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February 27, 2014

Sprint loses round in New York sales tax suit

A New York state appeals court Thursday upheld a lower court decision denying the company’s request to throw out the case. Overland Park-based Sprint is accused in the suit, filed by a whistle-blower in 2011 and now being pursued by Attorney General Eric Schneiderman, of failing to collect and pay some sales taxes on flat-rate access charges for wireless calling plans.

Sprint Corp. lost a bid to dismiss a lawsuit by New York’s attorney general seeking more than $300 million over claims it deliberately failed to pay sales taxes.

A New York state appeals court Thursday upheld a lower court decision denying the company’s request to throw out the case. Overland Park-based Sprint is accused in the suit, filed by a whistle-blower in 2011 and now being pursued by Attorney General Eric Schneiderman, of failing to collect and pay some sales taxes on flat-rate access charges for wireless calling plans.

Scheiderman’s office said in an amended complaint filed in August that the unpaid taxes amounted to more than $100 million since July 2005. The tax liability is now more than $130 million, Schneiderman’s office said today.

The attorney general is seeking three times the alleged underpayment by Overland Park, Kansas-based Sprint plus penalties under the state’s False Claims Act, putting the potential recovery of almost $400 million, according to his office. Sprint’s revenue rose 1.5 percent to $9.14 billion in the fourth quarter, posting a net loss of $1.04 billion compared with a loss of $1.32 billion a year earlier.

The decision “allows my office to proceed in holding Sprint accountable,” Schneiderman said in a statement.

John B. Taylor, a spokesman for Sprint, said by e-email that the company is disappointed by the court’s decision and exploring its options.

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