Sprint in $330 Million Settlement With NY AG for Underpaid Taxes

Sprint will pay $330 million to settle a New York state lawsuit alleging the carrier knowingly failed to collect and remit more than $100 million in state and local sales taxes owed on flat-rate wireless calling plans, Attorney General Barbara Underwood (D) said Friday. The AG said it’s the largest-ever recovery by a single state in an action brought under a state false claims act, and it followed another record-breaking New York settlement with Charter Communications about internet speed claims (see 1812180027). The AG said it has already distributed “a substantial portion” of the $330 million to localities directly harmed by Sprint’s conduct. Per terms of the New York False Claims Act, the whistleblower who brought the case in 2011 will receive $62.7 million, the AG said. Sprint collected state and local taxes for only the portion of the flat-rate charge it deemed intrastate, even though tax law and guidance doesn’t differentiate among intrastate, interstate and international calls, the AG said. Sprint violated tax law from 2005 to 2014, including after New York started investigating and after the state sued, the AG said. “Sprint knew exactly how New York sales tax law applied to its plans -- yet for years the company flagrantly broke the law, cheating the state and its localities out of tax dollars that should have been invested in our communities,” said Underwood. Acting Commissioner of Taxation and Finance Nonie Manion said that “Sprint violated the trust of its customers and deprived communities across New York State of revenue needed.” The company didn’t comment.