HomeMy WebLinkAboutAgenda Report - March 6, 1991 (42)O CIW OF LODI COUNCIL COMMUNICATION
AGENDA TITLE: Agreement for Sales Tax Audit and Information Services
MEETING DATE: March 6, 1991
PREPARED BY: Assistant City Manager
RECOMMENDED ACTION: The City Council approve the attached agreement with
Hinderliter, DeLlamas and Associates for sales tax audit
and adopt the attached resolution.
BACKGROUND INFORMATION: There is the distinct possibility the City of Lodi may not
be receiving its full potential sales tax revenue. This is
not to say that commercial and industrial establishments are
are not properly collecting and reporting sales and use tax.
Sales tax revenues can be increased through a system of monitoring, identifying and
correcting "point of sale" allocation errors.
For instance, a commercial outlet may have multiple outlets but all sales go through
one store or corporate office outside the City of Lodi and the sales tax, therefore,
goes to the other city. A place of business may be incorrectly identified as being
outside the City limits when, in fact, it is in the City. Through cooperation with
corporations, major equipment purchases can be made by the company direct and then
the use tax be paid within the City. These are but a few of the types of
allocations the audit may uncover.
It must be emphasized and underscored this is an audit of the State and not the
individual merchants.
Over 100 cities in California are using these services. We contacted three cities
in northern California: Fremont, Livermore and Martinez. All three reported
increased sales tax revenues in excess of ;100,00 per year.
Hinderliter, De Llamas and Associates are so sure that there are point of sales
errors that they have written the contract to provide that payment of the fees be
deferred until such time as adequate new sales tax revenue, sufficient to pay the
fees, have been received by the City as a result of audit and recovery performed by
the contractor.
Council Communications
Agreement for, Sales Tax Audit and Informatio:: Services
March 5, 1991
Page Two
The cost for this service is $500 per month plus 15% of all new sales or use tax
revenue received by the City. For instance, if we were to receive $100,000 in new
money, our cost would be $21,000 ($500 per month for 12 months plus 15% of $100,000).
The City Manager, Finance Director and myself met with Mr. de Llamas and were
impressed with the company's low key, yet comprehensive audit procedures. The way
the contract is written the City is at no risk and stands to gain significant
amounts of new revenue. We strongly urge the City Council approve this agreement.
In order for the contractor to proceed, the Council must also adopt the attached
resolution authorizing Hinderliter, de Llamas and Associates to examine sales tax
records of the City.
FUNDING: None Required
Respectfully submitted,
arryerry L.
Glenn
Assistant City Manager
JLG:br
Attachments
CCCOM148
RESOLUTION NO. 91-39
A RESOLUTION OF THE LODI CITY COUNCIL
AUTHORIZING ACCESS TO SALES AND USE TAX RECORDS PURSUANT TO
REVENUE AND TAXATION CODE SECTION 7056
THE CITY COUNCIL OF THE CITY OF LODI HEREBY RESOLVES AS FOLLOWS:
Section 1. The following City officials are hereby authorized to
receive and review sales and use tax allocation information from the
State Board of Equalization:
City Manager: Thomas A. Peterson
Finance Officer: Robert Holm or his successor
Assistant City Manager: Jerry L. Glenn
Section 2. The following independent contractor for the City of
Lodi is hereby also authorized to receive and review sales and use tax
data received from the State Board of Equalization:
Hinderliter, de Llamas & Associates: Robert Hinderliter, Principal
Lloyd de Llamas, Principal
Section 3. The City of Lodi hereby certifies that Hinderliter,
de Llamas & Associates:
A. Has a current confidentiality contract with the City to
receive sales and use tax records; and
S. Is required by that contract 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 this Resolution to examine the information;
and
C. Is prohibited by that contract from performira consulting
service for a retailer during the term of that contract; and
D. Is prohibited by that contact from retaining the
information contained in, r)r darived from those sales tax
records, after that contrac.: has expired.
Section 4. Information obtained by examination of Board of
records shall be used only for purposes related to the collection of
local sales and use taxes by the Board for municipal revenue
forecasting and ve,-ification.
RES9139/TXTA.02J
Section 5. The City Clerk shall certify to the adoption of this
Resolution and send forward a certified copy to:
State Board of Equalization
2014 "'+" Street, Suite 220
Sacramento, CA 95814
Attention: Jim Munekawa
UAN-TUM . H NSM N
Mayor
ATTEST:
ALICE M. KLIMUHL
City Clerk
Dated: March 6, 1991
I hereby certify that Resolution No. 91-39 was passed and
adopted by the Lodi City Council in a regular meeting held March 6,
1991 by the following vote:
Ayes: Council Members - Pennino, Pinkerton, Sieglock, Snider
and Hinchman (Mayor)
Hoes: Council Members - None
Absent: Council Members - None
LeA
Alice M. Reimche
City Clerk
91-39
RES9139/TXTA.02J
CITY COUNCIL
DAVIDNI HIr:r HXiA`., `.flavor
JAMES`.V PINK! RTON. ;r
.Nlavor Pro Iefrtvxn
PHILLIP A Pf N'cl',n
JACK A Sli (A-0CK
JOHN R lR.wdvl SNIDI R
CITY OF LODI
CITY HALL. 221 WEST PINE STREET
P O. BOX 3006
LOCI, CALIFORNIA 95241-1910
(2.09) 333.5634
f Ali 12091 33) b795
March 11, 1991
State Board of Equalization
Attention: Jim Munekawa
2014 "T" Street
Sacramento, CA 95814
Dear Mr. Munekawa:
THOMAS A PETERSON
City Manaver
ALICE M REI.NICHE
Cit' Clerk
BOB .Mc'NATT
C.IY Attorne%
Enclosed please find certified copy of Resolution No. 91-39 entitled,
"A Resolution of the Lodi City Council Authorizing Access to Sales and
Use Tax Records Pursuant to Revenue and Taxation Code Section 7056"
which was adopted by the Lodi City Council at its regular meeting of
March 6, 1991.
Should you have any questions regarding this matter, please do not
hesitate to call this office.
Very truly yours,
J
Alice M. Reimche
City Clerk
AMR/ _Imp
Enclosure