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NY Sues Sprint for $300M on Tax Fraud Claims

Sprint Wireless Woman Phone Retail Store

 (Reuters)

New York on Thursday sued Sprint Nextel Corp for more than $300 million, accusing the company of tax fraud for deliberately not collecting or paying millions of dollars of taxes for its cell phone service.

Sprint, the third-biggest U.S. mobile service provider, failed to bill customers for more than $100 million of taxes for its wireless services over seven years, according to New York Attorney General Eric Schneiderman.

Schneiderman filed his complaint in the New York State Supreme Court on Thursday, and said the case is the first tax enforcement action filed under the state's False Claims Act.

The lawsuit seeks three times the amount underpaid, plus penalties.

Schneiderman said Sprint's decision not to collect and pay taxes was part of the Overland Park, Kansas-based company's nationwide effort to lure customers from rivals such as AT&T Inc and Verizon Wireless, and make its service $4.6 million less expensive per month.