearly $100 million in taxes from customer bills in a bid to “gain an advantage over its competitors by reducing the amount of sales taxes it collected from its customers and, thereby, appearing to be a low-cost carrier.”
According to the complaint – which was based on information provided by a whistleblower – the practice allegedly began in July 2005 when Sprint began “unbundling” charges within its flat-rate monthly plans and failed to collect taxes on the portion of the services it attributed to interstate and international calls.
The complaint said the tweak made its plans $4.6 million cheaper per month than competitors’ plans at no cost to Sprint by paying less money to the government.
The lawsuit further alleged that Sprint willfully ignored the advice of a tax department field auditor in both 2009 and 2011 after the official informed the company its sales tax practice was illegal.
The state is seeking redress of three times the amount of damages resulting from Sprint’s alleged violations.
Filed Under: Carriers
