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HomeMy WebLinkAboutAgr 2003-04-08 (Hinderliter, Llamas et al.) AGREEMENT FOR SALES and USE TAX AUDIT SERVICES This Agreement is made and entered into as of the L day of ~ l . 200TbY and between the TOWN OF TffiURON a municipal corporation hereinafter called TOWN, and lllNDERLITER, DE LLAMAS AND ASSOCIATES a California Corporation, hereinafter called CONTRACTOR. I. RECITALS WHEREAS, sales, use and transactions tax revenues can be increased through: a system of continuous monitoring, identification and correction of allocation errors and; WHEREAS, TOWN desires to provide for the examination of its sales and use tax revenues to ensure that all sales and use tax due the TOWN is being properly allocated to TOWN and to recover any revenues erroneously allocated to other jurisdictions and allocations pools; and WHEREAS, CONTRACTOR has the programs, equipment and personnel required to deliver the sales and use tax services referenced herein; THEREFORE, TOWN and CONTRACTOR, for the consideration hereinafter described, mutually agree as follows: 1 11~r/o3 jftj3r II. SERVICES The CONTRACTOR shall perform the following services: A. CONTRACTOR shall conduct an initial and ongoing sales and use tax audit to identify and correct distribution errors and thereby generate previously unrealized sales tax income for the TOWN. Common errors that will be monitored and corrected include: transposition errors resulting in misallocations; erroneous consolidation of multiple outlets; misreporting of "point of sale" to the wrong location; delays in reporting new outlets; misallocating use tax payments to the allocation pools or wrong jurisdiction and erroneous fund transfers and adjustments. B. 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 professional and courteous manner to enhance TOWN'S relationships with the business community. C. 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 TOWN are recovered. D. If during the course of its audit, CONTRACTOR finds businesses located in the TOWN that are properly reporting sales tax but have the potential for modifying their operation to provide an even greater share to the TOWN, CONTRACTOR will work with those businesses and the TOWN to encourage such changes. 2 III. 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 TOWN may authorize persons other than TOWN 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 or transactions and use tax records of the Board of Equalization provided to TOWN 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 or transactions and use tax records only to an officer or employee of the TOWN 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 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 3 functions of the TOWN as set forth by resolution adopted pursuant to Section 7056 (b) of the Revenue and Taxation Code. The 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. IV. PROPRIETARY INFORMATION In performing its duties under this contract, CONTRACTOR will produce reports, technical information and other compilations of data to TOWN. The reports, technical information and compilations of data will belong to TOWN. However, these reports, technical information and compilations of data are derived by CONTRACTOR using methodologies, formulae, programs, techniques and other processes designed and developed by CONTRACTOR at a substantial expense and are therefore considered by CONTRACTOR to be 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, TOWN 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, TOWN 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 4 TOWN also agrees that it will undertake all necessary and appropriate steps to maintain the proprietary nature of CONTRACTOR'S Proprietary Information. v. CONSIDERATION A. CONTRACTOR shall be paid 15% of all new Sales and/or Use tax revenue received by the TOWN 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 TOWN 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 TOWN, 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 TOWN with an itemized quarterly invoice showing all formula calculations and amounts due for Audit Fees. Audit Fees shall be paid within 60 days of the receipt by TOWN of new sales and/or use tax revenue. CONTRACTOR shall obtain TOWN approval pnor 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 TOWN Manager or his/her designated representative on the 5 Sales Tax Audit Authorization form, a copy of which is attached as "Exhibit A." TOWN shall pay audit fees upon CONTRACTOR'S submittal of evidence of State Fund Transfers and payments to TOWN from businesses identified in the audit and approved by the TOWN. B. 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 representati ves. VI. TOWN MATERIALS AND SUPPORT TOWN 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 TOWN. TOWN further agrees to provide any information or assistance that may readily be available such as business license records within the TOWN and to provide CONTRACTOR with proper identification for contacting businesses. TOWN further agrees to continue CONTRACTOR'S authorization to examine the confidential sales tax records of the TOWN by maintaining CONTRACTOR'S name on the TOWN Resolution or by providing 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. 6 VII. TERMINA TION 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. CONTRACTOR shall be entitled to any unpaid Audit Fees due under Section V of this contract for work completed prior to the effective date of the termination notice, including, but without limitation, unpaid Audit Fees due under Section V for future reporting quarters. All documents, data, surveys and reports prepared by CONTRACTOR pursuant to this Agreement shall be considered the property of the TOWN and upon payment for services performed by CONTRACTOR, such documents and other identified materials shall be delivered to TOWN by CONTRACTOR. VIII. 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 TOWN. IX. NON-ASSIGNMENT This Agreement is not assignable either in whole or in part by CONTRACTOR without the written consent of TOWN. 7 X. A TTORNEY'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. XI. 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. XII. INDEMNIFICA TION CONTRACTOR hereby agrees to, and shall hold TOWN, 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 TOWN 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. TOWN 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 8 damage which may arise from TOWN'S negligent acts, errors or omissions under this Agreement. TOWN 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. 9 XIII. NOTICE All notices required by this Agreement shall be given to TOWN and CONTRACTOR in writing, by personal delivery or first class mail postage prepaid, addressed as follows: TOWN: CONTRACTOR: TOWN OF TffiURON 1505 TffiURON BLVD TffiURON, CA 94920 lllNDERLITER, DE LLAMAS, & ASSOCIATES 1340 Valley Vista Drive, Suite 200 Diamond Bar, CA 91765 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. APPROVED AS TO FORM: ~ ?f / t/ Town Attorney ... - TOWN: TO CONTRACTOR: lllNDERLITER, DE LLAMAS & ASSOCIATES A Californi orporation 10 SAMPLE SAMPLE EXHIBIT A Sales Tax Audit Work Authorization No. The following business or businesses, located in the Town of , have been identified as having the potential for generating additional sales tax revenue to the Town of . 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 Town. Contractor's compensation shall be 15% of the new sales and/or use tax revenue received by the Town as a result of audit and recovery work performed by Contractor, as set forth in the Agreement between Contractor and Town. TOWN OF By: Date lllNDERLITER, DE LLAMAS AND ASSOCIATES By: Date 11