NEW YORK (Reuters) - Sprint Nextel Corp must face a lawsuit brought by New York state accusing the company of deliberately not collecting or paying millions of dollars of taxes for its cell phone service, a judge has ruled.
In a decision made public on Monday, New York Supreme Court Justice O. Peter Sherwood denied a motion by Sprint to dismiss the lawsuit.
Sherwood, however, dismissed a conspiracy claim against Sprint and ruled that certain claims applying to periods before March 31, 2008 are barred by a three-year statute of limitations.
A Sprint spokesperson did not immediately respond to a message seeking comment.
The lawsuit brought by New York Attorney General Eric Schneiderman was the first tax enforcement action filed under the state's False Claims Act.
Under the False Claims Act, whistleblowers may be eligible to receive up to 25 percent of any money recovered by the government as a result of information they have provided.
Based on whistleblower information, Schneiderman alleged in the lawsuit that Sprint failed to bill customers for more than $100 million in taxes for its wireless services over seven years.
He said Sprint's decision not to collect and pay taxes was part of a nationwide effort by the Overland Park, Kansas-based company to lure customers from rivals such as AT&T Inc and Verizon Wireless, and make its service $4.6 million less expensive per month.
The lawsuit seeks three times the amount of underpaid tax, plus penalties.
A spokesman for Schneiderman applauded the ruling in a statement, saying it "sends a message that tax dodgers will be exposed and prosecuted to the fullest extent of the law."
(Reporting by Andrew Longstreth and Karen Freifeld; Editing by Ryan Woo)
SYDNEY (Reuters) - Asian stocks rose on Tuesday with Tokyo's Nikkei extending gains after encouraging manufacturing data in Europe and the United States helped cheer a market fretting about a slowing Chinese economy.
MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> rose 0.5 percent in early trade, reversing Monday's 0.3 percent fall. Australian shares <.axjo> climbed 1.8 percent, while South Korean stocks <.ks11> edged up 0.1 percent.</.ks11></.axjo></.miapj0000pus>
Japan's Nikkei <.n225> was up 0.9 percent at its highest since late May, adding to Monday's 1.3 percent gain.</.n225>
"We will likely continue to test strong levels," said Kenichi Hirano, operating officer at Tachibana Securities. "A weaker yen has become the normal condition, and stock prices are showing a tendency to gradually rise."
The lighter mood in Asian bourses followed a rise on Wall Street, which took heart after data showed U.S. manufacturing expanded last month, while construction spending neared a four-year high in May.
Also encouraging, factory activity in Europe showed signs of stabilization last month, and British manufacturing recorded its strongest growth in more than two years.
All these reports helped offset some disappointment over China, whose own survey on Monday showed a further slowdown in factory activity.
The reports also highlight an improving trend for the U.S. economy that could see the Federal Reserve keep to guidance that it could start dialing down stimulus later this year.
Analysts said that should keep the U.S. dollar on an upward trajectory over the medium- to longer- term.
"As the U.S. economy pulls ahead of Europe and Japan, and the Fed changes course, the dollar is at the start of a multi-year rally," said Kit Juckes, strategist at Societe Generale.
Juckes said the dollar index, which tracks the greenback's performance against a currency basket, can rise by 10-15 percent over the medium/longer term.
For now though, the dollar index was taking a bit of a breather having jumped 3.5 percent from June 19 to June 28 to reach a one-month peak. It was last down 0.1 percent at 82.996 <.dxy>, just off Friday's high of 83.344.</.dxy>
Against the yen, the dollar hovered near a one-month high of 99.87, while the euro edged up 0.1 percent to $1.3070.
The big mover was the Australian dollar, which bounced to $0.9240 from a 33-month trough of $0.9110 as investors trimmed bearish positions following a bruising 4.7 percent tumble in June.
The steep fall in the currency, which in itself is stimulatory for the economy, is a key reason many economists expect the Reserve Bank of Australia (RBA) will keep its cash rate steady at a record low 2.75 percent later on Tuesday.
Only 2 out of 23 economists polled by Reuters see the RBA lowering its cash rate to 2.5 percent and markets are giving a less than one-in-five chance of a rate cut. The outcome of the meeting is due at 0430 GMT.
In the commodities, copper slipped 0.5 percent to $6,943 per tonne while U.S. crude was steady at $97.95 a barrel.
Spot gold hovered at around $1,251 an ounce, continuing to consolidate after a horror quarter in which it slumped 23 percent, its worst performance in 45 years.
(Additional reporting by Dominic Lau and Lisa Twaronite; Editing by Eric Meijer)
The IRS has informed Tyco International Ltd. that it has disallowed roughly $2.86 billion in interest and deductions recognized by the company in its U.S. tax returns for the 1997-2000 tax years, according to a filing Monday with the Securities and Exchange Commission.
The move stems from a finding by the IRS that several of the Swiss fire protection and security company's former subsidiaries owe $883.3 million in taxes and $154 million in penalties.
Tyco noted that it has been able to resolve substantially all of the issues raised by the IRS for periods beginning with the 1997 tax year, but it has not been able to resolve matters related to the treatment of intercompany debt transactions during that period.
The company said it strongly disagrees with the IRS' claims and intends to contest the proposed tax adjustments with the U.S. tax court.
"We believe that we have meritorious defenses for our tax filings, that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and existing Treasury regulations, and that the previously reported taxes for the years in question are appropriate," Tyco said in the filing.
The company said it isn't required to make any payments until the dispute is definitively resolved, noting that could take several years.
Even so, Tyco warned that the ultimate resolution of the dispute is uncertain and could have a material impact on the company's financial condition.
For example, if the IRS' claim prevails, it would likely affect some $6.6 billion in interest deductions related to intercompany debt and taken by the company in subsequent tax years.
Tyco said it shares obligations on the issue with several companies that it spun off in recent years: Covidien PLC, TE Connectivity, ADT and Pentair.
Tyco spun off its Covidien health care and Tyco Electronics units in 2007 in a series of moves aimed at recovering from a high-profile scandal that led to the convictions of its former CEO L. Dennis Kozlowski and ex-Chief Financial Officer Mark Swartz for fraud. Tyco Electronics subsequently changed its name to TE Connectivity Ltd.
In 2012, it again separated into three public companies, forming The ADT Corp. and Pentair Ltd., along with Tyco International.
The tax-sharing agreements calls for Covidien to share 42 percent of any tax liabilities, while TE Connectivity's share is 31 percent, Tyco said.
Under its agreement with Pentair and ADT, the companies would also be responsible for covering a share of Tyco's tax liability. Pentair would share between 20 percent and 42 percent of the tax liabilities, while ADT would be responsible for 27.5 percent to 58 percent, Tyco added.
Pentair and ADT's share depends upon whether Tyco's tax liability for 2012 exceeds $500 million or $725 million.
Tyco International moved its global headquarters to Switzerland from Bermuda in 2009. It maintains its U.S. headquarters in Princeton, N.J. Its stock ended regular trading up $1.45, or 4.4 percent, at $34.40. Shares slipped 17 cents to $34.23 in extended trading.
Covidien moved its global headquarters to Switzerland from Bermuda in 2008. Its U.S. headquarters is in Mansfield, Mass. Covidien stock closed Monday up 25 cents at $57.41, then gained another 13 cents after hours.
TE Connectivity is likewise Swiss-based, with its main U.S. office in Berwyn, Pa. Its shares closed up 87 cents at $46.41.
Pentair is also headquartered in Switzerland, and has its main U.S. office in Minneapolis. The stock closed up 56 cents at $58.25.
Shares of ADT, based in Boca Raton, Fla., closed up 58 cents at $40.43, and added 7 cents in aftermarket trading.