Sprint Nextel is currently facing a lawsuit in the State of New York for charges that the telecoms company did not collect or pay millions of dollars worth of taxes for its cellular phone service. New York state judge, Justice O. Peter Sherwood, ruled against the motion to dismiss the lawsuit set against Sprint Nextel.

The lawsuit was initiated by the New York Attorney General, Eric Schneiderman. This was the first case that was filed under the False Claims Act implemented in the state.

Under this act, the whistleblower is eligible to receive certain percentage, up to 25%, of the money that would be recovered by the government from the company in question because of the information provided. Based on the parameters set by the act, the lawsuit can claim up to three times the amount of the claim for unpaid taxes along with penalties.

As per sources, the decision of Sprint Nextel not to claim taxes was part of their campaign to lure customers from rivals like Verizon Wireless and AT&T Inc.