HomeMy WebLinkAboutAGMT - Hinderliter de Lamas & Associates (SalesTax Audit Services) & (First Amendment)CITY OF SEAL BEACH
FIRST AMENDMENT TO
AGREEMENT FOR SALES, USE AND TRANSACTIONS TAX SERVICES
PARTIES AND DATE.
This First Amendment to the AgreeW for Sales, Use and Transactions Tax Services
( "First Amendment ") is entered into on the day of ADril , 2019, by and between the
CITY of Seal Beach organized under the laws of the State of California, with its principal place of
business at 211 Eighth Street, Seal Beach, CA 90740 ( "CITY ") and Hinderliter de Llamas and
Associates, a California corporation, with its principal place of business at 120 S. State College Blvd.,
Suite 200, Brea, CA 92821 ( "Consultant "). CITY and Consultant are sometimes individually
referred to herein as "Party" and collectively as "Parties."
2. RECITALS.
2.1 Agreement. The Parties entered into that certain Agreement for Sales, Use
and Transaction Tax Services dated October 7, 1991 ( "Agreement ").
2.2 First Amendment. The Parties now desire to amend the Agreement for ongoing
consultation for Sales Tax Audit and Information Services.
Increase for Sales and Use Tax Reports.
2.3 Compensation. Consideration of the Agreement is hereby amended as follows:
A. CONTRACTOR shall provide the sales tax and economic analysis services
described in Consideration for a fee of $400 per month, commencing with the month
of the Effective Date (hereafter referred to as "monthly fee "). The monthly fee shall
be invoiced quarterly in arrears and shall be paid by CITY no later than 30 days
after the invoice date. The monthly fee shall increase annually following the month
of the Effective Date by the percentage increase in the "CPI" for the preceding
twelve -month period. In no event shall the monthly fee be reduced by this
calculation. For purposes of this Agreement, the "CPI" shall mean the Consumer
Price Index - All Urban Consumers for the surrounding statistical metropolitan area
nearest CITY, All Items (1982 -84 = 100), as published by the U.S. Department of
Labor, Bureau of Labor Statistics, or, if such index should cease to be published,
any reasonably comparable index selected by CONTRACTOR.
B. CONTRACTOR shall be further paid 15% of all new and recovered sales, use and
transactions tax revenue received by the CITY as a result, in whole or in part, of
the allocation audit and recovery services (hereafter referred to as "audit fee "),
including without limitation, any reimbursement or other payment from any state
fund and any point of sale misallocations.
The audit fee shall be paid even if CITY assists, works in parallel with, and /or
incurs attorneys' fees or other costs or expenses in connection with any of the
relevant Services. Among other things, the audit fee applies to state fund
transfers received for back quarter reallocations and monies received in the first
eight consecutive reporting quarters following completion of the allocation audit
by CONTRACTOR and confirmation of corrections by the California
Department of Tax and Fee Administration. CITY shall pay audit fees upon
CONTRACTOR'S submittal of evidence of CONTRACTOR'S work in support
of recovery of subject revenue, including, without limitation, copies of CDTFA
549 -S petition forms of any other correspondence between CONTRACTOR and
the Department of Tax and Fee Administration or the taxpayer.
2. For any increase in the tax reported by businesses already properly making tax
payments to CITY, it shall be CONTRACTOR's responsibility to support in its
invoices the audit fee attributable, in whole or in part, to CONTRACTOR's
Services.
C. CONTRACTOR shall invoice CITY for any consulting and other optional Services
rendered to CITY based on the following hourly rates on a monthly or a quarterly
basis, at CONTRACTOR's option. All such invoices shall be payable by CITY no
later than 30 days following the invoice date. CITY shall not be invoiced for any
consulting Services totaling less than an hour in any month. The hourly rates in
effect as of the Effective Date are as follows:
Principal $325 per hour
Programmer $295 per hour
Senior Analyst $245 per hour
Analyst $195 per hour
CONTRACTOR may change such hourly rates from time to time upon not less than
30 days' prior written notice to CITY.
D. Any invoices not paid in accordance with the Thirty (30) day payment terms, shall
accrue monthly interest at a rate equivalent to ten percent (10 %) per annum until
paid.
E. CONTRACTOR unilaterally retains the right to divide any recovery bills in excess of
$25,000 over a one (1) year period (Four (4) quarterly billings).
F. CONTRACTOR shall provide CITY with an itemized quarterly invoice showing all
formula calculations and amounts due for the audit fee (including, without limitation,
a detailed listing of any corrected misallocations), which shall be paid by CITY no
later than 30 days following the invoice date.
2.4 Remaining Provisions of Agreement. Except as otherwise specifically set forth in this
First Amendment, the remaining provisions of the Agreement shall remain in full force and effect.
CITY OF
HI E L DE LLAMAS ASSOC.
By:
Andrew Nickerson, President
audit by CONTRACTOR and confirmation of corrections by the California
Department of Tax and Fee Administration. CITY shall pay audit fees upon
CONTRACTOR'S submittal of evidence of CONTRACTOR'S work in support
of recovery of subject revenue, including, without limitation, copies of CDTFA
549 -S petition forms of any other correspondence between CONTRACTOR
and the Department of Tax and Fee Administration or the taxpayer.
2. For any increase in the tax reported by businesses already properly making
tax payments to CITY, it shall be CONTRACTOR's responsibility to support in
its invoices the audit fee attributable, in whole or in part, to CONTRACTOR'
Services.
C. CONTRACTOR shall invoice CITY for any consulting and other optional Services
rendered to CITY based on the following hourly rates on a monthly or a quarterly
basis, at CONTRACTOR's option. All such invoices shall be payable by CITY no
later than 30 days following the invoice date. CITY shall not be invoiced for any
consulting Services totaling less than an hour in any month. The hourly rates in
effect as of the Effective Date are as follows:
Principal $325 per hour
Programmer $295 per hour
Senior Analyst $245 per hour
Analyst $195 per hour
CONTRACTOR may change such hourly rates from time to time upon not less
than 30 days' prior written notice to CITY.
D. Any invoices not paid in accordance with the Thirty (30) day payment terms, shall
accrue monthly interest at a rate equivalent to ten percent (10 %) per annum until
paid.
E. CONTRACTOR unilaterally retains the right to divide any recovery bills in excess of
$25,000 over a one (1) year period (Four (4) quarterly billings).
F. CONTRACTOR shall provide CITY with an itemized quarterly invoice showing all
formula calculations and amounts due for the audit fee (including, without
limitation, a detailed listing of any corrected misallocations), which shall be paid by
CITY no later than 30 days following the invoice date.
2.4 Remaininq Provisions of Agreement. Except as otherwise specifically set forth in
this First Amendment, the remaining provisions of the Agreement shall remain in full force and
effect.
CITY OF SEAL BEACH HINDERLITER DE LLAMAS & ASSOC.
By: By.
City Manager Andrew Nickerson,
APPROVED AS TO FORM:
By: By:
City Clerk
AGREEMENT FOR SALES TAX AUDIT AND INFORMATION SERVICES
This Agreement is made and entered into as of the ��day of , 1991 by and
between the CITY OF SEAL BEACH, a municipal ocorrporation hereinafter called CITY, and
HINDERLITER, DE LLAMAS AND ASSOCIATES a California Corporation, hereinafter
called CONTRACTOR.
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 Consultant, for the consideration hereinafter described, mutually
agree as follows:
1
SERVICES
The Contractor shall perform the following services:
A. Sales tax and economic analysis
1. 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 four quarters from the date of this agreement. Major sales tax producers
are defined as those businesses meeting a quarterly revenue threshold determined by
City. Since 100% of the business outlets registered with the Board of Equalization are
tracked monthly, this major producers data base is designed to highlight the activities of
major businesses. 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
and business districts or redevelopment areas 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.
2
3. Contractor will additionally provide an analysis for the City or its Redevelopment
Agency 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 will provide annual reports for the Administrator and City Council
identifying historical growth comparisons with state, county, selected city averages and
C.P.I. indices; top producer listings and make up and volatility of the economic base.
Annual reconciliation worksheets to assist Finance Officers with budget forecasting will
also be provided.
5. 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 "paint -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.
3
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
contracts will be conducted in a manner to encourage local business retention and
expansion.
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 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 will work with those businesses and
the City to encourage such changes.
C. On Going Consultation
Contractor shall work with City and City Redevelopment Agency 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 sample reports, letters and programs to enhance the sales tax base through improved
economic development efforts.
4
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 contractual agreement.
A. Contractor is authorized by this Agreement to examine sales 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
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 & Tax Code Section 6015, 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 has expired. Information obtained
by examination of board records shall be used only for purposes related to collection of
Iocal 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
5
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.
CONSIDERATION
A. Contractor shall establish the sales tax and audit data bases and shall provide the
monthly and quarterly updates referenced above for a fee of $300.00 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 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
P
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 Board of Equalization representatives.
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 percentage
reimbursements due the Contractor have been paid.
7
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 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.
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.
0:
NON - ASSIGNMENT
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
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.
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.
9
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.
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 SEAL BEACH
211 Eighth Street
Sea] Beach, CA 90740
Contractor: HINDERLITER, DE LLAMAS, & ASSOCIATES
2220 E. Alosta Avenue, Suite 205
Glendora, CA 91740
10
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.
,in trip
CITY OF SEAL BEACH
Mayor
.'ty erk
APPROVED AS TO FORM:
City Attorney
CONTRACTOR:
HINDERLITER, DE LLAM S & ASSOCIATES
A California,torooration f
11
!LV41 84
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 misaIlocated 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 dated , 1990.
CITY OF
I:
HINDERLITER, DE LLAMAS AND ASSOCIATES
LE
Date
12