HomeMy WebLinkAbout09-11-1989 Item #F2bCOUNM AGENDA �3 &�
CITY OF NEWPORT BEACH
N0. F -2(b)
FINANCE DEPARTMENT September 11, 1989
STAFF MEMO RECOMMENDING SALES TAX ENHANCEMENT
AND INFORMATION SERVICES TO COUNCIL
�Y ,P_ . .1 G0'JNCIL
TO: City Council CIT" 1! .i_J4FOIT "LACV
FROM: George Pappas, Finance Director S EP 1 1 1989
SUBJECT: CITY SALES TAX ENHANCEMENT AND INFORMATION SERVICES
Recommendation:
- a 775-
1.) That the City Council approve a consultant services agreement with Municipal
Resource Consultants (MRC) to perform sales tax consulting services for the City
of Newport Beach.
2.) Adopt a resolution designating Municipal Resource Consultants (MRC) as the
authorized City representative to examine Sales and Use Tax Records.
Discussion:
Sales Tax revenue to the City of Newport Beach in fiscal year 1988 -89 is
estimated to be $12 million. This represents the City General Fund's second
largest single source of revenue or about 27% of total General Fund revenue.
City Sales and Use Tax is based on a proportional one percent tax rate applied
to all taxable sales within the City limits.
MRC specializes in providing a unique sales tax enhancement service to California
cities. According to MRC, many California Cities are not receiving the sales
tax income to which they are entitled to due to point -of -sale taxpayer reporting
errors. MRC's audits are designed to identify and correct these taxpayer
reporting errors and thereby generate new sales tax income for the City. The
MRC audit scope would encompass all City businesses and would thus be
comprehensive in nature. Unlike most tax audits, their service produces new
income without causing any additional tax liability for business.
In order to make their services self- funding for the City, MRC's compensation
for providing the sales tax audit and information reports is entirely predicated
and contingent upon their ability to produce new sales tax income which would
not otherwise have been realized by the City. MRC's compensation for providing
the audit service is 25% of new sales tax income realized by the City as a result
of MRC identifying and correcting the related point -of -sale distribution error.
MRC has provided this unique audit service to other California cities such as
Bakersfield, Fullerton, Irvine, Long Beach, Riverside, Sacramento, San Jose, San
Mateo, Santa Ana, Santa Clara, Santa Fe Springs and Ventura.
Based on the above, staff recommends the City C cil retain MRC to perfo
sales tax audits. / /
ueorge ra
Finance 0