Embarq, Sprint Sue Government Over Taxes

OVERLAND PARK, Kan. (AP) — Embarq Corp. and its former corporate parent, Sprint Nextel Corp., have sued the federal government to recover $31.6 million in income taxes.

The two companies filed the lawsuit Wednesday in Kansas City, Kan., federal court. The complaint claims Sprint paid the taxes by mistake in the 1990 through 1994 tax years.

Sprint said it mistakenly included subsidies its local telephone division received from the Universal Service Fund as taxable income. The fund helps defray the cost of running lines to rural and poor areas.

The Internal Revenue Service denied Sprint's refund requests, which were filed in 2004.

Sprint's local division spun off in 2006 to become Embarq, which would receive any refunds.