SEC Investigates Sprint Over Allegations It Failed To Properly Collect Sales Tax

Back in April, the New York Attorney General’s office filed a lawsuit against Sprint, alleging the wireless provider deliberately under-collected sales tax in an effort to remain competitive. Now, Sprint has revealed that it is under investigation by the Securities and Exchange Commission over these same allegations.

Reuters reports that the investigation came to light today in Sprint’s quarterly filing with the SEC. The filing reveals that the SEC issued its order for investigation on July 23.

Sprint says it is cooperating with investigators and does not expect that the SEC’s prying eyes will have a material adverse effect on its financial position.

Maybe not, but if the New York AG’s suit is successful, it could take a sizable $300 million chunk out the Sprint coffers.

That lawsuit alleges that Sprint, in violation of a 2002 New York law, deliberately failed to collect sales tax on customers’ full phone bills, choosing instead to tax only a smaller portion of the bills. The lawsuit claims that this was not an accounting error but a conscious attempt to keep customers’ bills low in an effort to maintain market share and remain competitive.

This resulted, according to the lawsuit, in about $30,000/day in taxes that went uncollected over a seven-year period.

The state is suing to collect that allegedly under-reported tax, plus a mountain of penalties. If victorious, the AG also wants that money collected in such a way that it comes out of Sprint’s coffers and not customers’ checking accounts.

Sprint has denied any wrongdoing in the matter.

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  1. TuxthePenguin says:

    “If victorious, the AG also wants that money collected in such a way that it comes out of Sprint’s coffers and not customers’ checking accounts.”

    *sigh* That would be great if true, but where do you think that money came from in the first place you idiot?

    • Captain Spock says:

      They will raise rates for some other reason and the cost of the lawsuit will be passed on to the customer..

      Corporations DO NOT pay taxes, the money they have comes from us and thus it is US paying their taxes. When you RAISE taxes on Corporations, they pass that along to US… Rant over, thus Raising taxes on Corporations HURTS THE PEOPLE YOU ARE TRYING TO HELP

    • NeverLetMeDown2 says:

      Particularly in this case, when the claim isn’t that Sprint charged sales tax, but didn’t pay the state, but rather that Sprint didn’t charge customers enough sales tax.

    • Porlock Junior says:

      Oh, right, they won’t be paying the price because they’ll just raise prices to the customers, which will hurt their competitive position (you *have* heard of competition, I presume?), which is exactly what they were trying to avoid in the first place, exactly as it says in the story, you ition.

  2. Captain Spock says:

    Why would they do that… It must have been one guy, I cannot imagine a conspiracy where they met in secret with no lawyers present and though this was a good idea…

  3. Murph1908 says:

    Wait. Where was the ORIGINAL tax money supposed to come from?

    Oh yeah, consumers’ checking accounts.

  4. Bort says:

    What a strange way to be competitive, unless they advertised this how would you know your getting a cheaper rate with sprint vs a competitor?

    • nugatory says:

      agreed 100%. Anyone ever tried to find out what the taxes would be on a phone line, BEFORE signing the contract?

  5. tomm says:

    That’s $76 billion? I don’t think anyone could pay that back in a timely manner, on top of fines. Wouldn’t this bankrupt Sprint?

    • Bort says:

      but imagine how the republican party can use this to their advantage, thanks to Obama a major US job creator will be destroyed…

    • scoosdad says:

      No, your decimal places are off– $76.65 million: $30,000 a day x 365 days x 7 years

      But the article mentions it’s going to cost Sprint $300 million, which is what New York is suing them for, penalties included I guess.

  6. TheAnnonymousActivist says:

    All lies I paid Sprint every dime. I got rid of them in Nov. 2011. Just the taxes alone made my phone bill $20-$30 higher. Their insurance is crappy. This company’s customer service is crappy at best. Sprint Sucks!!!!

  7. KnightCrusader says:

    I don’t understand the problem with collecting less tax from the consumer… wouldn’t that just mean that Sprint had to foot the missing tax bill themselves? And if they did, what would the issue?

    Somedays I wish that tax was included in the prices advertised so we can just go and pay the price it says and be done with it.