FOR THE COUNCIL MEETING OF DECEMBER 20, 2022
COUNCIL AGENDA REPORT
TO: City Council
FROM: City Manager
Prepared by: Director of Finance
SUBJECT: UPDATED SALES AND USE AND MEASURE U TRANSACTION AND USE
TAX RECORDS DISCLOSURE DESIGNATIONS FOR THE FINANCE
DIRECTOR TO REVIEW TAX RECORDS AND AUTHORIZE
HINDERLITER, DE LLAMAS AND ASSOCIATES TO REVIEW TAX
RECORDS ON BEHALF OF THE CITY
RECOMMENDATION:
That the City Council adopt Resolutions:
1. Rescinding Resolution No. 2003-31 and authorizing the examination of California Department of Tax and Fee Administration (CDTFA) sales and use tax records; and
2. Authorizing the examination of CDTFA Measure U transaction and use tax records.
BACKGROUND:
Since the Sales Tax and Use Law of 1941, state law has prohibited the unlawful disclosure of sales and use tax information. Current law (Revenue and Tax Code, section 7056, et seq.) requires the City, through an adopted resolution, to designate which City officials may review detailed sales and use tax records and for what purpose. Current law also requires the City to officially designate any third parties with the ability to review sales and use tax records.
On September 15, 1992, the City Council adopted Resolution No. 92-130, which authorized the City Manager to receive and review confidential sales and use tax allocation information.
Under Resolution No. 92-130, the City authorized the California State Board of Equalization (BOE) to provide local sales tax data to a third party. Since 1992, the City has also contracted with Hinderliter, de Llamas and Associates (HdL) for sales tax audit services.
Since the 1992 resolution, there have been several changes and updates both statewide and locally relating to the Sales and Use Tax state program. In 2003, Resolution No. 2003- 31 was approved by Santa Maria City Council, authorizing the City Manager, as the designated City representative, to designate in writing the Director of Administrative Services and various other staff the authority to examine sales and use tax records provided from the BOE.
In June 2012, City of Santa Maria voters approved the passage of Measure "U", a quarter - cent (0.25 cents) transaction and use tax for a period of nine years. Resolution No. 2012-11 amended the Santa Maria Municipal code and provided for a local transaction and use tax.
In July 2018, this local tax measure was increased to one -cent and extended by voters and approved by Council Resolution No. 2018-07.
In 2017, the Transparency and Fairness Act of 2017 transferred various duties, powers, and responsibilities from the BOE to the California Department of Tax and Fee Administration (CDTFA), including all functions incident to the administration and collection of sales or transaction and use taxes.
DISCUSSION:
In recent years, the CDTFA has modernized the sales tax and use program, by updating its software system, transitioning to electronic funds submissions, and reviewing documentation submitted by local jurisdictions and contracted third parties, such as Council resolutions and third -party agreements.
In July of this year, the CDTFA contacted HdL, as a City approved designee, requesting the adoption of a new Resolution for the position title change from Director of Administrative Services to Director of Finance.
In addition, the City Council deems it desirable and necessary for authorized representatives of the City and the authorized Santa Maria Chamber of Commerce representatives to examine confidential sales and use tax records and for the additional account of the Measure U transaction and use tax records of the CDTFA pertaining to sales and use tax and transaction and use tax collected by the CDTFA for the City.
Staff recommends that Council adopt the accompanying resolutions to update information, authorize the Director of Finance as the City official allowed to update the list of designated persons authorized to review sales or transactions and use tax records on behalf of the City, and to ensure both sales tax and Measure U transaction and use tax, language is consistent.
Fiscal Considerations:
There are no fiscal considerations.
Impact to Community:
There is no impact to the services provided to the community.
MARY HARVEY
Director of Finance
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SANTA MARIA, CALIFORNIA, RESCINDING
RESOLUTION NO. 2003-31 AND AUTHORIZING THE
EXAMINATION OF CALIFORNIA DEPARTMENT OF TAX AND
FEE ADMINISTRATION SALES AND USE TAX RECORDS
WHEREAS, this Resolution rescinds all prior resolutions of the City Council of the City of Santa Maria adopted pursuant to California Revenue and Taxation Code Section 7056; and
WHEREAS, pursuant to Santa Maria Municipal Code Title 3, Chapter 3-8.05, the City of Santa Maria entered a contract with the California Department of Tax and Fee Administration (CDTFA) to perform all functions incident to the administration and collection of local sales and use tax; and
WHEREAS, the City Council deems it desirable and necessary for authorized representatives of the City and the authorized Santa Maria Chamber of Commerce representatives to examine confidential sales and use tax records of the CDTFA pertaining to sales and use tax collected by the CDTFA for the City pursuant to that contract; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth certain requirements and conditions for the disclosure of CDTFA records, and establishes criminal penalties for the unlawful disclosure of information contained in, or derived from, sales and use tax records of the CDTFA.
NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of Santa Maria, California, as follows:
Section 1. That this Resolution rescinds all prior resolutions of the City Council of the City of Santa Maria adopted pursuant to California Revenue and Taxation Code Section 7056; and
Section 2. That the City Manager, Director of Finance, other officers or employees of the City, and authorized representatives of the Santa Maria Chamber of Commerce designated in writing by the Director of Finance to the CDTFA, are hereby appointed to represent the City with Authority to examine sales and use tax records of the CDTFA pertaining to sales and use taxes collected for the City by the CDTFA pursuant to the contract between the City and CDTFA. The information obtained by the examination of CDTFA records shall be used only for purposes related to the collection of City sales and use tax by the CDTFA pursuant to that contract; and Section 3. That Hinderliter, de Llamas and Associates, designated in writing by the Director of Finance to the CDTFA, is hereby appointed to represent the City with authority to examine those sales and use tax records of the CDTFA, for the purposes related to the following governmental functions of the City:
(a) Sales and economic analysis;
(b) Allocation audit and recovery; and
(c) Ongoing consultation.
The entity, designated in writing by the Director of Finance to the CDTFA, meets all the following conditions:
(a) Has an existing contract with the City to examine those sales and use tax records; and
(b) Is required by that contract to disclose information contained in, or derived from, those sales and use tax records only to the officer or employee authorized under Section 2 of this Resolution to examine the information; and (c) Is prohibited by that contract from performing consulting services for a retailer during the term of that contract; and
(d) Is prohibited by that contract from retaining the information contained in or derived from those sales and use tax records, after that contract has expired.
Section 4. The information obtained by examination of CDTFA records shall be used only for the purposes related to the collection of City sales and use tax by the CDTFA pursuant to the contract between the City and the CDTFA; and Section 5. The Chief Deputy City Clerk is hereby authorized to make minor changes herein to address clerical errors, so long as substantial conformance of the intent of this document is maintained. In doing so, the Chief Deputy City Clerk shall consult with the City Manager and City Attorney concerning any changes deemed necessary.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Santa Maria, California, held this 20th day of December 2022.
ATTEST:
Chief Deputy City Clerk
Mayor
APPROV a ORM:
. l+
City Attorney
PROVED AS TO CONTENT:
De•artment Director
City Manager
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SANTA MARIA, CALIFORNIA, AUTHORIZING THE
EXAMINATION OF CALIFORNIA DEPARTMENT OF TAX AND
FEE ADMINISTRATION MEASURE U TRANSACTION AND USE
TAX RECORDS
WHEREAS, pursuant to Santa Maria Municipal Code Title 3, Chapter 3-8.05, the City of Santa Maria entered into a contract with the California Department of Tax and Fee Administration (CDTFA) to perform all functions incident to the administration and collection of local transaction and use tax; and
WHEREAS, the City Council deems it desirable and necessary for authorized representatives of the City and the authorized Santa Maria Chamber of Commerce representatives to examine confidential Measure U transaction and use tax records of the CDTFA pertaining to transaction and use tax collected by the CDTFA for the City pursuant to that contract; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth certain requirements and conditions for the disclosure of CDTFA records, and establishes criminal penalties for the unlawful disclosure of information contained in, or derived from, transaction and use tax records of the CDTFA.
NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of Santa Maria, California, as follows:
Section 1. That the City Manager, Director of Finance, other officers or employees of the City, and authorized representatives of the Santa Maria Chamber of Commerce designated in writing by the Director of Finance to the CDTFA, are hereby appointed to represent the City with Authority to examine Measure U transaction and use tax records of the CDTFA pertaining to transaction and use taxes collected for the City by the CDTFA pursuant to the contract between the City and CDTFA. The information obtained by the examination of CDTFA records shall be used only for purposes related to the collection of City Measure U transaction and use tax by the CDTFA pursuant to that contract; and
Section 2. That Hinderliter, de Llamas and Associates, designated in writing by the Director of Finance to the CDTFA, is hereby appointed to represent the City with authority to examine those Measure U transaction and use tax records of the CDTFA, for the purposes related to the following governmental functions of the City:
(a) Sales and economic analysis; and
(b) Allocation audit and recovery; and
(c) Ongoing consultation.
The entity, designated in writing by the Director of Finance to the CDTFA, meets all the following conditions:
(a) Has an existing contract with the City to examine those Measure U transaction and use tax records; and
(b) Is required by that contract to disclose information contained in, or derived from, those Measure U transaction and use tax records only to the officer or employee authorized under Section 2 of this Resolution to examine the information; and
(c) Is prohibited by that contract from performing consulting services for a retailer during the term of that contract; and
(d) Is prohibited by that contract from retaining the information contained in or derived from those Measure U transaction and use tax records, after that contract has expired.
Section 3. The information obtained by examination of CDTFA records shall be used only for the purposes related to the collection of City Measure U transaction and use tax by the CDTFA pursuant to the contract between the City and the CDTFA; and Section 4. The Chief Deputy City Clerk is hereby authorized to make minor changes herein to address clerical errors, so long as substantial conformance of the intent of this document is maintained. In doing so, the Chief Deputy City Clerk shall consult with the City Manager and City Attorney concerning any changes deemed necessary.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Santa Maria, California, held this 20t" day of December 2022.
ATTEST:
Chief Deputy City Clerk
Mayor
APPRO 4 • : = TO FORM:
City Attorney
APPROVED AS TO CONTENT:
epartment Directo
ity Manager