HomeMy WebLinkAboutCC Resolution 9761 (Sales Tax Audit)RESOLUTION NO. 9761
A RESOLUTION AUTHORIZING THE SIGNING OF AN AGREEMENT FOR SALES
TAX AUDIT AND INFORMATION SERVICES WITH HINDERLITER, DE LLAMAS AND
ASSOCIATES
THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESOLVES as follows:
The City Manager and City Clerk are authorized to execute, on behalf of the City
of San Rafael, an agreement for sales tax audit and information services with
Hinderliter, de Llamas and Associates
1340 Valley Vista, Suite 200
Diamond Bar, CA 91765
a copy of which is hereby attached and by this reference made a part thereof. In
addition, a scope of services to be performed are outlined in the proposal attached
hereto; the formal agreement shall include this proposal and shall be subject to the
approval of the City Attorney as to form.
I, JEANNE M. LEONCINI, Clerk of the City of San Rafael, hereby certify that the
foregoing resolution was duly and regularly introduced and adopted at a regular
meeting of the City Council of said City on sixth day of January, 1997, by the following
vote, to wit:
AYES: COUNCILMEMBERS: Cohen, Heller, Miller, Phillips & Mayor Boro
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
resolutionsftl sales tax.res
lJEANNE M. LEONCINI, City Clerk
AGREEMENT FOR SALES TAX AUDIT AND INFORMATION SERVICES
This Agreement is made and entered into as of the 6th day of January, 1997 by and between the
CITY OF SAN RAFAEL, a municipal corporation (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;
AGREEMENT
NOW, THEREFORE, CITY and CONTRACTOR, for the consideration hereinafter described,
mutually agree as follows:
1. PROJECT COORDINATION
A. CITY. The City Manager shall be the representative of the CITY for all purposes
under this Agreement. The Director of Administrative Services is hereby designated the
PROJECT MANAGER for the CITY, and said PROJECT MANAGER shall supervise all
aspects of the progress and execution of this Agreement.
B. CONTRACTOR. CONTRACTOR shall assign a single PROJECT DIRECTOR
to have overall responsibility for the progress and execution of this Agreement for
CONTRACTOR. Lloyd de Llamas is hereby designated as the PROJECT DIRECTOR for
CONTRACTOR. Should circumstances or conditions subsequent to the execution of the
Agreement require a substitute PROJECT DIRECTOR for any reason, the CONTRACTOR shall
notify the CITY within ten (10) business days of the substitution.
2. DUTIES OF CONTRACTOR
CONTRACTOR shall perform the duties and/or services as follows:
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, business district or redevelopment area 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.
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
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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 "point-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.
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 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.
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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.
D. 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.
1. CONTRACTOR is authorized by this Agreement to examine sales .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.
2. CONTRACTOR is required to disclose information contained in, or derived
from, those sales or transactions and use tax records only to an officer or employee of
the CITY who is authorized by resolution to examine the information.
3. 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.
4. 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 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
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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.
3. DUTIES OF THE CITY
CITY shall perform the duties as follows:
A. 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.
4. COMPENSATION
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 $650.00 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
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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 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.
5. TERM OF AGREEMENT
The term of this Agreement shall be for two years commencing on January 6, 1997 and ending
on December 31, 1998. Upon mutual agreement of the parties, and subject to the approval of the
City Manager, the term of this Agreement shall be extended for an additional period of two years.
6. TERMINATION
A. Discretionary. Either party may terminate this Agreement without cause upon
thirty (30) days written notice mailed or personally delivered to the other party.
B. Cause. Either party may terminate this Agreement for cause upon fifteen (15)
days written notice mailed or personally delivered to the other party, and the notified
party's failure to cure or correct the cause of the termination, to the reasonable satisfaction
of the party giving such notice, within such fifteen (15) day time period.
C. Effect of Termination. Upon receipt of notice of termination, neither party shall
incur additional obligations under any provision of this Agreement without the prior
written consent of the other.
D. Return of Documents. Upon termination, any and all CITY documents or
materials provided to CONTRACTOR and any and all of CONTRACTOR's documents
and materials prepared for or relating to the performance of its duties under this
Agreement, shall be delivered to CITY as soon as possible, but not later than thirty (30)
days after termination.
E. Presentation of Notice. 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.
7. OWNERSHIP OF DOCUMENTS
The written documents and materials prepared by the CONTRACTOR in connection with the
performance of its duties under this Agreement, shall be the sole property of CITY. CITY may
use said property for any purpose, including projects not contemplated by this Agreement.
8. INSPECTION AND AUDIT
Upon reasonable notice, CONTRACTOR shall make available to CITY, or its agent, for
inspection and audit, all documents and materials maintained by CONTRACTOR in connection
with its performance of its duties under this Agreement. CONTRACTOR shall fully cooperate
with CITY or its agent in any such audit or inspection.
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9. ASSIGNABILITY
The parties agree that they shall not assign or transfer any interest in this Agreement nor the
performance of any of their respective obligations hereunder, without the prior written consent of
the other party, and any attempt to so assign this Agreement or any rights, duties or obligations
arising hereunder shall be void and of no effect.
10. INSURANCE
A. During the term of this Agreement, CONTRACTOR shall maintain, at no expense
to CITY, the following insurance policies:
1. A comprehensive general liability insurance policy in the minimum
amount of one million ($1,000,000) dollars per occurrence for death, bodily
injury, personal injury, or property damage.
2. An automobile liability (owned, non -owned, and hired vehicles) insurance
policy in the minimum amount of one million ($1,000,000) dollars per
occurrence.
B. The Insurance coverage required of the CONTRACTOR by section W.A., shall
also meet the following requirements:
1. The insurance shall be primary with respect to any insurance or coverage
maintained by CITY and shall not call upon CITY's insurance or coverage for any
contribution.
2. The insurance policies shall be endorsed for contractual liability and
personal injury.
3. The insurance policies shall be specifically endorsed to include the CITY,
its officers, agents, employees, and volunteers, as additionally named insureds
under the policies.
4. CONTRACTOR shall provide to PROJECT MANAGER, (a) Certificates
of Insurance evidencing the insurance coverage required herein, and (b) specific
endorsements naming CITY, its officers, agents, employees, and volunteers, as
additional insureds under the policies.
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5. The insurance policies shall provide that the insurance carrier shall not
cancel, terminate or otherwise modify the terms and conditions of said insurance
policies except upon thirty (30) days written notice to CITY's PROJECT
MANAGER.
6. If the insurance is written on a Claims Made Form, then, following
termination of this Agreement, said insurance coverage shall survive for a period
of not less that five years.
7. The insurance policies shall provide for a retroactive date of placement
coinciding with the effective date of this Agreement.
8. The insurance shall be approved as to form and sufficiency by PROJECT
MANAGER and the City Attorney.
C. If it employs any person, CONTRACTOR shall maintain worker's compensation
and employer's liability insurance, as required by the State Labor Code and other
applicable laws and regulations, and as necessary to protect both CONTRACTOR and
CITY against all liability for injuries to CONTRACTOR's officers and employees.
D. Any deductibles or self-insured retention's in CONTRACTOR's insurance policies
must be declared to and approved by the PROJECT MANAGER and the City Attorney.
At CITY's option, the deductibles or self-insured retention's with respect to CITY shall be
reduced or eliminated to CITY's satisfaction, or CONTRACTOR shall procure a bond
guaranteeing payment of losses and related investigations, claims administration,
attorney's fees and defense expenses.
11. INDEMNIFICATION
CONTRACTOR shall indemnify, release, defend and hold harmless CITY,. its officers, agents,
employees, and volunteers, against any claim, demand, suit, judgment, loss, liability or expense
of any kind, including attorney's fees and administrative costs, arising out of or resulting in any
way, in whole or in part, from any acts or omissions, intentional or negligent, of CONTRACTOR
or CONTRACTOR's officers, agents and employees in the performance of their duties and
obligations under this Agreement.
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12. NONDISCRIMINATION
CONTRACTOR shall not discriminate, in any way, against any person on the basis of age, sex,
race, color, religion, ancestry, national origin or disability in connection with or related to the
performance of its duties and obligations under this Agreement.
13. GOVERNING LAW AND COMPLIANCE WITH ALL LAWS
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.
CONTRACTOR shall observe and comply with all applicable federal, state and local laws,
ordinances, codes and regulations, in the performance of its duties and obligations under this
Agreement. CONTRACTOR shall perform all services under this Agreement in accordance with
these laws, ordinances, codes and regulations. CONTRACTOR shall release, defend, indemnify
and hold harmless CITY, its officers, agents and employees from any and all damages, liabilities,
penalties, fines and all other consequences from any noncompliance or violation of any laws,
ordinances, codes or regulations.
14. NO THIRD PARTY BENEFICIARIES
CITY and CONTRACTOR do not intend, by any provision of this Agreement, to create in any
third party, any benefit or right owned by one party, under the terms and conditions of this
Agreement, to the other party.
15. NOTICES
All notices and other communications required or permitted to be given under this Agreement,
including any notice of change of address, shall be in writing and given by personal delivery, or
deposited with the United States Postal Service, postage prepaid, addressed to the parties
intended to be notified. Notice shall be deemed given as of the date of personal delivery, or if
mailed, upon the date of deposit with the United States Postal Service. Notice shall be given as
follows:
CITY: Ken Nordhoff
(Project Manager)
CITY OF SAN RAFAEL
1400 Fifth Avenue
P. O. Box 151560
San Rafael, CA 94915-1560
IN
CONTRACTOR: Lloyd de Llamas, Project Director
HINDERLITER, DE LLAMAS AND ASSOCIATES
1340 Valley Vista Drive, Suite 200
Diamond Bar, CA 91765
16. INDEPENDENT CONTRACTOR
For the purposes, and for the duration, of this Agreement, CONTRACTOR, its officers, agents
and employees shall act in the capacity of an Independent Contractor, and not as employees of
the CITY. CONTRACTOR and CITY expressly intend and aeree that the status of
CONTRACTOR, its officers, agents and employees be that of an Independent Contractor and not
that of an employee of CITY.
17. ENTIRE AGREEMENT - AMENDMENTS
A. The terms and conditions of this Agreement, all exhibits attached, and all
documents expressly incorporated by reference, represent the entire Agreement of the
parties with respect to the subject matter of this Agreement.
B. This written Agreement shall supersede any and all prior agreements, oral or
written, regarding the subject matter between the CONTRACTOR and the CITY.
C. No other agreement, promise or statement, written or oral, relating to the subject
matter of this Agreement, shall be valid or binding, except by way of a written
amendment to this Agreement.
D. The terms and conditions of this Agreement shall not be altered or modified
except by a written amendment to this Agreement signed by the CONTRACTOR and the
CITY.
E. If any conflicts arise between the terms and conditions of this Agreement, and the
terms and conditions of the attached exhibits or the documents expressly incorporated by
reference, the terms and conditions of this Agreement shall control.
18. SET-OFF AGAINST DEBTS
CONTRACTOR agrees that CITY may deduct from any payment due to CONTRACTOR under
this Agreement, any monies which CONTRACTOR owes CITY under any ordinance, agreement,
contract or resolution for any unpaid taxes, fees, licenses, assessments, unpaid checks or other
amounts.
19. WAIVERS
The waiver by either party of any breach or violation of any term, covenant or condition of this
Agreement, or of any ordinance, law or regulation, shall not be deemed to be a waiver of any
other term, covenant, condition, ordinance, law or regulation, or of any subsequent breach or
violation of the same or other term, covenant, condition, ordinance, law or regulation.
The subsequent acceptance by either party of any fee, performance, or other consideration which
may become due or owing under this Agreement, shall not be deemed to be a waiver of any
preceding breach or violation by the other party of any term, condition, covenant of this
Agreement or any applicable law, ordinance or regulation.
20. COSTS AND ATTORNEY'S FEES
The prevailing party in any action brought to enforce the terms and conditions of this Agreement,
or arising out of the performance of this Agreement, may recover its reasonable costs (including
claims administration) and attorney's fees expended in connection with such action.
21. CITY BUSINESS LICENSE / OTHER TAXES
CONTRACTOR shall obtain and maintain during the duration of this Agreement, a CITY
business license as required by the San Rafael Municipal Code. CONTRACTOR shall pay any
and all state and federal taxes and any other applicable taxes. CONTRACTOR's taxpayer
identification number is 33-0008507, and CONTRACTOR certifies under penalty of perjury that
said taxpayer identification number is correct.
22. PROFESSIONAL STANDARDS
CONTRACTOR shall maintain or exceed the level of competency presently maintained by other _
similar practitioners in the State of California, for professional and technical soundness, accuracy
and adequacy of all work, advice, and materials furnished under this Agreement.
23. PROPRIETARY INFORMATION
In performing its duties under this contract, CONTRACTOR will produce reports, technical
information and other compilations of data to CITY. These reports, technical information and
compilations of data are derived by CONTRACTOR using methodologies, formulae, programs,
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techniques and other processes designed and developed by CONTRACTOR at a substantial
expense. CONTRACTOR's reports, technical information, compilations of data, methodologies,
formulae, programs, techniques and other processes designed and developed by CONTRACTOR
shall be referred to as Proprietary Information. CONTRACTOR's Proprietary Information is not
generally known by the entities with which CONTRACTOR competes.
CONTRACTOR desires to protect its Proprietary Information. Accordingly, CITY agrees that
neither it nor any of its employees, agents, independent CONTRACTORs or other persons or
organizations over which it has control, will at any time during or after the term of the
Agreement, directly or indirectly use any of CONTRACTOR's Proprietary Information for any
purpose not associated with CONTRACTOR's activities. Further, CITY agrees that it nor any of
its employees, agents, independent contractors or other persons or organizations over which it
has control, will disseminate or disclose any of CONTRACTOR's Proprietary Information to any
person or organization not connected with CONTRACTOR, without the express written consent
of CONTRACTOR. The CITY also agrees that it will undertake all necessary and appropriate
steps to maintain the proprietary nature of CONTRACTOR's Proprietary Information.
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 SAN RAFAEL
By:
Vityy Manager
ATTEST:
CONTRACTOR
HINDERLITER, DE LLAMAS AND
ASSOCIAS, a California orporation
By:
Llov de Llamas
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December 27, 1996
THE CITY OF SAMPLE
Sales Tax Audit
Work Authorization No. One
Revenue Management for Local Government
Hinderliter, de Uamas & Associates
Hdl Coren & Cone
The business or businesses listed on Attachment A located in the City of SAMPLE CITY have been
identified as having the potential for generating additional sales tax revenue to the City of
SAMPLE. Contractor is hereby authorized to contact the given businesses 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.
THE CITY OF SAMPLE
Date
HINDERLITER, DE LLAMAS AND ASSOCIATES
Date
1340 Valley Vista Drive I Suite 200 1 Diamond Bar, CA 1 91765 1 (909) 861-4335 1 Fax (909) 861-7726