NEW YORK, June 14 (Reuters) - Sprint Nextel Corp asked a
judge on Thursday to dismiss a lawsuit filed against the company
by the state of New York for more than $300 million in
uncollected taxes and penalties.
Eric Schneiderman, the state's attorney general, has accused
the mobile service provider of deliberately failing to collect
and turn over to New York more than $100 million in taxes for
its wireless phone services over seven years. The lawsuit, filed
in April, seeks three times the alleged amount of underpayment,
along with penalties.
But in a motion to dismiss filed in New York State Supreme
Court on Thursday, Sprint said the state was attempting to levy
taxes on services that are legally excluded from sales tax.
"The New York Attorney General's complaint seeks to impose
liability for practices that do not violate New York law," the
At issue is Sprint's practice of "unbundling" its monthly
plans so that its customers paid taxes on calls made to people
within New York state, but not on those made to other states.
Schneiderman claims New York law requires sales tax on the
full amount of the monthly charges, regardless of the type of
calls made. But Sprint said New York law expressly exempted
"interstate" calls from sales tax and that federal law permits
mobile providers to unbundle taxable and nontaxable services.
The complaint is based on whistleblower information from
Empire State Ventures, which conducts investigations and has
been involved in many false claims cases. Schneiderman has said
that internal Sprint documents demonstrate the unbundling is
part of a broad strategy to draw customers away from its major
The lawsuit was brought under the False Claims Act, which
allows whistleblowers to receive up to 25 percent of any money
recovered by the government as a result of information they have
The attorney general's office could not immediately be
reached for comment.
(Reporting by Joseph Ax)
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