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The lawsuit alleged that for nearly a decade, Sprint “knowingly failed to collect and remit more than $100 million in state and local sales taxes owed on its flat-rate wireless calling plans sold to New Yorkers.”
According to AG Barbara Underwood, the $330 million settlement is the largest-ever recovery resulting from an action filed under the New York False Claims Act. It is also the largest recovery by a single state in an action brought under a state false claims act.
“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,” she said. “Now, Sprint will pay the price with this record-setting settlement. This should serve as a clear reminder that the New York False Claims Act protects New Yorkers from companies that attempt to flout their obligations under New York tax law.”
Underwood noted that “Sprint’s decision not to comply with New York sales tax law for nearly a decade harmed not just the State of New York, but also every county, city, town, village, and school district in New York that imposes a sales tax.” A “substantial” amount of the money recovered has already been distributed.
"For years, (Sprint) flagrantly broke the law, cheated the state, and evaded taxes that should have been invested in our communities," Underwood posted on Twitter. "Now, Sprint will have to pay the price: a $330M settlement, the largest-ever of its kind."
The investigation into Sprint came when a whistleblower filed a lawsuit under the New York False Claims Act. Underwood said that the whistleblower will receive $62.7 million, as the New York False Claims Act entitles whistleblowers who report fraud against the government to a specific share of the recovery.
Following the whistleblower’s lawsuit, the Attorney General’s office launched an extensive investigation into Sprint. The investigation determined that the company sold wireless calling plans to New Yorkers, which permitted a specified number of minutes of voice calls for a flat-rate. Those plans failed to distinguish between intrastate and interstate calls.
The AG’s lawsuit, launched in 2012, claimed that Sprint knowingly failed to collect state and local taxes on those calling plans.
“By blatantly understating the amount of sales tax owed to the tune of $100 million, Sprint violated the trust of its customers and deprived communities across New York State of revenue needed for vital services,” acting Commissioner of Taxation and Finance Nonie Manion stated. “We applaud the whistleblower who brought this injustice to light, and our colleagues at the Attorney General’s Office who worked closely with us on the investigation that led to this record-setting settlement of $330 million.”
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