November 28, 2023
Finance Department
DATE: November 28, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Andrea Miller, Director of Finance
Mubeen Qader, Deputy Director of Finance
Antonio Banuelos, Accounting Manager
Subject: Contract for Business Tax Audit Services and Analysis FINANCIAL IMPACT: The cost for the first year of the contract is included within the approved fiscal year 2023-2024 Finance
Department budget (01177015-400201).
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
City staff requests approval of a contract with BRI
Consultants, Inc. to provide business tax audit services and analysis.
RECOMMENDED ACTION: APPROVE a contract with BRI Consultants, Inc. in an amount not to exceed $250,000, to provide Business Tax
Audit Services and provide as-needed analysis, with a
term beginning November 29, 2023, and ending
December 31, 2026, with two one-year options to renew
at the amount of $50,000 per year, for a total contract amount not to exceed $350,000 – Finance Department
(Andrea Miller/ Mubeen Qader 510-412-2077/ Antonio
Banuelos 510-620-6741).
AGENDA
REPORT
November 28, 2023
DISCUSSION:
City Council placed a measure on the November 3, 2020 ballot that was approved by the voters, which changed the Business Tax calculation methodology to be based on gross receipts instead of the prior method based upon the number of employees employed by a business.
Section 7.04.430 of the approved Business Tax Ordinance speaks to the audit process of selected business. Although City staff has and will continue to directly review and audit businesses directly, it was deemed necessary to contract consultants to audit businesses with more complex and nuanced business operations and records.
7.04.430 Audit—Examination of books, records, witnesses.
The city may conduct audits and examinations pursuant to the terms of this section. The City Manager or any authorized employee is authorized to examine the books, papers, tax returns, and records of any person subject to this chapter for the purpose of verifying the accuracy of any declaration made, or if no declaration was made, to ascertain the business tax due.
Every person subject to the provisions of this chapter is directed and required to furnish to the City Manager, the means, facilities, and opportunity for making such examination and investigations. The City Manager is authorized to examine a person under oath, for the purpose of verifying the accuracy of any declaration made, or if no declaration was made, to ascertain the business tax or registration fees due under this chapter. In order to ascertain the business tax or registration fees due under this chapter, the City Manager may compel, by administrative subpoena, the production of relevant books, papers and records and the attendance of all persons as parties or witnesses.
The refusal to submit to such examination or production by any employer or person subject to the provisions of this chapter shall be deemed a violation of this chapter, and administrative subpoenas shall be enforced pursuant to applicable state law.
On September 13, 2023, the Finance Department issued a Request for Proposals (RFP) seeking qualified and experienced consulting firms to project gross receipts for very large, complex businesses and to review their financial, manufacturing, and processing records to confirm that reported gross receipts are correct. During the life of the contract, the consultant will perform audits of selected businesses to determine accuracy of business tax remittances. Additionally, at the direction of City staff, the consultant will provide additional as needed analysis including providing forecasts and trend analysis.
The RFP was posted on the City’s BidsOnline system where 737 vendors were notified, and 11 vendors downloaded copies of the RFP. On October 4, 2023, one electronic
November 28, 2023
proposal was received. The proposal was reviewed by City staff members and the vendor was found to be compliant. Based on a combination of expertise in this field and experience with other California municipalities dealing with gross receipts business tax issues, City staff decided to proceed with the proposed contract.
City staff is requesting approval of a three-year contract with BRI Consultants, Inc. in the amount of $250,000 to provide business tax audit services and to provide as needed analysis, with a term beginning November 29, 2023, and ending December 31, 2026, with two one-year options to renew at the amount of $50,000 per year, for a total contract not to exceed $350,000.
DOCUMENTS ATTACHED:
Attachment 1 – Original Contract
Attachment 2 – Request for Proposals - SB90 State Mandated Cost Reimbursement Attachment 3 – Project Report