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HomeMy WebLinkAboutContract 0444-2 L144 (2esui n 0 a°•'' ORIGINAL AGREEMENT FOR TRANSACTIONS TAX AUDIT & INFORMATION SERVICES This Agreement is made and entered into as of the Q day of r , 201Dby and between the CITY OF CATHEDRAL CITY hereinafter referred to as "CITY" and HINDERLITER, DE LLAMAS AND ASSOCIATES a California Corporation, hereinafter referred to as"CONTRACTOR". I. RECITALS WHEREAS, transactions tax revenues can be increased through a system of continuous monitoring, identification and correction of allocation errors and reporting deficiencies, and WHEREAS, an effective program of transactions and use tax management can provide for more accurate budget forecasting and financial planning; and WHEREAS, CITY desires the combination of data entry, report preparation, and data analysis necessary to effectively manage its Measure "H" transactions and use tax base and recover revenues either unreported or erroneously allocated to other jurisdictions; and WHEREAS, CONTRACTOR has the programs, equipment and personnel required to deliver the transactions and use tax related services referenced herein; THEREFORE, CITY and CONTRACTOR, for the consideration hereinafter described, mutually agree as follows: 11/17/2011 II. SERVICES The CONTRACTOR shall perform the following services: A. DEFICIENCY/ALLOCATION REVIEWS AND RECOVERY 1. CONTRACTOR shall conduct on-going reviews to identify and correct unreported transactions and use tax payments and distribution errors thereby generating previously unrealized revenue for the CITY. Said reviews shall include: (i) Comparison of county-wide local tax allocations to transactions tax for brick and mortar stores and other cash register-based businesses, where clearly all transactions are conducted on-site within the Measure "H" CITY boundaries, and therefore subject to transactions tax. (ii) Review of any significant one-time use tax allocations to ensure that there is corresponding transaction tax payments for taxpayers with nexus within the CITY boundaries. (iii) Review of state-wide transactions tax allocations and patterns to identify any obvious errors and omissions. (iv) Identification and follow-up with any potentially large purchasers of supplies and equipment (e.g. hospitals, universities, manufacturing plants, agricultural operations, refineries) to ensure that their major vendors are properly reporting corresponding transactions tax payments to the Measure "H"Transactions Tax District. 2 11/17/2011 2. CONTRACTOR will initiate, where the probability of an error exists, contacts with the appropriate taxpayer management and accounting officials 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 enhance CITY's relations with the business community. 3. CONTRACTOR shall prepare and submit to the Board of Equalization all information necessary to correct any allocation errors and deficiencies 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. B. OPTIONAL DATA BASE MANAGEMENT, REPORTS AND STAFF SUPPORT 1. CONTRACTOR shall establish a database containing all applicable Board of Equalization (BOE) registration data for each business within the Measure "H" District boundaries holding a seller's permit account. Said database shall also identify the quarterly transactions and use tax allocations under each account for the most current and previous quarters where available. 2. CONTRACTOR shall provide updated reports each quarter identifying changes in allocation totals by individual businesses, business groups and by categories. Quarterly aberrations due to State audits, fund transfers, and receivables, along with late or double payments, will also be identified. Quarterly reconciliation worksheets to assist finance officer with budget forecasting will be included. 3. CONTRACTOR shall advise and work with CITY Staff on planning and economic questions related to maximizing revenues, preparation of revenue 3 11/17/2011 projections and general information on sales, transactions and use tax questions. 4. CONTRACTOR shall make available to CITY the HdL proprietary software program and Measure "H" database containing all applicable registration and quarterly allocation information for CITY business outlets registered with the Board of Equalization. The database will be updated quarterly. 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 an CITY may authorize persons other than CITY officers and employees to examine State Sales,Use and Transactions Tax records. 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, use or transactions and use tax records of the Board of Equalization provided to CITY pursuant to contract under the conditions established by the California Revenue and Taxation law. B. CONTRACTOR is required to disclose information contained in, or derived from, those sales, use or transactions and use tax records only to an officer or employee of the CITY who is authorized by resolution to examine the information. 4 11/17/2011 C. CONTRACTOR is prohibited from performing consulting services for a retailer, as defined in California Revenue & Taxation Code Section 6015, 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. CONSIDERATION A. CONTRACTOR shall be paid 25% of all new transactions or use tax revenue received by the CITY as a result of audit and recovery work performed by CONTRACTOR (hereafter referred to as "audit fees"). New revenue shall not include any amounts determined and verified 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 those specific quarters identified as being missing and/or deficient following completion of the audit by CONTRACTOR and confirmation of corrections by the State Board of 5 11/17/2011 Equalization. CONTRACTOR shall provide CITY with an itemized quarterly invoice showing all formula calculations and amounts due for audit fees. CONTRACTOR shall obtain prior approval from CITY for each specific business where payment of the percentage fee will be expected. Said approval shall be deemed given when the Executive Director or his/her designated representative, signs a Work Authorization form, a copy of which is attached as "Exhibit A." CITY shall pay audit fees upon CONTRACTOR'S submittal of evidence of State 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 the Board of Equalization Staff D. The CITY may at anytime during the contract, exercise the option to receive the additional services outlined in Section II (B) (page 3) by written authorization from the Executive Director. CONTRACTOR shall establish the data bases and provide the ongoing reports, staff support and computer program and data bases for a fee of$0.00 per month, invoiced quarterly. E. Extra work beyond the Scope of Services set forth in this agreement such as special analyses requiring modification of CONTRACTOR'S software or extraordinary manual compilation of data will not be performed by CONTRACTOR or reimbursed by CITY unless such extra work is specifically authorized in writing by Executive Director or his/her designated representative. CONTRACTOR shall be compensated for any additional services in the amounts 6 11/17/2011 and in the manner as agreed to by the CITY and CONTRACTOR at the time the CITY's written authorization is given to CONTRACTOR for the performance of said services. 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, use, and transactions tax records of CITY. CITY further agrees to continue CONTRACTOR'S authorization to examine the confidential records of the CITY by maintaining CITY's name on the CITY Resolution 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. LICENSE, PERMITS, FEES AND ASSESSENTS CONTRACTOR shall obtain such licenses, permits and approvals (collectively the "Permits") as may be required by law for the performance of the services required by this Agreement. CITY shall assist CONTRACTOR in obtaining such Permits, and CITY shall absorb all fees, assessments and taxes which are necessary for any Permits required to be issued by CITY. VIII. TERMINATION This Agreement may be terminated for convenience 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 7 11/17/2011 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 CONTRACTOR'S 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 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. IX. 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. X. NON-ASSIGNMENT This Agreement is not assignable either in whole or in part by CONTRACTOR without the written consent of CITY. 8 11/17/2011 XI. 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. XII. 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. XIII. 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 9 11/17/2011 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. 10 11/17/2011 XIV. NOTICE All notices required by this Agreement shall be given to C ITY and CONTRACTOR in writing, by personal delivery or first class mail postage prepaid, addressed as follows: CITY: CITY OF CATHEDRAL CITY 68-700 Avenida Lalo Guerrero Cathedral City, CA 92234-7031 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: CI Y OF CATHEDRAL CITY '-f----- ---- _:--6_____A--, --6_,;e1 5-- '1\14 r CONTRACTOR: HINDERLITER, DE LLAMAS & ASSOCIATES A California Corporation it President APPROVED AS TO FORM: CITY COUNSEL: // 11 11/17/2011 SAMPLE SAMPLE EXHIBIT A Sales Tax Audit Work Authorization No. The following business or businesses, located in the City of Cathedral City have been identified as having the potential for generating additional tax revenues to the City of Cathedral City. 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 bill for uncollected transactions and use tax payments or modify misallocated payments and to return revenues that may be due to the District. Contractor's compensation shall be 25% of the new sales and/or use tax revenue received by the District as a result of audit and recovery work performed by Contractor, as set forth in the Agreement between Contractor and City. CITY: CITY OF CATHEDRAL CITY By: Date: HINDERLITER, DE LLAMAS AND ASSOCIATES By: Date