HomeMy WebLinkAboutContracts & Agreements_99-2012_CCv0001.pdf AGREEMENT FOR SALES, USE AND TRANSACTIONS TAX AUDIT
AND INFORMATION SERVICES
This Agreement is made and entered into as of the 3'd day of July. 2012 by and between
the City of Redlands, a municipal corporation ("City"), and Hinderliter, De Llamas and
Associates, a California corporation ("Contractor"). City and Contractor are sometimes
individually referred to herein as a"Party- and, together, as the "Parties."
RECITALS
WHEREAS, sales, use and transactions tax revenues can be increased through a system
of continuous monitoring, identification and correction of allocation errors; and
WHEREAS, an effective program of sales and use tax management will improve
identification of economic opportunities; provide for more accurate sales and use tax forecasting;
assist in related revenue collections; and
WHEREAS. City desires the combination of data entry, report preparation and analysis
necessary to effectively manage its sales and use tax base; recover revenues erroneously
allocated to other jurisdictions and allocation pools; and maximize its financial and economic
planning: and
WHEREAS, Contractor has the programs, equipment and personnel required to deliver
the sales and use tax related services referenced herein:
NOW, THEREFORE, in consideration of the mutual promises contained herein, City and
Contractor agree as follows:
AGREEMENT
ARTICLE I - SERVICES
Contractor shall perform the following services:
A. SALES TAX AND ECONOMIC ANALYSIS
I. Contractor shall establish a special database that identifies the name, address
and quarterly allocations of all sales tax producers within the City of Redlands
for the most current and all quarters back to fiscal year 1984-1985 or earlier, if
City has prior historical sales tax data available on computer readable magnetic
media. This database will be utilized to generate special reports to City on:
major sales tax producers by rank and category, sales tax activity by categories,
business districts areas, identification of reporting aberrations, and per capita
and outlet comparisons with regional and statewide sales.
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2. Contractor shall provide up-dated reports each quarter identifying changes in
sales by individual businesses, business groups and categories and by
geographic area; quarterly aberrations due to State audits, fund transfers, and
receivables along with late or double payments will be identified; and quarterly
reconciliation worksheets to assist City's Finance Director with budget
forecasting.
3. Contractor shall additionally provide a quarterly summary analysis for City to
share with chambers of commerce 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 the HdL sales tax computer software
program and database containing sellers permit and quarterly allocation
information for all in-City business outlets registered with the Board of
Equalization and update quarterly. The software shall allow City staff to search
business by street address, account number, business name, business type and
keyword; arrange data by geographic area, and print out a variety of reports.
B. ALLOCATION AUDIT AND RECOVERY
I. Contractor shall conduct an initial and on-going sales and use tax audit to
identify and correct distribution errors and thereby generate previously
unrealized sales tax income for 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" to the wrong
location-, delays in reporting new outlets; misallocating use tax payments to the
allocation pools or wrong jurisdiction 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 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 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 City are recovered.
4. If during the course of its audit, Contractor finds businesses located in the City
of Redlands that are properly reporting sales tax but have the potential for
modifying their operation to provide an even greater share to City, Contractor
shall so advise City and upon request, shall work with those businesses and City
to encourage such changes.
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C. ON GOING CONSULTATION
Throughout the term of this agreement, Contractor shall advise and work with City
staff on technical questions related to sales, use and transactions tax; advise City
staff on utilization of reports to enhance business license collection efforts; provide
sales tax projections for proposed annexations, economic development projects and
budget planning; and generally serve as support staff on sales, use and transactions
tax related issues.
ARTICLE 2 - 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) (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 Bradley-Burns Uniform Sales and Use Tax 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 City
who is authorized by resolution to examine the information.
C. During the term of this Agreement, Contractor is prohibited from performing
consulting services for a retailer, as defined in California Revenue & Taxation Code
Section 6015.
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 City as set forth by resolution adopted pursuant to Section
7056 (b) of the Revenue and Taxation Code. The resolution shall designate
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.
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ARTICLE 3 - PROPRIETARY SOFTWARE
A. OWNERSHIP OF MATERIALS, CONFIDENTIALITY.
1. Software License. Contractor hereby provides a license to City to use
Contractor's Software. The software shall only be used by City. City shall not
sublet, duplicate, modify, decompile, reverse engineer, disassemble, or attempt
to derive the source code of the software. The license granted hereunder shall
not imply ownership by City of said software, rights of City to sell said
software, or rights to use said software for the benefits of others. This license
is not transferable. Upon termination, the software license shall expire, all
copies of the software shall be removed from City's computers and network,
and all digital copies deleted or otherwise destroyed.
2. City Data. Contractor acknowledges that the account data generated by City
during the course of City operations is the property of City. At the termination
of this Agreement, City data will be made available to City in a format
acceptable to both City and Contractor.
3. Proprietary Information. As used herein, the term "proprietary information"
means anv information which relates to Contractor's computer or data
processing programs; data processing applications, routines, subroutines,
techniques or systems; or business processes. City shall hold in confidence
and shall not disclose to any other party any Contractor proprietary information
in connection with this Agreement, or otherwise learned or obtained by City in
connection with this Agreement. The obligations imposed by this paragraph
shall survive any expiration or termination of this Agreement. The provisions
of this Article 3 shall not apply to any information that is public information.
ARTICLE 4 - CONSIDERATION
A. Contractor shall establish the sales and transactions tax databases, shall provide the
ongoing reports and analysis and shall make available the computer software
program and databases referenced above for a fee of $650.00 per month, invoiced
quarterly(hereafter referred to as "Monthly. Fee").
B. Contractor shall be further paid 15% of all new sales, transactions and/or use tax
revenue received by City as a result of audit and recovery work performed by
Contractor {hereafter referred to as "Audit Fees"), including any reimbursement
from the Sales and Use Tax Compensation Fund as outlined in Section 97.68 of the
Re-venue and Taxation Code. New sales, transactions 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 City, it shall be Contractor's
responsibility to separate and support the incremental amount attributable to its
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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 fust
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 date for Audit fees.
Contractor shall obtain City approvalprior to beginning the work of<correcting tax
reporting methodologyor "point of sale" for specific businesses where said payment
of the percentage;fee will be expected. Said approval shall be deemed given when.
the City Manager, or his designated representative, signs a Sales Tax Audit
Authorization form, a copy of which is attached as "Exhibit A7 to this Agreement.
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 City.
ARTICLE 5 - CITY MATERIALS ANIS'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 Gude, 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 continue Contractor authorization to
examine the confidential sales tax records of the City,by maintaining Contractor's name
on City's Resolution or by providing copies of future allocation`reports on computer
readable magneis media until such time as all audit adjustments have been completed by
the State Board of Equalization and audit fees clue Contractor have been paid;
ARTICLE 6-LICENSE PERMITS,FEES AND ASSESSENTS
Contractor shad obtain such licenses, permits and approvals (collectively,the "Permits")
as may be required 'by lave 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.
ARTICLE 7-TERMINATION
This Agreement may be terminated for convenience by either Party by giving thirty ( )
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 pork 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
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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. 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.
ARTICLE 8 - 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.
ARTICLE 9 -NON-ASSIGNMENT
This Agreement is not assignable either in whole or in part by Contractor without the
written consent of City.
ARTICLE 10—ATTORNEYS' FEES
In the event any action is commenced to enforce or interpret any of the terms or
provisions of this Agreement the prevailing party shall, in addition to costs and any other
relief be entitled to recover its reasonable attorneys' fees, including fees for use of in-
house counsel by a Party.
ARTICLE I I - GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of the
State of California.
ARTICLE 12 - INSURANCE
All insurance required by this Agreement shall be maintained by Contractor for the
duration of its performance of its Services. Contractor shall not perform any services
unless and until all required insurance listed below is obtained by Contractor. Contractor
shall provide City with certificates of insurance and endorsements evidencing such
insurance prior to commencement of the services.
A. Contractor shall secure and maintain Workers* Compensation and Emplover*s
Liability insurance throughout the duration of this Agreement in accordance with the
t�
laws of State of California,with an insurance carrier acceptable to City.
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B. Contractor shall secure and maintain in force throughout the term of this Agreement
comprehensive general liability insurance with carriers acceptable to City. Minimum
coverage of One Million Dollars ($1,000,000) per occurrence and Two Million
Dollars ($2,000.000) aggregate for public liability, property damage and personal
injury is required. City shall be named as an additional insured. Such insurance shall
be primary and non-contributing to any insurance or self-insurance maintained by
City.
C. Contractor shall secure and maintain professional liability insurance throughout the
term of this Agreement in the amount of One Million Dollars ($1,000,000) per claim
made.
D. Contractor shall secure and maintain business auto liability coverage, with minimum
limits of One Million Dollars ($1,000,000) per occurrence, combined single limit for
bodily injury liability and property damage liability throughout the term of this
Agreement. This coverage shall include all Contractor owned vehicles used in
connection with Contractor's provision of the Services, hired and non-owned
vehicles, and employee non-ownership vehicles. Such insurance shall be primary and
non-contributing to any insurance or self insurance maintained by City. City shall be
named as an additional insured.
E. Contractor shall defend, indemnify and hold harmless City and its elected officials,
employees and agents from and against any and all claims, losses or liability,
including attorneys* fees, arising from injury or death to persons or damage to
property occasioned by Contractor's and its officers , employees' and agents'
negligent acts or omissions, or Contractor's willful misconduct, in performing the
services.
ARTICLE 13 - 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 indemnify and defend, including reasonable attorneys fees. 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
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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.
ARTICLE 14 -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 Clerk
City of Redlands
P.O. Box 3005
35 Cajon Street
Redlands, CA 9237')
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 OF REDLANDS CONTRACTOR
A
Pete Aguilar, ayor HINDS ITER, DE LLAMAS&
ASSOCIATES, A California Corporation
Aguilar,
ATTEST:
Sain Irwin, lerk
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,UJVPLE SAJVPLE
EXHIBIT A
Sales Tax Audit
Work Authorization No.
The following business or businesses, located in the City of Redlands, have been identified as
having the potential for generating additional sales tax revenue to the City of Redlands.
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 REDLANDS
By:
Date:
HINDERLITER, DE LLAMAS AND ASSOCIATES
By:
Date: