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USA Based Sprint Investigated Over Tax Collection Issues
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USA based Sprint says that it has facing an investigation by the Securities and Exchange Commission into how it collects state and local sales taxes.
The company said that the investigation follows a filing by the New York Attorney General alleging Sprint did not collect the proper New York state taxes from Sprint's New York customers:
"Sprint recently received a subpoena from the Securities and Exchange Commission in connection with its investigation of our practices in the collection and remittance of state and local taxes, including those in New York. Sprint is cooperating with the SEC in regards to its inquiries and we believe our practices with respect to state and local taxes on mobile wireless services are in compliance with applicable law." the company said in a statement.
Since 2002, New York Tax Law has required mobile phone companies to collect and pay sales taxes on the full amount of their monthly access charges for their calling plans. For example, when a customer pays Sprint a fixed monthly charge of $39.99 for 450 minutes of mobile calling time, the law requires Sprint to collect and pay sales taxes on the entire $39.99.
Sprint Nextel however would "unbundle" the portion of the calls made within the State, on which taxes were paid from calls made to other States, on which Sprint says taxes cannot be levied.
Sprint is citing the New York tax code that excludes interstate phone calls from sales tax, and a Federal law that allows the mobile networks to split taxable and exempt portions of its monthly invoices.
Sprint has filed to have the New York case dismissed, and the issue is still waiting to be heard in court.
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