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Can I be a whistleblower if a company failed to pay NYS Sales Tax?

above-the-bar-logo-no12Yes provided you have proof and first hand knowledge of a company’s failure to pay New York Sales Tax you may be able to file a claim under the False Claims Act (assuming no one else has already done so and the information is not publicly or otherwise known.) In March 2011, whistleblowers filed a lawsuit under the New York State False Claims Act alleging that the telecom giant Sprint-Nextel Corp. knowingly failed to collect and pay $130 million in New York and local sales taxes. After an extensive investigation by the Taxpayer Protection Bureau and the New York State Department of Taxation & Finance, the Attorney General took over the lawsuit on the behalf of taxpayers. If found liable of fraudulently failing to pay taxes, Sprint would be required to pay triple to amount of taxes owed, fines and attorneys fees, amounting to approximately $400 million. Under the False Claims Act, the whistleblowers may be entitled to receive up to 25 percent of money recovered as a result of the information they provided.

Under the New York False Claims Act, individuals, as well as the Attorney General or local governments, can file a lawsuit against a person or a company that is involved in fraud against the government, such as not paying taxes. Individuals or whistleblowers file such claims as “Qui Tam suits,” which are kept secret in order to allow the government to conduct an investigation into suspected fraudulent activity.

If you are working for a company that you believe is engaged in activity attempting to defraud the government, you need to arrange for a private, confidential consultation with our Award-Winning New York Employment Lawyers by clicking here or by calling our office at (800) 893-9645. Filing a whistleblower lawsuit under the False Claims Act can be a complicated process. First, many companies, as is the case with Sprint, have large legal departments and financial resources to defend themselves against allegations of fraud. Moreover, companies may try to retaliate against employees who are whistleblowers. Retaliation may take on many forms, including termination or a change in pay. Finally, under the New York False Claims Act, whistleblowers are entitled to receive a percentage–up to 25 percent–of money recovered by the government. Our Employment Lawyers will help you to receive the money you are entitled to under the law. The law firm of Villanueva & Sanchala will protect and guide you through the complex legal process involved in filing a false claims suit.

In February 2014, Attorney General Eric T. Schneiderman announced that his office was proceeding with a $400 million lawsuit against Sprint. Under current New York State tax laws, mobile phone carriers are required to collect and pay sales tax on the full amount of monthly access charges. For example, if a phone company charges $39.99 for 450 minutes, the carrier must collect and pay sales tax on the full amount of $39.99. However, since 2005, the Attorney General alleges that Sprint didn’t collect or pay such taxes on some of these access charges. Moreover, the suit alleges that the company repeatedly and knowingly submitted false documentation to New York State tax authorities. Even after being accused of illegal activity, Sprint still did not collect or pay taxes on access charges. As a result, Schneiderman stated that Sprint continues to increase its tax bill by $30,000 per day.

According to the lawsuit, Sprint made a conscious decision not to pay taxes in order to obtain an advantage over its competitors. Instead of cutting costs or providing better service to gain more customers, the carrier was able to provide cheaper service plans by not paying over $4 million in monthly New York taxes.

Speaking about an appeals court decision that allowed that allowed his office to move forward with the case, Schneiderman remarked, “Today’s decision allows my office to proceed in holding Sprint accountable for deliberately evading sales tax and costing state and local governments $130 million. As long as I am Attorney General, I’m committed to ensuring that taxpayers’ money is protected, and that honest businesses aren’t put at a disadvantage for collecting and paying their fair share.”

If you are working for a company that you believe is defrauding the government, you may be able to file a whistleblower lawsuit under the New York False Claims Act. Contact one of our Award-Winning Employment Attorneys by clicking here or by calling our office at (800) 893-9645.

Disclaimer: 

Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced employment law attorney in your state or jurisdiction.