Sprint Appeal of Tax Suit to Be Heard by Top New York Court

Sprint Corp. (S), the third-biggest U.S. wireless carrier, won a hearing before New York’s top court in a bid for dismissal of a lawsuit by the state over sales taxes.

A state appellate panel in Manhattan in February upheld a lower-court decision denying the company’s request to throw out the case. Sprint is accused in the suit, filed by a whistle-blower in 2011 and now being pursued by Attorney General Eric Schneiderman, of failing to collect and pay some sales taxes on flat-rate access charges for wireless calling plans.

The Manhattan appellate panel today granted Sprint’s request for a hearing before the Court of Appeals in Albany.

“Sprint is pleased with the court’s decision and looks forward to a review by the Court of Appeals,” Stephanie Vinge Walsh, a spokeswoman for the company, said in an e-mailed statement. Matt Mittenthal, a spokesman for the attorney general’s office, declined to comment.

The state has said it’s seeking almost $400 million in back taxes and penalties under the state’s False Claims Act from Overland Park, Kansas-based Sprint.

The whistle-blower law allows individuals and companies to be held liable for any fraud on the government. Tax fraud is included as a result of a bill Schneiderman wrote when he was a state senator, according to his office.

After taking office in 2011 as attorney general, Schneiderman created the Taxpayer Protection Bureau, which investigated the whistle-blower case filed against Sprint, according to his office.

Sprint’s decision not to collect the taxes arose out of a nationwide effort to gain an edge on competitors by being able to offer less expensive customer plans, Schneiderman said.

The case is New York v. Sprint Nextel, 103917-2011, New York State Supreme Court, New York County (Manhattan).

To contact the reporters on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at cdolmetsch@bloomberg.net; Christie Smythe in federal court in Brooklyn, New York, at csmythe1@bloomberg.net.

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net. Charles Carter, Stephen Farr

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