UGLY: NY State Going After Sprint (S)
The Market Ticker ® - Commentary on The Capital Markets
Posted 2012-04-19 11:07
by Karl Denninger
in Company Specific
UGLY: NY State Going After Sprint (S)
 

Eek....  From the wire:

* New York files more than $300 million tax fraud lawsuit against Sprint Nextel Corp

* Ny attorney general eric schneiderman accuses Sprint of deliberately not collecting or paying millions of dollars of taxes for cellphone service

That's not good.  The state is seeking treble damages under the False Claims Act.

Details are not immediately available but it sounds like the State is alleging that Sprint did not "correctly" calculate and bill state telecommunications taxes for customers in New York.

I have no idea what the merits of this are, but the states tend to be pretty rapacious when it comes to anything related to sales and excise taxes.

Sprint's stock is off more than 6% straight down on the news of this suit.  If this suit has merit it's a very real and serious problem as this is not a small amount of money and if in fact the underbilling was deliberate it would call into question any argument that one would make about Sprint turning things around.

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