In its 2013 second quarter Form 10-Q, Sprint Corporation revealed that on July 2, 2013, the SEC notified the company that it was closing its investigation into the company’s sales tax collection activities and did not intend to recommend an enforcement action against the company. On July 23, 2012, the SEC had issued a formal order of investigation relating to the company's sales tax collection.
State Action. The Form 10-Q also disclosed that on April 19, 2012, the New York Attorney General filed a complaint alleging that Sprint has fraudulently failed to collect and pay more than $100 million in New York sales taxes on receipts from its sale of wireless telephone services since July 2005. The complaint seeks recovery of triple damages as well as penalties and interest. The company moved to dismiss the complaint on June 14, 2012. On July 1, 2013, the court entered an order denying the motion to dismiss in large part, although it did dismiss certain counts or parts of certain counts.
New York law allows for an immediate appeal and the company indicated in the filing that it intends to appeal this order. The company believes that the complaint is without merit and intends to defend this matter vigorously. The company does not expect the resolution of this matter to have a material adverse effect on its financial position or results of operations.