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Sprint Faces SEC Probe Over Taxes
New York State Lawsuit Prompts Broader Inquiry
by Karl Bode 08:39AM Monday Aug 06 2012
Last April Sprint was hit with a $300 million lawsuit by the State of New York for allegedly failing to collect and turn over to the state more than $100 million in taxes for its wireless phone services over seven years. Leaked documents had shown that Sprint has been "unbundling" the company's monthly plans so that users pay taxes on calls made to people within New York state -- but not to those made to other states. The U.S. Securities and Exchange Commission has now opened a formal investigation into Sprint's tax collection practices. "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 in a statement. "We intend to stand up for New York consumers' rights and fight this lawsuit."

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celeritypc
For Lucky Best Wash, Use Mr. Sparkle
Premium
join:2004-05-15
Caldwell, NJ

It's the new "Business Friendly" New York...

cue Jay-Z music now...

n2jtx

join:2001-01-13
Glen Head, NY

Re: It's the new "Business Friendly" New York...

said by celeritypc:

cue Jay-Z music now...

ROTFL! I agree. NY is the worst place to setup business and I hope no budding businesspeople are stupid enough to fall for New York's ads. Even if New York gives your business a whopping tax break, the taxes your employees will be saddled with will ratchet up your payroll to more than make up for any saving the state might give your business.

There are plenty of states in the union where you not only have more personal freedom but have a friendlier business and personal tax environment.
--
I support the right to keep and arm bears.
en103

join:2011-05-02

Re: It's the new "Business Friendly" New York...

I thought California was the least business friendly state.

cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7

Not caring until it affects you

Screw over the consumer any way possible and TPTB don't care all that much. But screw over TPTB and suddenly we have a $300m issue.

Coming soon to a wireless bill near you, a "tax compliance fee" line item.
pandora
Premium
join:2001-06-01
Outland
kudos:2

Re: Not caring until it affects you

I love an unlocked phone on a flat rate pre-paid plan. No extras.

Oh_No
Trogglus normalus

join:2011-05-21
Chicago, IL

Sprint screwed up only in how they calculated tax.

Sprint was following the law in what the concept they were following.
said by sprint :
Sprint leverages federal rules which state that telephone calls placed to numbers outside of the state (also known as an “interstate call”) cannot be taxed. Therefore, in Sprint’s view, customers deserve a tax break for those interstate, non-taxable calls.
The problem is sprint "estimated" the % of interstate calls instead of actually using their call records to calculate the number.

said by sprint :
But Sprint does not actually review individual calling records to figure out what specific out-of-state numbers were called. Instead it created what New York officials argue is “an arbitrary formula” to guesstimate how much the average customer spends talking to in-state vs. out-of-state numbers. But those percentages varied wildly from 2005 to the present day, with different amounts for Sprint-Nextel customers living in upstate and downstate New York
Basically what will happen is sprint will calculate the time/money it will take to go back and review 7 years of phone data and either settle out of court for that cost OR if they have a competent database person they will run a query that will take a few days and provide the actual data and pay the different or state how they over paid.
Sprint followed the law, but their estimating practice was BS.

Transmaster
Don't Blame Me I Voted For Bill and Opus

join:2001-06-20
Cheyenne, WY

1 edit

Re: Sprint screwed up only in how they calculated tax.

It is States like New York, and New York City are going to put the hurts to any business HQ'ed in New York but has employees in remote offices in other states. New York, and New York will collect income tax from the employee living, and working in Wyoming. Alaska, etc. New York, and New York feel that if the The Company is HQ in New York, the paycheck comes from New York so everyone in New York wants a piece of it.

Wow 9 New Yorks in one paragraph
--
I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's.
- Mark Twain in Eruption

RARPSL

join:1999-12-08
Suffern, NY
said by Oh_No:

Sprint was following the law in what the concept they were following.

said by sprint :
Sprint leverages federal rules which state that telephone calls placed to numbers outside of the state (also known as an “interstate call”) cannot be taxed. Therefore, in Sprint’s view, customers deserve a tax break for those interstate, non-taxable calls.

This Federal rule is designed for Landlines (ie: Where the calling number is in a fixed location and so is the called number). Once you add cell phones (either as the calling or called phone) there are some issues. With a landline doing the calling, I would assume that the area code of the called number would be used to decide if it is in-state or out-of-state (even if it is a cell phone not a landline). Since there is no way for a landline company to know where the cellphone is currently located I guess that this is "correct". The issue becomes more complex once the calling phone is a cellphone since just because I have a NYS phone number, I am not automatically located in NYS when I make the call (the concept of long distance calls is no longer in effect since there is no difference in charges based on my phone number and the called number) so unless the cell company wants to use the tower being used not my phone number to decide where I am for the in/out of state calls (let alone calling a cell phone NOT serviced by the cell company), I think that the Landline rule should be applied. Thus I think Sprint is right and the NYS Tax Authorities is trying the violate federal law and doing a tax grab.