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SEC investigating Sprint over sales tax collection

Fri, 08/03/2012 - 3:17pm
Maisie Ramsay, Wireless Week

Federal trade regulators have opened a probe into Sprint's collection of sales taxes three months after the New York Attorney General sued Sprint over the same issue.

Sprint disclosed in a quarterly report yesterday that the SEC "issued a formal order of investigation relating to the company's sales tax collection," on July 23, three days before it reported its second-quarter results.

The company did not mention the inquiry when it reported its earnings last week.

Sprint provided few details about the development in its regulatory filing, stating that it could not predict the outcome or timeframe of the SEC's investigation.

"We do not expect the resolution of these matters to have a material adverse effect on our financial position or results of operations," it said.

In a separate statement released yesterday, Sprint said that it had been subpoenaed by the SEC "in connection with its investigation of our practices in the collection and remittance of state and local taxes, including those in New York."

The SEC inquiry follows a complaint filed in April by the New York Attorney General alleging that Sprint underpaid its state taxes by $100 million in over the past seven years to make its plans cheaper, thereby gaining an edge on its competitors. Sprint continues to deny the claims and moved to dismiss the case in mid-June.

"The Attorney General's office claims New York consumers, who already pay some of the highest wireless taxes in the country, should pay even more," Sprint said, calling the state's complaint "without merit.”

“We intend to stand up for New York consumers' rights and fight this lawsuit,” Sprint continued.

The suit states that Sprint made its plans in New York cheaper by $4.6 million per month by leaving taxes off customers’ bills.

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