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Sprint gets tagged with $300 million lawsuit for tax fraud

Posted: , by Michael H.

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Sprint gets tagged with $300 million lawsuit for tax fraud
It seems like Sprint is really having trouble getting itself any good press these days, between failed acquisitions, a non-existent LTE network, and slow service, and this story isn't going to help at all. It seems that Sprint has been served with a $300 million lawsuit by the state of New York for tax fraud. 

The New York attorney general's office announced the lawsuit today. Apparently, Sprint filed false records which allowed the carrier to underpay taxes. The attorney general's office claims that this was done in an effort to keep monthly charges low, and give Sprint an "advantage over its competitors." Supposedly, Sprint didn't collect and pay the full taxes for the monthly access charges to customers. According to the New York AG, this allowed Sprint to "position its calling plans as cheaper than competitors' plans by $4.6 million per month, collectively". Even worse, the underpayment in taxes is increasing by $30,000 per day. 

Not surprisingly, Sprint disagrees. The carrier made a statement saying that the claims were "without merit" and that it had collected and paid "every penny of sales taxes" that were owed to NY. Sprint also positioned itself as being on the side of the consumer, claiming that the NY attorney general was trying to add more to already high taxes, and that Sprint would "stand up for New York consumers’ rights". Of course, the AG's statement does make it clear that it plans to go after the money from Sprint, not the customers, so we're not too sure what to make of Sprint's noble gesture. 

11 Comments
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posted on 19 Apr 2012, 20:16 3

1. LoneShaolin (Posts: 307; Member since: 14 Jan 2012)


Dun dun dun. They are done for.

posted on 25 Apr 2012, 06:31

11. TechnoTechyes (Posts: 55; Member since: 24 Jan 2011)


If they did fail, the government would step in. As they did for the airlines and auto makers. There is no way Verizon and AT&T would be able to handle 70 million Sprint, Boost, Virgin, and Assurance customers overnight. No cellular company would fail slowly.
Here is what everyone would face:
* Phone supplies for Verizon and AT&T would probably be set back 6-10 months, And new phones would go up in price.
* Verizon and AT&T would need 2 years to get the networks in place to handle the additional customer load, in the meantime they would have network failures from coast to coast.
* Finally, everyone's phone bill would probably skyrocket to handle the situation.

If any of the 4 major carriers were to go belly up, it would be a disaster for America cell service. The government would not let that happen.

Not surprisingly Phone Arena writers might know cellular tech (well maybe), but I am often baffled by their interpretation of the business and the law. Often they seem misinformed or that they didn't understand what they read elsewhere. You'd think they would have someone with an MBA review their business stories before they post some of their articles. I guess if you want better articles with less imprudence, complain to their sponsors.

Also about the article... How can 1.8 million (including family plan) customers be accumulating $4.6 million in missed taxes each month? The AG is stating (theoretically) that Sprint is 25% short in tax collections. But for those numbers to be correct, the average Sprint bill would be about $158/month. It's not. Also, how can the AG claim that 1% is giving Sprint a competitive advantage? That is about 70 cents/mo.

posted on 19 Apr 2012, 20:16 4

2. iphonegroupie (Posts: 1; Member since: 19 Apr 2012)


MAS PUTOS

posted on 19 Apr 2012, 20:21 5

3. baldilocks (Posts: 459; Member since: 14 Dec 2008)


Now they have something to use as an excuse to throttle data and charge overages.... :)

posted on 19 Apr 2012, 20:28 3

4. idaman12000 (Posts: 39; Member since: 03 May 2011)


im glad i left crappy service over 3 yrs

posted on 19 Apr 2012, 20:41

5. iblackdroid (Posts: 67; Member since: 19 Jul 2011)


pretty sure it's attorney's general

posted on 20 Apr 2012, 01:24 1

9. threeline (Posts: 253; Member since: 11 Sep 2011)


So the attorney has a general? The Attorney General aka AG is one person.

posted on 19 Apr 2012, 22:01

6. theBankRobber (Posts: 642; Member since: 22 Sep 2011)


Well I guess we will be paying as much as Verizon and AT&T.

posted on 19 Apr 2012, 22:11

7. highper (Posts: 6; Member since: 30 Mar 2012)


I know they got plenty of taxes from me!

posted on 19 Apr 2012, 22:16 2

8. eaxvac (Posts: 328; Member since: 15 Jan 2012)


Did AT&T/Verizon hire someone for this?

posted on 23 Apr 2012, 11:12

10. kabukijoe (Posts: 65; Member since: 06 Mar 2010)


This is just New State trying to make up for the exuberant amounts of tax payer dollars that they waste. They took thousands out of my paycheck in taxes and the bastards claim that I still owe them more. Even though there are still roads with tolls here, and EVERYTHING is over taxed to the point that it is ridiculous. I have Sprint and NY state taxes and fees average almost 20% every month, which is MORE than enough.

Maybe they should stop giving large amounts of our hard earned money to people that refuse to work and cheat the system, then go spend it on luxury items, booze and illegal drugs. Also, all of the goverment officials that allow this corruption to continue should have their salaries lowered (rather than propose raises for themselves) I'm sure they could live on less than several hundred thousand dollars per year. They should not be awarded unnecessary amounts of money for their failure. And I'm POSITIVE these over paid/underworked government officials don't need brand new $30,000-$50,000 work vehicles every year to drive around in.

New York is a greedy, corrupt, joke of a state.

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