CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
1/9/2023
1 SUBJECT:
Consideration of Resolution Authorizing City Manager to Execute Agreements with California Department of Tax and Fee Administration (CDTFA) to set up, administer and operate the City of Pacifica Transactions and Use Tax Ordinance, and Resolution Authorizing HDL Companies to Examine Confidential Tax Information for Purposes of Audit RECOMMENDED ACTION:
Consider and Approve the Agreements and Adopt the Resolutions to allow the California Department of Tax and Fee Administration (CDTFA) to administer and operate the City's Transactions and Use Tax Ordinance and adopt resolution authorizing HDL Companies to access confidential sales or transactions and use tax records for purposes of auditing.
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650) 501-6004
[email protected] <mailto:[email protected]>
INTRODUCTION:
On November 8, 2022, a General Election was held where a majority of voters approved an Ordinance to establish a ½ Cent Transactions and Use Tax (TUT) in the City of Pacifica. The City Council adopted a Resolution Declaring the Canvass of Returns and Results of the General Municipal Election of November 8, 2022 at their meeting held on December 15, 2022.
The ½ Cent Transactions and Use Tax will begin being collected on April 1, 2023. Pursuant to Section 7270 of the Revenue and Taxation Code, Cities and Counties are required to contract with the California Department of Tax and Fee Administration (CDTFA) for the administration of the Ordinance imposing the 1/2 Cent Transactions and Use Tax prior to the new tax taking effect.
The CDTFA performs all functions related to the administration and operation of the ordinance.
BACKGROUND:
There are two contracts with the CDTFA to establish the new TUT in Pacifica. One contract is to set up the tax while the second is for ongoing administration. In addition, since the 1/2 Cent Transactions and Use Tax is separate and distinct from the Local Sales and Use Tax (also known as the Bradley-Burns Sales and Use Tax), a Resolution of Confidentiality for access to the allocation data by the City and its Sales Tax Revenue Audit Firm (HdL Companies) is also required. The attached Resolution of Confidentiality has been updated to cover both the Local Sales and Use Tax and the new TUT.
The attached Resolution authorizes the City Manager to execute the Agreements with the CDTFA. These documents are attached to this Council Report as Attachments 1 through 5.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
These items advance the Vision 2025 & Beyond Council Priority and further the City Council’s Pacifica City Council 2
January 09, 2023
Strategic Goal of Fiscal Sustainability.
FISCAL IMPACT:
The ½ Cent Transactions and Use Tax is estimated to generate $2.6 Million per year in revenues. These revenues will begin to be collected on April 1, 2023 (as noted above).
Under the provisions of Revenue and Taxation Code Section 7272, the City will pay the CDTFA an annual amount for the establishment and operation of the ½ Cent Transactions and Use Tax district in Pacifica. The annual amount charged to the City covers the CDTFA’s direct and indirect costs, which shall not exceed $175,000 as enumerated in the Code Section 7272. This is a required annual cost that will be subtracted from the total revenue remittances from the Transactions and Use Tax.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
Attachment 1 - Resolution Authorizing City Manager to Execute Agreements with CDTFA (DOCX)
Attachment 2 - Preparatory Agreement (DOCX)
Attachment 3 - Administration Agreement (DOCX)
Attachment 4 - Resolution Re Examination of Tax Information (DOCX) Attachment 5 - Designation Letter to the CDTFA (DOCX)