Sprint settles New York state sales tax suit for $330M

Sprint will pay a record-breaking $330 million to settle a seven-year-old case that accused it of under-collecting sales taxes to make its calling plans more appealing to customers.

The agreement — announced on Friday by New York Attorney General Barbara Underwood and Acting NY Tax Commissioner Nonie Manion — cast a harsh light on Sprint for understating state and local taxes on flat-rate calling plans it sold to New Yorkers.

By not collecting the full tax amount, the telecom giant, based in Overland Park, Kan., was able to charge lower prices than its competitors — not by being by a more efficient operator, but by being a tax cheat.

Manion put the amount of understated sales tax owed by Sprint at $100 million and credited a whistle-blower for bringing “this injustice to light.”

Whistle-blower Empire State Ventures — the fraud-detection firm behind the original suit — claimed in 2011 that Sprint started under-collecting sales taxes in 2005.

David Koenigsberg, lead lawyer for Empire State, wouldn’t comment on what initially motivated the firm to become a whistle-blower. But he did confirm it collected $62.7 million of the settlement.

“Sprint knew exactly how New York sales tax law applied to its plans, yet for years the company flagrantly broke the law, cheating the state and its localities out of tax dollars that should have been invested in our communities,” Underwood said in a statement.

The AG’s office, while under the leadership of Eric Schneiderman, joined the case in 2012 by filing a superseding complaint — its first tax enforcement action under the New York False Claims Act, which was amended in 2010 to cover tax fraud.

Of the remaining $267.3 million, the AG’s office said “a substantial portion” had already been distributed to those localities deprived of tax revenue by Sprint’s conduct.

Sprint, which the AG accused of continuing to evade its tax obligations until mid-2014, told The Post it was pleased with the settlement.

“While we disagree with the state’s characterizations, we believe resolving this matter is in the best interest of the company,” a spokeswoman said.