HomeMy WebLinkAbout1998 CON HdL Coren & Cone - Sales Tax ServicesFrorn:HdL COMPANIES
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AGREEMENT FOR SALES TAX AUDIT AND INFORMATION SERVICES
This Agreement is made and entered into as of the 14th day of July , 1998 by and
between the CITY OF NATIONAL CITY a municipal corporation hereinafter called CITY, and
HJNDERLITER, DE LLAMAS AND ASSOCIATES a California Corporation, hereinafter called
CONTRACTOR.
I. RECITALS
WHEREAS, sales tax revenues can be increased through: a system of continuous
monitoring, identification and correction of "point of sale" allocation errors, and
WHEREAS, an effective program of sales tax management will improve identification of
sales tax opportunities as they relate to economic development and provide for more
accurate sales tax forecasting; and
WHEREAS, CITY desires the combination of data entry, report preparation, and data
analysis necessary to effectively manage the municipal sales tax base and recover
revenues erroneously allocated to other jurisdictions and allocation pools; and
WHEREAS, CONTRACTOR has the programs, equipment and personnel required to
deliver the sales tax services referenced herein;
THEREFORE, CITY and CONTRACTOR, for the consideration hereinafter described,
mutually agree as follows:
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II. SERVICES
The CONTRACTOR shall perform the following services:
A. Sales tax and economic analysis
CONTRACTOR shall establish a special data base that identifies the name,
address and quarterly allocations of the major sales tax producers within the
CITY for the most current and previous five quarters from the date of this
agreement, or longer, if the CITY has historical sales tax data available on
computer readable magnetic media that extends beyond the most recent five
quarters. A second data base covering the same period will be established
showing total sales tax receipts for each business category identified by the
Board of Equalization. These data bases will be utilized to generate special
reports to the CITY on: major sales tax producers by rank and category, analysis
of sales tax activity by category, business district or redevelopment area
specified by CITY, analysis of reporting aberrations, and per capita and outlet
comparisons with state wide sales.
2. CONTRACTOR shall provide up -dated reports each quarter identifying changes
in sales by major outlets and by category; area growth and decline comparisons;
and current graphics, tables, and top 100 listings. Quarterly aberrations due to
State audits, fund transfers, and receivables along with late or double payments
will be identified. Quarterly reconciliation worksheets to assist finance officer
with budget forecasting will be included.
3. CONTRACTOR will additionally provide an analysis for the CITY or its
Community Development Commission to share with Chambers of Commerce
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and other economic development interest groups that analyze CITY'S sales tax
trends by major groups, and geographic areas without disclosing confidential
information.
4. CONTRACTOR shall make available to CITY Staff the HdL DATA computer
program and data base containing sellers permit information for all in -city
business outlets registered with the Board of Equalization. In addition,
contractor shall process for CITY the monthly registration and allocation files
provided by the Board in magnetic media. Printouts of registration changes and
dollars allocated by business name and number will be provided from these files
on a monthly basis.
B. Allocation Audit and Recovery
1. CONTRACTOR shall conduct an initial and on -going sales tax audit in order to
identify and correct "point -of -sale" distribution errors and thereby generate
previously unrealized sales tax income for the CITY. Common errors that will
be monitored and corrected include: transposition errors resulting in
misallocations; erroneous consolidation of multiple outlets; misreporting of
"point of sale" from the wrong location; delays in reporting new outlets;
misidentifying transactions as a "use tax" rather than a "sales tax," and erroneous
fund transfers and adjustments.
2. CONTRACTOR will initiate contacts with the appropriate sales management
and accounting officials in companies that have businesses where a probability
of error exists to verify whether current tax receipts accurately reflect the local
sales activity. Such contacts will be conducted in a professional and courteous
manner so as to encourage local business retention and expansion.
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3. CONTRACTOR shall prepare and submit to the Board of Equalization all
information necessary CO correct any allocation errors that are 'identified and shall
follow-up with the individual businesses and the State Board of Equalization to
ensure that all back quarter payments due the CITY are recovered.
4. If during the course of its audit, CONTRACTOR finds businesses located in the
CITY that are properly reporting sales tax but have the potential for modifying
their operation to provide an even greater share to the CITY, CONTRACTOR
shall so advise CITY and upon request, shall work with those businesses and the
CITY to encourage such changes.
C. On Going Consultation
Throughout the term of this agreement, CONTRACTOR shall advise and work with
CITY and Community Development Commission Staffs on questions related to
tenant mix alternatives for maximum sales tax returns; advise CITY Business
License staff on utilization of reports to enhance business license collection efforts;
provide sales tax projections on specific projects for redevelopment negotiation and
CITY budget purposes; and provide data support to enhance the sales tax base
through improved economic development efforts.
III. CONFIDENTIALITY
Section 7056 of the State of California Revenue and Taxation code specifically limits the
disclosure of confidential taxpayer information contained in the records of the State
Board of Equalization. This section specifies the conditions under which a CITY may
authorize persons other than CITY officers and employees to examine State Sales and
Use Tax records.
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The following conditions specified in Section 7056 (b), (1) of the State of California
Revenue and Taxation Code are hereby made part of this agreement.
A. CONTRACTOR is authorized by this Agreement to examine sales or transactions
and use tax records of the Board of Equalization provided to CITY pursuant to
contract under the Bradley -Bums Uniform Sales and Use Tax Law.
B. CONTRACTOR is required to disclose information contained in. or derived from,
those sales or transactions and use tax records only to an officer or employee of the
CITY who is authorized by resolution to examine the information.
C. CONTRACTOR is prohibited from performing consulting services for a retailer, as
defined in California Revenue & Taxation Code Section 60I5, during the term of this
Agreement.
D. CONTRACTOR is prohibited from retaining the information contained in, or
derived from those sales or transactions and use tax records, after this Agreement has
expired. Information obtained by examination of Board of Equalization records shall
be used only for purposes related to collection of local sales and use tax or for other
governmental functions of the CITY as set forth by resolution adopted pursuant to
Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate
the CONTRACTOR as a person, authorized to examine sales and use tax records and
certify that this Agreement meets the requirements set forth above and in Section
7056 (b), (1) of the Revenue and Taxation Code.
IV. PROPRIETARY INFORMATION
In performing its duties under this agreement, CONTRACTOR will produce reports,
technical information and other compilations of data to CITY. These reports, technical
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information and compilations of data are derived by CONTRACTOR using
methodologies, formulae, programs, techniques and other processes designed and
developed by CONTRACTOR at a substantial expense. CONTRACTORS reports,
technical information, compilations of data, methodologies, formulae, programs,
techniques and other processes designed and developed by CONTRACTOR shall be
referred to as Proprietary Information. CONTRACTOR'S Proprietary Information is not
generally known by the entities with which CONTRACTOR competes.
CONTRACTOR desires to protect its Proprietary Information. Accordingly, CITY
agrees that neither it nor any of its employees, agents, independent CONTRACTORs or
other persons or organizations over which it has control, will at any time during or after
the term of the Agreement, directly or indirectly use any of CONTRACTOR'S proprietary
Information for any purpose not associated with CONTRACTOR'S activities. Further,
CITY agrees that it nor any of its employees, agents, independent contractors or other
persons or organizations over which it has control, will disseminate or disclose any of
CONTRACTOR'S Proprietary Information to any person or organization not connected
with CONTRACTOR, without the express written consent of CONTRACTOR. The
CITY also agrees that it will undertake all necessary and appropriate steps to maintain the
proprietary nature of CONTRACTOR'S Proprietary Information.
V. CONSIDERATION
A, CONTRACTOR shall establish the sales tax and audit data bases, shall provide the
ongoing reports and analysis and shall make available the computer program and
data bases referenced above for a fee of S675.00 per month, invoiced quarterly
(hereafter referred to as "monthly fee").
B. CONTRACTOR shall be further paid 15% of all new Sales and/or Use tax revenue
received by the CITY as a result of audit and recovery work performed by
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CONTRACTOR (hereafter referred to as "audit fees"). New sales and/or use tax
revenue shall not include any amounts determined by CITY or CONTRACTOR to be
increment attributable to causes other than CONTRACTOR'S work pursuant to this
agreement. In the event that CONTRACTOR is responsible for an increase in the tax
reported by businesses already properly making tax payments to the CITY, it shall be
CONTRACTOR'S responsibility to separate and support the incremental amount
attributable to its efforts prior to the application of the audit fee. Said audit fees will
apply to state fund transfers received for back quarter reallocations and monies
received in the first eight consecutive reporting quarters following completion of the
audit by CONTRACTOR and confirmation of corrections by the State Board of
Equalization. CONTRACTOR shall provide CITY with an itemized quarterly
invoice showing all formula calculations and amounts due for audit fees.
CONTRACTOR shall obtain CITY approval prior to beginning the work of
correcting tax reporting methodology or "point of sale" for specific businesses where
said payment of the percentage fee will be expected. Said approval shall be
accomplished by the City Administrator or his designated representative on the Sales
Tax Audit Authorization form, a copy of which is attached as "Exhibit A." CITY
shall pay audit fees upon CONTRACTOR'S submittal of evidence of Stare Fund
Transfers and payments to CITY from businesses identified in the audit and
approved by the CITY.
C. Above sum shall constitute full reimbursement to CONTRACTOR for all direct and
indirect expenses incurred by CONTRACTOR in performing audits including the
salaries of CONTRACTOR'S employees, and travel expenses connected with
contacting local and out-of-state businesses and Board of Equalization
representatives.
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VI. CITY MATERIALS AND SUPPORT
CITY shall adopt a resolution in a form acceptable to the State Board of Equalization and
in compliance with Section 7056 of the Revenue and Taxation Code, authorizing
CONTRACTOR to examine the confidential sales tax records of CITY. CITY further
agrees to provide any information or assistance that may readily be available such as
business license records within the CITY and to provide CONTRACTOR with proper
identification for contacting businesses. CITY further agrees to provide copies of the
monthly allocation reports received for the most recent five quarters from the execution
of this agreement and to continue to provide copies of future allocation reports on
computer readable magnetic media until such time as all audit adjustments have been
completed by the State Board of Equalization and audit fees due the CONTRACTOR
have been paid.
VII. TERMINATION
This Agreement may be terminated by either party by giving 30 days written notice to the
other of such termination and specifying the effective date thereof. Upon the presentation
of such notice, CONTRACTOR may continue to work through the date of termination.
Upon termination as provided herein, CONTRACTOR shall be paid the value of all tax
analysis and reporting work performed less payments previously made by CITY. In
ascertaining the value of the work performed up to the date of termination, consideration
shall be given to amounts due for any unpaid invoices, and to businesses identified by
CONTRACTOR which make tax payments after termination of this Agreement as a
result of CONTRACTORS work. After CITY receives said tax payments for such
businesses, CONTRACTOR shall be paid the audit fees resulting from tax payments
made by the business for back quarter reallocations and the first eight consecutive
reporting quarters following completion of the audit by CONTRACTOR and
confirmation of corrections by the State Board of Equalization. Compensation for any
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audit work previously authorized and satisfactorily performed shall be made at the times
provided in the preceding section entitled "Consideration."
All documents, data, surveys and reports prepared by CONTRACTOR pursuant to this
Agreement shall be considered the property of the CITY and upon payment for services
performed by CONTRACTOR, such documents and other identified materials shall be
delivered to CITY by CONTRACTOR.
VIII. INDEPENDENT CONTRACTOR
CONTRACTOR shall perform the services hereunder as an independent contractor and
shall furnish such services in his own manner and method, and under no circumstances or
conditions shall any agent, servant, or employee of CONTRACTOR be considered as an
employee of CITY.
IX. NON -ASSIGNMENT
This Agreement is not assignable either in whole or in part by CONTRACTOR without
the written consent of CITY.
X. ATTORNEY'S FEES
In the event a legal action is commenced to enforce any of the provisions of this
Agreement, the prevailing party shall be entitled to recover its costs and reasonable
attorney's fees.
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XI. GOVERNING LAW
The laws of the State of California shall govern the rights, obligations, duties and
liabilities of the parties to this Agreement and shall also govern the interpretation of this
agreement.
XII. INDEMNIFICATION
CONTRACTOR hereby agrees to, and shall hold CITY, its elective and appointive
boards, officers, agents and employees, harmless from any liability for damage or claims
for damage for personal injury, including death, as well as from claims for breach of
confidentiality or property damage which may arise from CONTRACTOR'S willful or
negligent acts, errors or omissions or those of its employees or agents. CONTRACTOR
agrees to and shall defend CITY and its elective and appointive boards, officers, agents
and employees from any suits or actions at law or in equity for damages caused, or
alleged to have been caused, by reason of any of the aforesaid willful or negligent acts,
errors or omissions.
CITY hereby agrees to, and shall hold CONTRACTOR, its officers, agents and
employees, harmless from any liability for damage or claims for damage for personal
injury, including death, as well as from claims for breach of confidentiality or property
damage which may arise from CITY'S negligent acts, errors or omissions under this
Agreement. CITY agrees to and shall defend CONTRACTOR and its officers, agents
and employees from any suits or actions at law or in equity for damage caused, or alleged
to have been caused, by reason of any of the aforesaid negligent acts, errors or omissions.
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XIII. INSURANCE
The contractor, at its sole cost and expense, shall purchase and maintain throughout the
term of this agreement the following insurance policies:
A. Automobile insurance covering all bodily injury and property damage incurred
during the performance of this Agreement, with a minimum coverage of $500,000
combined single limit per accident. Such automobile insurance shall include non -
owned vehicles.
B. Comprehensive general liability insurance, with minimum limits of $1,000,000
combined single limit per occurrence, covering all bodily injury and property damage
arising out of its operation under this Agreement.
C. Workers' compensation insurance covering all of its employees and volunteers.
D. The aforesaid policies shall constitute primary insurance as to the CITY, its officers,
employees, and volunteers, so that any other policies held by the CITY shall not
contribute to any loss under said insurance. Said policies shall provide for thirty (30)
days prior written notice to the CITY of cancellation or material change.
E. Said policies, except for the worker's compensation policy, shall name the CITY and
its officers, agents and employees as additional insureds.
F. This Agreement shall not take effect until certificate(s) or other sufficient proof that
these insurance provisions have been complied with, are filed with and approved by
the CITY's Risk Manager. If the CONTRACTOR does not keep all of such
insurance policies in full force and effect at all times during the terms of this
Agreement, the CITY may elect to treat the failure to maintain the requisite
insurance as a breach of this Agreement and terminate the Agreement as provided
herein.
G. If required insurance coverage is provided on a "claims made" rather than
"occurrence" form, the CONTRACTOR shall maintain such insurance coverage for
three years after expiration of the term (and any extensions) of this Agreement.
H. Any aggregate insurance limits must apply solely to this Agreement.
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XIV. NOTICE
All notices required by this Agreement shall be given to CITY and CONTRACTOR in
writing, by personal delivery or first class mail postage prepaid, addressed as follows:
CITY:
CITY OF NATIONAL CITY
1234 National City Boulevard
National City, Ca 92050
CONTRACTOR: HINDERLITER, DE LLAMAS, & ASSOCIATES
1340 Valley Vista Drive, Suite 200
Diamond Bar, CA 91765
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the
date first above written by their respective officers duly authorized in that behalf.
City Clerk ...Michael R. calla
APPROVED AS TO FORM:
CittygAttorneyer, III
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CITY:
CITY OF NATIONAL CITY
C,
Mayor George H. waters
CONTRACTOR:
I-JINDERLITER, DE LLAMAS & ASSOCIATES
A California Corporation
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C
City Attorney
SAMPLE
EXHIBIT A
Sales Tax Audit
Work Authorization No.
SAMPLE
The following business or businesses, located in the City of , have been
identified as having the potential for generating additional sales tax revenue to the City of
. Contractor is hereby authorized to contact the given business(s) and the
State Board of Equalization to verify the accuracy of the current reporting methodology and
obtain the necessary documentation for the Board of Equalization, to modify allocation formulas,
and to return previous misallocated revenue that may be due to City.
Contractor's compensation shall be 15% of the new sales and/or use tax revenue received by the
City as a result of audit and recovery work performed by Contractor, as set forth in the
Agreement between Contractor and City.
CITY OF
By:
Date
HINDERLITER, DE LLAMAS AND ASSOCIATES
By:
Date
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RESOLUTION NO. 98 - 83
RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF NATIONAL CITY AUTHORIZING
THE MAYOR TO EXECUTE AGREEMENTS
WITH THE HdL COMPANIES FOR SALES TAX
SERVICES AND PROPERTY TAX SERVICES
WHEREAS, at the Preliminary Budget Meeting on June 15, 1998, the City
Council authorized to contract with HdL Companies to provide the City of National City
Sales and Use Tax Set -vices and Property Tax Audit Services and reports; and
WHEREAS, these new contracts will supersede the existing contingency
contracts with HdL Companies based on a percentage of revenue recovery; and
WHEREAS, HdL Companies will provide quarterly trending of sales tax
data of the top sales tax generators in the city, a data base which cannot be provided by
the State Board of Equalization; and
WHEREAS, the Property Tax Service will enable the Finance Department
to have immediate access to the County data base on property taxes generated in National
City; and
WHEREAS, these services will benefit both the City and the Community
Development Commission in capturing all the revenues belonging to the City.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City
of National City that the Mayor is authorized to execute an agreement with HdL
Companies for Sales and Use Tax Services and an agreement with HdL Companies for
Property Tax Services. Said Agreements are on file in the office of the City Clerk.
Signature Page to Follow
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Resolution No. 98 - 83
July 14, 1998
Page Two
PASSED and ADOPTED this 14th day of July, 1998.
George H. Waters, Mayor
ATTEST:
M Clerk
is ael R. Dall ,City
APPROVED AS TO FORM:
,001
George H."Eiser, 111
City Attorney
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Passed and adopted by the Council of the City of National City, California, on July 14, 1998, by
the following vote, to -wit:
Ayes: Councilmembers Beauchamp, Inzunza, Morrison, Zarate, Waters.
Nays: None.
Absent: None.
Abstain: None.
AUTHENTICATED BY: GEORGE H.WATERS
Mayor of the City of National City, California
'MICHAEL R. DALLA
City Clerk of the City of National City, California
By:
Deputy
I HEREBY CERTIFY that the above and foregoing is a full, true and con-ect copy of
RESOLUTION NO. 98-83 of the City of National City, California, passed and adopted by the
Council of said City on July 14, 1998.
Na
tional Ciry, California
Ci Clerk of the C" of
By:
Deputy