New York State Attorney General Eric Schneiderman filed a complaint under the state’s False Claims Act alleging that Sprint “deliberately under-collect[ed] and underpa[id] millions of dollars in New York state and local taxes on flat-rate access charges for wireless calling plans.” New York State amended its False Claims Act in 2010 to permit cases for violations of state and local tax laws.  This case, initiated by a whistleblower, is the first public tax case and the first case in which the state government has elected to intervene.  In the Attorney General’s press release, Neil Getnick, managing partner of Getnick & Getnick, remarked, “Attorney General Schneiderman’s action today has the potential to revolutionize tax fraud enforcement nationwide.  His office has set a new standard in fighting corporate tax fraud with what we are calling the “New York Model”: enact a strong ‘False Claims Act’ that covers tax fraud; establish a team of dedicated prosecutors open to working with whistle-blowers; and let the facts dictate the result.”

According to the AG’s office, Sprint caused the state and local governments more than $100 million in sales tax revenue by failing to collect and pay taxes on its flat rate calling plans in violation of an “extremely clear and unambiguous” provision of the law.  Sprint allegedly implemented this plan after concluding that it could gain a competitive advantage over Verizon, AT&T, T-Mobile and MetroPCS, who all complied with the sales tax law, by not charging customers for and not paying the sales tax on their calling plans.

Read the entire article, “Schneiderman seeking $300M against Sprint”
Read the entire press release, “A.G. Schneiderman Files Groundbreaking Tax Fraud Lawsuit Against Sprint For Over $300 Million”