EXHIBIT A
STATEMENT OF WORK AND CONSULTANTS DUTIES AND RESPONSIBILITIES The Consultant shall perform the following services:
MANAGEMENT REPORTS AND ECONOMIC ANALYSIS
Consultant shall establish a special database that identifies the name, address, and quarterly allocations of all sales tax producers within the City for the most current and previous back to 1990 or earlier, if the City has prior historical sales tax data available on computer readable magnetic media and update the information quarterly. This database will be utilized to generate special reports to the City on: major sales tax producers by rank and category, sales tax activity by categories, business districts or redevelopment areas, identification of reporting aberrations, and per capita and outlet comparisons with regional and statewide sales.
Consultant shall provide updated reports each quarter identifying changes in sales by individual businesses, business group and categories, and by geographic area. Quarterly aberrations due to State audits, fund transfers, and receivables along with late or double payments will be identified. Quarterly reconciliation worksheets to assist finance officer with budget forecasting will be included along with separate reports to monitor and project the City's Measure S Transactions Tax that was adopted in 2020.
Consultant shall additionally provide a quarterly summary analysis for the City or its Redevelopment Agency to share with Chambers of Commerce and other economic development interest groups that analyze the City's sales tax trends by major groups, and geographic areas without disclosing confidential information.
Consultant shall make available and train the City Staff on the use of HdL sales tax computer software program and database containing sellers permit and quarterly allocation information for all in-city business outlets registered with the Board of Equalization and keep the registration and allocation data current with quarterly updates.
ALLOCATION AUDIT AND RECOVERY
Consultant shall conduct an initial and on-going sales and use tax audit to identify and correct "point-of-sale" distribution errors and thereby generate previously unrealized sales tax income for the City. 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; failure to properly report out of state purchases to in-state warehouses; improper reporting of capital purchases to state or county allocation pools; misdirection of self-imposed use tax and erroneous fund transfers and adjustments.
Consultant 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 so as to enhance the City's relations with the business community.
14 Consultant shall prepare and submit to the California Department of Tax and Fee Administration (CDTFA) all information necessary to correct any allocation errors that are identified and shall follow-up with the individual businesses and the CDTF A to ensure that all back quarter payments due the City are recovered.
If during the course of its audit, Consultant fmds businesses or capital projects located in the City that have the potential for modifying their operation to provide an even greater share of sales or use tax to the City, Consultant shall so advise City and upon request, shall work with those businesses, Consultant, and the City to encourage such changes.
DEFICIENCY/ALLOCATION AUDITS- TRANSACTIONS TAX
Consultant shall conduct on-going reviews to identify and correct unreported transactions and use tax payments and distribution errors, thereby generating previously unrealized revenue for the City. Said reviews shall include:
• Comparison of county-wide local tax allocations to transactions tax for brick-and-mortar stores and other cash register-based businesses, where clearly all transactions are conducted on-site within the Measure "S" City boundaries, and therefore subject to transactions tax.
• Review of any significant one-time use tax allocations to ensure that there is corresponding transaction tax payments for taxpayers with nexus within the City boundaries.
• Review of state-wide transactions tax allocations and patterns to identify any obvious errors and omissions.
• Identification and follow-up with any potentially large purchasers of supplies and equipment ( e.g. hospitals, universities, manufacturing plants, agricultural operations, refineries) to ensure that their major vendors are properly reporting corresponding transactions tax payments to the Measure "S" Transactions Tax District.
Consultant will initiate, where the probability of an error exists, contacts with the appropriate taxpayer management and accounting officials to verify whether current tax receipts accurately reflect the local sales activity. Such contacts will be conducted in a professional and courteous manner so as to enhance the City's relations with the business community.
Consultant shall prepare and submit to the CDTF A all information necessary to correct any allocation errors and deficiencies that are identified, and shall follow-up with the individual businesses and the CDTF A to ensure that all back quarter payments due the City are recovered.
CONSULTATION
Throughout the term of this agreement, Consultant shall provide sales tax estimates for proposed annexations, economic development projects and budget projections, monitor the City's sales tax sharing agreements and budgeted revenue projections against actual receipts, evaluate sales and use tax related legislative and regulatory proposals that potentially impact the City, assist in targeting business retention and tax leveraging opportunities, provide training 15 on sales, transactions and use tax revenues when requested and generally serve as City staff on sales, use and transactions tax issues.
CONSIDERATION
Consultant shall establish the sales and transactions tax databases, shall provide the ongoing reports and analysis and shall make available the computer software program and databases referenced above for a fee of $850 per month, invoiced quarterly (hereafter referred to as "monthly fee"). The monthly fee shall increase annually by the percentage increase in the Consumer Price Index (CPI) for the preceding twelve-month period.
Consultant shall be further paid 15% of all new Bradley-Bums sales or use tax revenue received by the City as a result of audit and recovery work performed by Consultant (hereafter referred to as "audit fees") including any reimbursement from the Sales and Use Tax Compensation Fund as outlined in Section 97 .68 of the Revenue and Taxation Code. New sales, transactions and/or use tax revenue shall not include any amounts determined by the City or Consultant to be increment attributable to causes other than Consultant's work pursuant to this agreement. In the event that Consultant is responsible for an increase in the tax reported by businesses already properly making tax payments to the City, it shall be Consultant'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 Consultant and confirmation of corrections by the California Department of Tax and Fee Administration.
Consultant shall provide the City with an itemized quarterly mvmce showing all formula calculations and amounts due for audit fees.
For City's Measure "S" Transactions Tax, Consultant shall be paid 25% of all new transactions or use tax revenue received by the City as a result of audit and recovery work performed by Consultant (hereafter referred to as "audit fees"). New revenue shall not include any amounts determined and verified by the City or Consultant to be increment attributable to causes other than Consultant's work pursuant to this agreement. In the event that Consultant is responsible for an increase in the tax reported by businesses already properly making tax payments to the City, it shall be Consultant'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 those specific quarters identified as being missing and/or deficient following completion of the audit by Consultant and confirmation of corrections by the California Department of Tax and Fee Administration.
Consultant shall obtain City approval prior 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. City shall pay audit fees upon Consultant's submittal of evidence of State Fund Transfers and payments to the City from businesses identified in the audit and approved by the City.
16 Above sum shall constitute full reimbursement to Consultant for all direct and indirect expenses incurred by Consultant in performing audits including the salaries of Consultant's employees, and travel expenses connected with contacting local and out-of-state businesses and CDTF A representatives.
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 California Department of Tax and Fee Administration. This section specifies the conditions under which a City may authorize persons other than City 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 agreement:
A. Consultant is authorized by this Agreement to examine sales, use or transactions and use tax records of the Board of Equalization provided to the City pursuant to contract under the Bradley-Bums Uniform Sales and Use Tax Law.
B. Consultant is required to disclose information contained in, or derived from, those sales, use or transactions and use tax records only to an officer or employee of the City who is authorized by resolution to examine the information.
C. Consultant is prohibited from performing consulting services for a retailer, as defined in California Revenue & Taxation Code Section 6015, during the term of this Agreement.
D. Consultant 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 CDTF A records shall be used only for purposes related to collection of local sales and use tax or for other governmental functions of the City as set forth by resolution adopted pursuant to Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate the Consultant 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. 17