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HomeMy WebLinkAbout89-107 - Sales & Use Tax RecordsRESOLUTION NO. 89 -107 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DESIGNATING A CIITY CONSULTANT AS THE AUTHORIZED CITY REPRESENTATIVE TO EXAMINE SALES AND USE TAX RECORDS. WHEREAS, pursuant to California Revenue and Taxation Code Section 7200 et seq., the City of Newport .Beach has adopted a sales and use tax ordinance which imposes a tax and provides a measure therefore that can be administered and collected by the State Board of Equalization along the same and existing statutory and administrative procedures followed by the State Board of Equalization in administering and collecting the California State Sales and Use Taxes. WHEREAS, pursuant to California Revenue and Taxation Code Section 7056, the City of Newport Beach, by resolution, may designate any officer, employee or any other person to examine all of the sales and use tax records of the Board pertaining to sales and use taxes collected for the City. WHEREAS, the City of Newport Beach has entered into an agreement for sales tax audit and information services with the firm of MUNICIPAL RESOURCE CONSULTANTS, a partnership of JOHN T. AUSTIN, INC. and ALLEN W. CHARKOW, INC. to designate MUNICIPAL RESOURCE CONSULTANTS as the authorized Consultant to examine such sales tax records maintained by the Board on behalf of the City of Newport Beach. WHEREAS, all legal prerequisites prior to the adoption of this Resolution have occurred. NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of Newport Beach as follows: Section 1: In all respects as set forth in the Recitals, Part A, of this Resolution. Section 2: The City Council of the City of Newport Beach hereby certifies to the State Board of Equalization that MUNICIPAL RESOURCE CONSULTANTS is the designated representatives of the City of Newport Beach to examine all of the sales and use tax records of the Board pertaining to sales and use taxes collected by the • Board on behalf of the City of Newport Beach. Section 3: Pursuant to California Revenue and Taxation Section 7056(b) , the City Council of the City of Newport Beach hereby certifies that MUNICIPAL RESOURCE CONSULTANTS, a partnership of JOHN T. AUSTIN, INC. and ALLEN W. CHARKOW, INC. (hereinafter referred to as "Consultant ") meets all of the following conditions: a. CONSULTANT has an existing contract with the CITY to examine sales tax records; b. CONSULTANT is required by that contract to disclose information contained in, or derived from, those sales tax records only to an officer or employee of the CITY who is authorized by resolution to examine the information; C. CONSULTANT is prohibited by the contract from performing consulting services for a retailer during the term of the contract; and d. CONSULTANT is prohibited by the contract from retaining the information contained in, or derived from, those sales tax records after the contract has expired. Section 4: The City Clerk shall certify to the adoption of this Resolution. ADOPTED this 11th day of September , 1989. ATTE T: City Clerk Mayor CONSULTANT SERVICES AGREEMENT C - -27 75' THIS AGREEMENT is made at Newport Beach California, as of /1,5J 1989, by and. between the City of Newport Beach a municipal corporation (hereafter referred to as "City ") and Municipal Resource Consultants (hereafter • referred to as "Consultant" or "MRC"), who agree as follows: I. Services. Subject to the terms and conditions set forth in this Agreement, Consultant shall provide to City the services described in Exhibit "A ". Consultant shall provide said services at the time, place, and in the - manner specified in Exhibit "All. The Consultant shall not be compensated for services outside the scope of Exhibit "A". 2. Payment. City shall pay Consultant for services rendered pursuant to this Agreement at the times and in the manner set forth in Exhibit "A". The payments specified in Exhibit "A" shall be the only payments to be made to Consultant for services rendered pursuant to this Agreement, unless the City approves additional compensation for additional service. Consultant shall submit all billings for services rendered pursuant to this Agreement to City in the manner specified in Exhibit "A ". 3. Facilities and EcruipMent. Consultant shall, at its sole cost and expense, furnish all facilities and equipment which may be required for furnishing services Pursuant to this Agreement. 4. General Provisions. The general provisions set forth in Exhibit "B" are part of this Agreement. In the event of any inconsistency between said general provisions and any other terms or conditions of this Agreement, the other term or condition shall control insofar as it is inconsistent with the general provisions. 0 MR 5. Exhibits. All Exhibits referred to herein are attached hereto and are by this reference incorporated herein. EXECUTED as of the day and year first above stated. By: Title: Date: By: Title: Date: ATTEST: CITY CLERK ATTEST TO FORM: CITY OF NEWPORT BEACH A Municipal Corporation ZII��L MUNICIPAL RESOURCE CONSULTANTS 2 T. Austin /�,�RTNrz JC m� p.N�l EXHIBIT "A" Additional terms of this Agreement are as follows: • OBJECTIVES MRC shall provide a Sales Tax Information, Audit and Corollary Consulting service designed to achieve the following objectives: Sales Tax Information Computerize the City's sales tax data utilizing MRC's Sales Tax Analysis & Reporting System (STARS) to readily facilitate the City's monitoring, analysis and forecasting of its sales tax revenue. Sales Tax Audit Conduct an initial and ongoing sales to identify and correct point of sale reporting errors and thereby generate income for the City. MRC's sales tax encompass all City businesses and not firms. Corollary Consulting tax audit in order taxpayer new sales tax audit shall just the major As an outgrowth of the sales tax information and audit services, MRC shall identify additional opportunities for the City and /or MRC to enhance the City's revenue base in areas such as sales tax, property tax, business license tax, utility users tax and defined economic development goals. SCOPE OF SERVICE The scope of service includes, but is not limited to, MRC performing the following tasks: Sales Tax Information o Procure a computer tape of sales tax permit records from the State Board of Equalization. o Establish master file in STARS from tape data provided in previous task. o Input data from sales 'tax distribution reports provided by State Board of Equalization for most recent six (6) consecutive quarters. o Receive and process sales tax distribution reports quarterly. • o Reorganize and refine computerized sales tax data for the City utilizing MRC's Sales Tax Analysis and Reporting System (STARS) o Prepare and submit STARS reports on a quarterly basis principally focusing on the major sales tax producers. Major sales tax producers are defined as those businesses meeting or exceeding a specified quarterly revenue threshold and comprising in aggregate: ninety percent (90 %) or more of the sales tax revenue generated from businesses located in the City. All major sales tai: producers and business categories are monitored and analyzed quarterly based on reports to include the following: Management Summary & Charts. Based on MRC's analysis and evaluation of the STARS reports and other data,, each quarterly report includes a comprehensive Management Summary. The Summary features a general analysis regarding statewide trends that may affect the City's sales tax plus a specific analysis of the City's sales tax composition, changes and performance. Twelve color charts are included in each report to graphically illustrate the data and analysis presented in the Summary. The Management Summary and Charts do not contain confidential information and can therefore be distributed to key City personnel and the City Council. Major (and Too 100) Sales Tax Producers Ranks in descending order according to level of sales tax produced. 2 Business Classification. Groups and ranks major producers by business classification according to level of sales tax produced. Sales Tax Trend Reports. Indicates growth and decline comparisons by various categories for forecasting and analysis. • - Geo- Coding Tracks sales tax performance within specific areas of the city (e.g., key shopping centers, redevelopment project areas, downtown business districts, etc.) Charts and printed reports are included for each geo -area. (Note: Each client is entitled to at least one geo -area at nq charge. If numerous geo -areas are desired, there many be a nominal charge. MRC will advise the City in advance of any such charge, which would be at MRC's cost). Status Report MRC cleans up addresses on all permits and provides a status report on all changes to the sales tax files, that is equally useful for business tax enforcement. The report shows all new permits, address changes, owner changes and closed permits and effectively replaces the yellow registration cards that are cumbersome to use. By comparing the data which is in a clean address order with the business tax files, unlicensed business can be identified and billed, or business tax records can be updated for new addresses or owners, or purged if closed. The "cleaned up" data from the State Board of Equalization can be transferred to the City's computer via floppy diskette or 9 -track tape if the City desires to have the information for other Purposes. 3 Sales Tax Audit o Develop a target list of potential point of sale reporting errors based on a comprehensive inventory and evaluation of all businesses in the City of Newport Beach. These businesses are to be analyzed based on prop:rietory guidelines established by MRC, formulated through expert knowledge of corporate mergers and acquisitions, sales vs. use tax, business marketing organization and methods, commercial sales tax reporting practices, and other conditions contributing to reporting errors. o Contact each target business to determine whether a point of sale reporting error exists. Note: This shall be accomplished with the highest regard to discretion and professional conduct. MRC sales tax audits shall be predicated on a constructive public relations approach which emphasizes the importance of each business to the City and the mutual benefits of correcting reporting errors. o Provide to the City and State Board of Equalization reports addressing each point of sale reporting error individually, including the business name, address, telephone number, California sales tax permit number, individuals contacted, date(s) of contact, nature of business, reason(s) for error, recommended corrective procedure and, if available, estimated sales tax income which should be forthcoming to the City of Newport Beach. o Coordinate with the taxpayer and State Board of Equalization to make the necessary corrections plus retroactive adjustments for eligible amounts improperly distributed in prior quarters. o On a quarterly basis, monitor and analyze STARS reports with audit focus on the following: Those accounts with previously reported point of sale distribution errors to ensure that the corrections are made for current quarters plus retroactive adjustments for eligible amounts improperly distributed in prior quarters. Those major accounts comprising approximately ninety percent (go %) of the City's total sales tax revenue to identify any irregularities (e.g., negative fund transfers, significant increases, decreases, etc.) and ensure that the City is not getting less than it is entitled. • - Those accounts having a use tax designation to ascertain why the tax is being classified as use tax rather than sales tax. Corollary Consulting o Make specific recommendations (for City staff and /or MRC) to further enhance the City's revenue_ base in areas such as sales tax, property tax, business license tax, 'transient occupancy tax, utility users tax and defined economic development goals. o Provide City employees with post audit sales tax orientation: Conduct technical seminar on California's local sales tax distribution process. Train staff in the fundamentals of sales tax auditing should the City desire to assume responsibility for future maintenance of local retail accounts internally. o Analyze list of City's major sales tax producers in order to advise and assist the City in developing a public relations program to prevent the loss of these important businesses. o Profile for Economic Development /Community Redevelopment and Chamber of Commerce personnel the most economically desirable /undesirable types of developments /business users and the reasons why. o Provide a list of businesses located in the City that are not presently producing sales tax to the City of Newport Beach but could be through constructive changes in marketing and /or purchasing procedures. o Assist in defining specific geographic areas for which the City would have an interest in knowing the sales tax produced (e.g., within Community Redevelopment Agency boundaries). 5 TIMING Service under this contract shall commence within ten (10) days following receipt of the following: City Council contract approval and resolution designating MRC as the authorized City contractor to examine sales and use tax records (see Exhibit • - ..0 "); and State Board of Equalization quarterly distribution reports for most recent six (6) consecutive quarters. Sales Tax Information STARS reports shall be provided to City on a quarterly basis within thirty (30) working days following receipt of the quarterly distribution reports., Sales Tax Audit The initial report identifying point of sale reporting errors shall be provided within sixty (60) to ninety (90) working days following receipt of the above. Corollary Consulting This will occur within a reasonable time after delivery of the initial STARS reports and /or completion of the Sales Tax Audit. 3 PERIOD COVERED AND CHARGES The term of this Agreement shall be for a one (1) year period commencing September 11 1989 _ In order to make the proposed services self - funding for the City of Newport Beach, MRC's compensation for providing the initial and ongoing sales tax audits and STARS reports is entirely predicated and contingent upon MRC's ability to produce new sales tax revenue for the City, further described as follows: • Sales Tax Audit Service MRC's compensation for providing the audit service is 25% of new sales tax revenue realized by the City as a result of MRC identifying and correcting the related point -of -sale distribution error. Said 25% applies to each correction for fund transfers (i.e., retroactive adjustments for eligible amounts improperly distributed in prior quarters) and the first six consecutive reporting quarters following completion of the audit by MRC and confirmation of corrections by the State Board of Equalization. Sales tax audit invoices are submitted quarterly after the City has received the revenue from the correction and quarterly distribution report confirming it. Each invoice is to include the business name, permit number, local allocation amount received by the City and amount due MRC. Invoices are due and payable upon receipt. STARS Reports MRC proposes to provide STARS Reports for $6,000 for the first year, or $1,500 per quarter, payable only after the City has received the quarterly STARS report(s) and sufficient funds to cover the STARS charges from the City's 75% share of new sales tax revenue produced from MRC's audit service. The following computation illustrates a hypothetical example: New sales tax revenue produced for City from MRC audit service Less MRC compensation for audit service @ 25% City's share of new sales tax revenue @ 75% Less STARS charge for full year @ $1,500 per quarter Net new sales tax revenue to City after compensating MRC for audit service and STARS reports $100,000 - 25,000 $ 75,000 -$ 6,000 69.000 Should MRC's audit service fail to generate sufficient new sales tax revenue for the City to cover the STARS charges out of the City's 75% share, then MRC shall absorb the shortfall amount. Expenses . All expenses incurred by MRC in providing the audit service and STARS reports are absorbed by MRC. These expenses include items such as employee salaries and benefits, insurance, airfare, auto rentals, meals, lodging, keypunching, computer processing, clerical, communications (e-g., personal meetings, telephone, mail, etc.) photocopying, overhead and miscellaneous out -of- pockets for consumable supplies and research materials such as maps, directories, etc. 0 r � CERTIFICATION OF 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. A. MRC is authorized by this Agreement to examine sales and use tax records of the State Board of Equalization provided to City pursuant to contract under the Bradley - Burns Uniform Sales and Use Tax Law. B. MRC 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. MRC is prohibited from performing consulting services for a retailer during the term of -this Agreement. D. MRC 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 State 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 MRC 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. MRC hereby certifies that any and all information utilized in the conduct of work performed is to be utilized only for those Purposes authorized by the City and by the Bradley -Burns Uniform Local Sales and Use Tax Law. E l GENERAL PROVISIONS EXHIBIT "B" 1. Independent Contractor. At all times during the term of this Contract, Municipal Resource Consultants (Consultant) shall be an Independent Contractor and shall not be an • employee of the City of Newport Beach (City). City shall have the right to control Consultant only insofar as the results of Consultant's services rendered pursuant to this Agreement; however, City shall not have the right to control the means by which Consultant accomplishes services rendered pursuant to this Agreement. 2. Liability. City shall not be called upon to assume any liability for direct payment of any salaries, wages, or other compensation to any Consultant personnel or subcontractor performing services hereunder for City, or any liability other than provided for in this Agreement. City shall not be liable for compensation or indemnity to any Consultant employee or subcontractor for injury or sickness arising out of his /her employment, or for any negligent actions of the Consultant or its employees. All persons employed in the performance of such services and functions shall be employees of Consultant, and as such shall not, for any purposes, be considered employees of City and therefore shall have no right to any City service, civil service, or other City status. 3. Subcontracts. Any subcontracts entered into by Consultant for services to be rendered towards the completion of Consultant's portion of this Agreement shall be for Consultant's benefit alone, and as such shall be its responsibility with no liability resting on the City. Consultant agrees to provide a list of all subcontractors to be used in connection with services; to be rendered toward the completion of its portion of this Agreement to the City within ten (10) working days of execution of this Agreement. 4. Licenses, Permits Etc. Consultant represents and warrants to City that he has all licenses, permits, qualifications and approvals of whatsoever nature which are legally required for Consultant to practice his profession. Consultant represents and warrants; to City that Consultant shall, at his sole cost and expense:, keep in effect or obtain at all times during the term of this Agreement any licenses, permits, and approvals which are legally required for Consultant to practice his profession. GENERAL PROVISIONS' PAGE 2 5. Time. Consultant shall devote such time to the Performance of services pursuant 1:0 this Agreement as may be reasonably necessary for satisfactory performance of Consultant's obligations pursuant to this Agreement. Neither Party shall be considered in default of this Agreement to the extent performance is prevented or delayed by any cause, present or future, which is beyond the reasonable control of the party. 6. Insurance. (a) Public Liability. During the term of this Agreement, Consultant shall maintain in full force and effect a policy of public liability insurance with minimum coverages as follows: $1,000,000 for injury to one person in any one occurrence; $1,000,000 aggregate; and, $50,000.00 for property damage. Consultant shall cause the City, its officials and employees to be named on all liability policies described above as insured as respects: (1) activities performed for the City by or on behalf of the named insured, (2) products and completed operations of the Named Insured, and (3) premises owned, leased or used by the Named Insured. (b) Worker's Compensation. During the term of this Agreement, Consultant shall fully comply with the terms of the law of California concerning worker's compensation. Said compliance shall include, but not be limited to, maintaining in full force and effect one or more policies of insurance insuring against any liability Consultant may have for worker's compensation. 7. Consultant Not Agent. Except as City may specify in writing, Consultant shall have no authority, express or implied to act on behalf of City of any capacity whatsoever as an agent. Consultant shall have no authority, express or implied, pursuant to this Agreement to bind City to any obligation whatsoever. a. Assignment Prohibited. No party to this Agreement may assign any right or Obligation pursuant to this agreement. Any attempt of purported assignment of any right or obligation pursuant to this Agreement shall be void and of no effect. GENERAL PROVISIONS PAGE 3 9. Personnel. Consultant shall assign only competent personnel to perform services pursuant to this Agreement. In the event that City, in its sole discretion, at any time during the term of this Agreement, desires the removal of any person or persons assigned by Consultant to perform services pursuant to this Agreement, Consultant shall • remove any such person immediately upon receiving notice from City of the desire of City for the removal of such person or persons. 10. Standard of Performance. Consultant shall perform all services required pursuant to this Agreement in the manner and according to the standards observed by a competent practitioner of the profession in which Consultant is engaged in the geographical area in which Consultant practices his profession. All products of whatsoever nature which Consultant delivers to City pursuant to this Agreement shall be prepared in a substantial, first class and workmanlike manner and conform to the standards of quality normally observed by a person practicing in Consultant's profession. 11. City Representative. The City Manager or his designee is the representative of the City and will administer this Agreement for the City. 12. Termination. This Agreement may terminate on ten (10) days written notice by either party, or within such time as both parties may find necessary to conclude the work currently under way and to summarize Consultant's findings for City. 13. Indemnity and Hold Harmless. Consultant shall assume the defense of, and indemnify and save harmless, the City, its officers, employees, and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, the performance of the work, provided that such action, damage, claims, loss, or expense is attributable to bodily injury, sickness, disease or death, or to injury to, or destruction of property, whether upon or off the work, including the loss of use thereof, and is caused in whole or in part by any negligent act or omission of the Consultant, and subcontractor, anyone directly or ,indirectly employed by any of them or anyone for whose acts any of them may be liable, whether or not it is caused in part by a party indemnified hereunder. GENERAL PROVISIONS/ PAGE 4 14. Eaual Employment Opportunity: During the performance of this Agreement, Consultant, for itself, its assignees and successors in interest, agrees as follows: a. Compliance With Reculations: Consultant shall • comply with the Executive Order 11246 entitled "Equal Employment Opportunity,: as labor regulations (41 C.F.R. Part 60), hereinafter referred to as the "Regulations." b. Nondiscrimination: Consultant, with regard to the work performed by it after award and prior to completion of the work pursuant to this Agreement, shall not discriminate on the ground of race, color, religion,, sex or national origin in the selection and retention of subcontractors, including - procurements of materials and leases; of equipment. C. Solicit-At-in" f..,- - - -- ••�� �� r.aunrlals ano equipment: in all solicitations either by competitive bidding or negotiations made by Consultant for work to be performed under any subcontract, including procurements of materials or equipment, such Potential subcontractor or supplier shall be notified by Consultant of Consultant's obligation under this Agreement and the Regulations relative to nondiscrimination on the ground of race, color, religion, sex or national origins. d. Information and Reports:, Consultant shall provide all information and reports required by the Regulations, or orders and instructions issued pursuant thereto, and will permit access to its books, records, accounts, other sources of information and its facilities as may be determined by the City to be pertinent to ascertain compliance with such Regulations, orders and instructions. Where any information required of Consultant is in the, exclusive possession of another who fails or refuses to furnish this information, Consultant shall so certify to the City and shall set forth what efforts it has made to obtain the information. e. Sanctions for Noncompliance: In the event of noncompliance by Consultant with the nondiscrimination provisions of this Agreement, the City shall impose such contract sanctions as it may determine to be appropriate, including, but not limited to: (1) Withholding of payments to Consultant under the contract until Consultant complies; (2) Cancellation, termination, or suspension of the Agreement, in whole or in part. GENERAL PROVISIONS( PAGE 5 f. Incorooration of Provisions: Consultant shall include the provisions of paragraphs a through a in every subcontract, including Regulations, order, or instructions issued pursuant thereto. Consultant shall take such action with respect to any Regulations, order or instructions issued • pursuant thereto. Consultant shall take such action with respect to any subcontract or procurement as the City may direct as a means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event Consultant becomes involved in, or, is threatened with, litigation with a subcontractor or supplier as a result of such direction, Consultant may request City to enter such litigation to protect the interests; of the City. 15. Cost of Litigation: If any legal action is necessary to enforce any provision hereof or for damages by reason for an alleged breach of any provisions of this Agreement, the prevailing party shall be entitled to receive from the losing party all costs and expenses in such amount as the court may adjudge to be reasonable attorneys' fees.