HomeMy WebLinkAboutFin TUT Auditing Services 2013Department: Finance
Aenda
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Meeting Date: December 16, 2013
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Prepared by: Mark Moses, Finance Director City Manager Approvalo
1. AUTHORIZING THE CITY MANAGER TO EXECUTE AN AMENDMENT TO
THE AGREEMENT BETWEEN THE CITY AND HINDERLITER, DE LLAMAS
AND ASSOCIATES (HdL) FOR SALES TAX AND TRANSACTION AND USE
TAX AUDIT AND INFORMATION SERVICES SO AS TO EXTEND THE TERM
OF THE AGREEMENT.
2. AUTHORIZING EXAMINATION OF SALES AND USE TAX AND
TRANSACTIONS AND USE TAX RECORDS
BACKGROUND: On March 19, 2012, the City Council adopted a resolution that authorized the
City Manager to renew the City's agreement with HdL, a company that specializes in sales tax
consulting and audit services and that has been providing these services to the City for several
years. A related resolution, required by the California State Board of Equalization (BOE)
authorized HdL to examine the City's sales and use tax and transactions and use tax records at
the State Board of Equalization.
On November 5,, 20131 the voters of San Rafael approved Measure E,, a new transactions and us
tax, effective April 1, 2014, that will replace the existing transactions and use tax, Measure S,
which now terminates on March 3 1 ! 2014. This new tax,, like the sales tax and terminating
transactions and use taxwill be collected for the City by the BOE. As with the taxes currently *1
effect,, under Revenue and Taxation Code section 7056the City must speciffically authorize Hd
to access the confidential transaction and use tax records maintained by the BOE. I
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ANALYSIS: The City" s current contract with HdL for sales tax and transaction and use tax
consultationreporting and audit expires on December 31, 2014. The consultation is performed
on a fixed -fee basisand includes quarterly, detailed sales tax -related reports and meetings with
City staff. The purpose each meeting is to review the most recent quarterly report, analyze local
and statewide sales tax results, and project revenue trends. The audit work is performed on a
contingent fee basis, and ensures that sales tax and transactions and use taxes are •properly
credited to the City.
Staff recommends extending this contract through December 31, 2017, in order to ensure
continuity of reporting and audit for the first three years of the new transactions and use tax.
Reporting errors are fairly commondue to the large number of taxing agencies and districts in
California,, and the complexity of sales tax reporting remittance procedures.
Due to the proprietary and confidential nature of sales and use tax -related information and the
legal restrictions on its distribution and use, the BOE requires a City Council resolution to allow
the City's authorized agents to access transaction and tax records. Because the transaction and
use tax approved under Measure E is a new tax, a new resolution that authorizes HdL to access
and examine the City's transactions and use tax records is required. The resolution also confirms
the existing authority of the City Manager to designate City employees whose job functions
justify access to the City's sales and use tax and transactions and use tax records.
FISCAL IMPACT: The terms of the amended contract, $650 per month for consultation and
reporting of both sales tax and transactions and use tax, plus a contingent fee of 15% of tax
revenues generated as a direct result of HdUs audit and recovery work (charged only for the first
eight quarters of recovery), are unchanged. Payment for these services is provided for in the
operating budget of the City's General Fund.
RECOMMENDATION: Adopt the Resolutions extending the term of the City's services
agreement with HdL, and authorizing HdL to examine City transactions and use tax records.
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• RESOLUTION OF i OF OF 1
RAFAEL AUTHORIZING 1 1 TO AMEND
AGREEMENT LLAMAS
1 1 ASSOCIATES i1
FOR 1LES TAX AND TRANSACTION AND USE TAXAUDIT AND
INFORMATION SERVICEi AS TO EXTEND THE TERM OF
AGREEMENT
WHEREAS, pursuant to Resolution No. 13315, the City of San Rafael entered into an
agreement, dated March 19, 2012, with Hinderliter, de Llamas and Associates to provide the City
with sales tax and transaction and use tax audits and information services; and
WHEREAS the City desires to continue the audit and information services provided b
Hinderliter, de Llamas and Associates through
NOW i OF OF 1 Rl
HEREBY RESOLVES i i
The City Council of the City of San Rafael hereby authorizes the City Manager to amend
the Agreement between the City of San Rafael and Hinderliter, de Llamas and Associates for
sales tax and transaction and use tax audit and information services for the purpose of extending
the term through December 31, 2017, in the form attached to the Staff Report and on file with the
City Clerk.
1, Esther C. Beirne, 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 San Rafael
City Council held on the 16 th day of December, 2013, by the following vote to wit;
AYES: Councilmembers: Bushey, ! ; i oConnolly
ABSENT: bers: Mayor Phillips
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ESTHER C. BEIRNE, City Clerk
AGREEMENT BETWEEN THE CITY OF SAN RAFAEL AND HINDERLITER
DE LLAMAS AND ASSOCIATES FOR SALES TAX AND TRANSACTIONS
AND USE TAX AUDITS AND INFORMATION SERVICES DATED
MARCH 19 ,2012,
Section S. is hereby amended to read:
8. IERM OF AGREEMENT.
The term of this agreement shall commence on January 1, 2012 and end on
December 31, 2017.
Nancy Mackle, eity Manager
ESTHER C. BEIRNE, City Clerk
C it y Attorney
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By: ff I
Name: Andrew Nickerson
Title: President