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HomeMy WebLinkAboutContracts & Agreements_42-1985_CCv0001.pdf AGREEMENT FOR SALES TAX AUDIT AND INFORMATION SERVICES This Agreement is made and entered into as of the 18th day of December f 1985 by and between the CITY OF REDLANDS , a Municipal Corporation, hereinafter called CITY, and ROBERT HINDERLITER AND ASSOCIATES , a California Corporation, hereinafter called CONTRACTOR. RECITALS This Agreement is entered into with reference to the following facts and circumstances. 1 . That City desires to engage Contractor to render certain professional services hereafter described in connection with the review of sales tax revenue generated by businesses located within the City; and, 2 . That Contractor is qualified to provide such services to the City; and, 3 . That City has elected to engage the services of Contractor upon the terms and conditions as hereinafter set forth. SERVICES The services to be performed by -Contractor under this agreement shall include , but not be limited to, those services set forth in Parts One and Two of that certain "Agreement for Sales Tax Audit and Information Services" , a copy of which is attached hereto as Exhibit "A" and by this reference incorporated herein and made a part hereof as though it were fully set forth herein. Performance of the work specified in said Proposal is hereby made an obligation of Contractor under this Agreement , subject to any changes which may be make subsequently hereto upon the mutual written agreement of the said parties. Contractor agrees to perform the services set forth in this agreement in a good and workmanlike manner, consistent with the standard of performance commonly expected in the pro- fession. -1- EXHIBIT "A" AGREEMENT FOR SALES TAX AUDIT AND INFORMATION SERVICES PART ONE - BASIC SERVICES The scope of work is divided into the specific tasks that are necessary to provide the City with reasonable assurance it is receiving the sales tax dollars it is entitled to. Also included are the task descriptions covering development of the information necessary to evaluate trends, target economic development efforts , and improve the sales tax productivity of the existing base. TASK A. Within sixty (60) days after receipt of sales tax return data, transfer such data from quarterly reports provided by the State Board of Equalization for the immediate prior three (3) quarters to the computer data bases that provide a basis for all future analyses . Enter business name from contractor provided computer listing of sales tax permittees registered in City and assign geo-code designation . TASK B. Enter sales tax return data from each subsequent quarterly report as each such report is provided and provide City with computer reports generated from two basic data bases - Sales By the Major Outlet and Sales By Category. Reports provided on a quarterly basis include : Major outlets By Industry Type , Top 50 Producers by Rank, Growth and Decline Comparisons with Other Jurisdictions , and Growth and Decline Comparisons by Category, Sales by Geographic Area, Sales By Business Type , and Supplemental Charts and Graphs . Evaluation of this data to detect deviance in reporting by tax payers with multiple outlets is a very important part of the effort to isolate error and recover lost revenue. Task C. Develop and maintain in conjunction with City staff a "current business retention" program designed to protect the existing sales tax base. Sample letters and survey documents will be provided that enable the City to gain knowledge of business plans to expand or relocate. This is an effective way to let business managers know their presence in the community is appreciated, while enabling the City to act in a timely way to influence relocation decisions . Work within this task will also include evaluation of the existing system of correlating business license data with permit data provided by the State Board of Equalization. Recommendations for system improvements, if appropriate, will be provided. -2- OPTIONAL PART TWO SERVICES The services described in this part provide the City with the option to pursue opportunities for augmentation of its sales tax base thru effective use of information developed as part of the Audit and Information Service. Major outlets whose sales tax reporting patterns reveal a probability of error are contacted in order to make sure the City is receiving all the point-of-sale dollars from local transactions. Firms with the potential for making constructive moves in point-of-sale determining activity are identified, contacted and encouraged to locate the sales personnel responsible for that activity in the City. Assistance is provided in making the reporting changes that assure the City of receiving proper credit for new taxable sales. Note: Sensitivity to the needs and interests of the business community are essential for the maintenance of a positive business climate . Experience with this work shows that the contacts authorized by the City for sales tax development purposes are perceived by business leaders as evidence of careful management of municipal resources. It is generally understood that maximization of revenues available from sales tax makes a city less dependent on local fees and taxes . Also, the correction of allocation errors does not result in any additional tax obligation. The steps provided for in this part assure the city of ongoing control of field contacts. Task A. Identify from the Audit and Information Reports the companies currently located in the City that have unrealized potential for producing additional sales tax revenue . Identify those outlets with aberrant reporting patterns where the probability of significant error warrants review. Task B. Obtain city approval to begin the work of inducing change in tax reporting methodology or point-of-sale for the identified companies . The approval process is accomplished thrix separately approved "Part Two Work Authorizations" ( sample attached) . The City is thereby assured of continuing participation in and control of the essential field contacts. -3- Task C. Initiate contact with the appropriate officials in the companies that have been identified in Task "A" Generally , the initial contacts will be with the person responsible for reporting sales tax receipts to the State Board of Equalization. This establishes the current reporting methodology and makes it possible to verify its accuracy and appropriateness. In those instances where error is found, the necessary documentation and correspondence is provided to obtain confirmation by the Board of Equalization and subsequent recovery of misallocated revenue. Meetings with sales and/or management personnel who have knowledge of product lines, and the distribution of taxable sales activities are arranged. The information obtained here is evaluated for the purpose of determining whether current receipts accurately reflect the 'Local sales activity. In addition, an evaluation is made of the potential for positive change in the location of point-of-sale tax generating activities. Movement of point-of-sale activity may require City zoning or permit approval . Should this be the case, meetings will be arranged with the appropriate City officials, and the company will be assisted with the process . To the extent City officials or staff involved in Economic Development are available to assist in the efforts to induce the relocation of tax producing activity, their participation is encouraged. Measure of Performance and Compensation. The measure of performance shall be the incremental growth in the local sales and use tax reported by those companies identified in a " Part Two Work Authorization " ( copy attached ) . Base sales tax amounts, inflationary growth, and incremental growth determined by the City to be attributable to causes other than the work authorized in this agreement shall be deducted prior to calculating compensation. The amount of gain is verified by reference to the sales tax return data developed by the State Board of Equalization and provided to the city on a quarterly basis . The Adjusted Incremental Growth on which compensation is calculated is determined by subtracting (a) same quarter base year receipts adjusted for inflation, and (b) city determined adjustments for growth not attributable to work authorized in this agreement, from (c) current receipts. -4- PART THREE 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. The following conditions specified in Section 7056 (b) , (l ) of the State of California Revenue and Taxation Code are hereby made part of this contractual agreement. A. Contractor is authorized by this agreement to examine sales and use tax re*cords of the Board of Equalization provided to City pursuant to contract under the Bradley-Burns Uniform Sales and Use Tax Law. B. Contractor is required to disclose information contained in, of derived from, those sales 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 during the term of this agreement. D. Contractor is prohibited from retaining the information contained in , or derived from, those sales and use tax records, after this agreement Aas expired . Information obtained by examination of board 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. -5- PART FOUR TERMS AND CONDITIONS FEE FOR BASIC SERVICES - PART ONE Nine Hundred Dollars ( $900 ) -payable upon completion of the computer data bases and reports covering the prior three sales tax quarters as described in Task "A". Three Hundred Dollars ( $300 ) per month for the work described in Task "B" , and Task "C" so long as this agreement is in effect. The City will be invoiced quarterly for the services rendered in the prior three month period. Total not to exceed $3, 400 .00 . FEE FOR OPTIONAL SERVICES - PART TWO The services described in Part Two of this agreement are available to the City at its option. Contractor will not perform or charge for Part Two work without separate written authorization by the City in the form of an approved "Part Two Work Authorization" (sample attached) . The fee for services described in Part Two is Fifteen (15 ) percent of: 1 . New sales and/or use tax revenue received as a result of work performed by contractor for the the first eight ( 8 ) quarters following verification of incremental sales tax gain in accordance with an approved "Part Two Work Authorization" . 2 . Fund Transfers processed by The Board of Equalization for taxpayer misallocations found by Contractor and paid to City. The City will be provided with a quarterly invoice showing all formula calculations and amounts due. AUTHORIZATION AND TERMINATION PROVISIONS This agreement becomes effective when endorsed by the City in the space provide below, and may be terminated by either party with 30 days written notice . Upon termination , Contractor shall be paid the value of Part One work performed, less payments of compensation previously made. Compensation for any Part Two work previously agreed to and satisfactorily performed shall be governed by the provisions of the applicable "Part Two Work Authorization". -6- 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. NOMASSIGNMENT This Agreement is not assignable either in whole or in part by Contractor without the written consent of City. 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. GOVERNING LAW This Agreement shall be governed by the laws of the State of California 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 negligent acts, errors or omissions under this Agreement . 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 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 damages caused, or alleged to have been caused, by reason of any of the aforesaid negligent acts, errors or omissions. -7- NOTICE All notices required by this Agreement shall be given to City and Contractor in writing , by first class mail postage prepaid, addressed as follows: City: Linda Kirwan, Finance Director City of Redlands P. 0. Box 280 Redlands , Calif. 92373 Contractor: Robert Hinderliter President 507 Michel Pl. Placentia, Ca. 92670 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: CITY OF REDLANDS A Municipal Corporation Z1- MAYOR ---(aITY CL CONTRACTOR: ROBERT HINDERLITER & ASSOCIATES A California Corporation PRESIDENT APPROVED AS TO FORM: CITY ATTORNEY -8-