HomeMy WebLinkAbout2/19/2014 - STAFF REPORTS - 2.M. iy
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°Q41FORa�P CITY COUNCIL STAFF REPORT
DATE: FEBRUARY 19, 2014 CONSENT CALENDAR
SUBJECT: APPROVAL OF AN AMENDMENT TO AGREEMENT NO. 6205 WITH
MUNISERVICES, LLC FOR LOCAL BUSINESS LICENSE TAX
COMPLIANCE AND AUDITING SERVICES
FROM: David H. Ready, City Manager
BY: Finance Department
SUMMARY
The City Council will consider an Amendment to the Agreement with MuniServices, LLC
for City Business License Tax Compliance Services, to extend the Agreement for an
additional three years, under the existing compensation schedule of 40% of additional
revenue collected.
RECOMMENDATION:
1. Approve Amendment No. 1 to Agreement No. A6205 with MuniServices, LLC to
provide the City Business License Tax Discovery and Assessment Services for an
additional three (3) years plus a one-year optional extension at the mutual consent
of the parties for a maximum contract term ending June 30, 2017.
2. Authorize the City Manager to execute all necessary documents.
STAFF ANALYSIS:
Business License Tax generates approximately $875,000 per year to the City's General
Fund revenue, is collected from over 6,300 entities conducting business within the City
of Palm Springs, and must by renewed, reported and paid on an annual basis.
The City routinely uses outside qualified local government tax specialists and auditors to
ensure compliance with the City's rules and regulations for the proper compliance and
remittance of City taxes.
The City Manager entered into agreement with MuniServices for business license tax
compliance services to search for businesses that are non-compliant or under-compliant
with the City's municipal code for the payment of business license taxes.
The current agreement has been very successful and has resulted in the payment of
$57,780 to the City of Palm Springs for under-reported business licenses taxes, and
ITEM NO.
City Council Staff Report
February 19, 2014 —Page 2
Business License Tax Audit/Recovery
another $19,672 has been invoiced but is yet to be received for a total of $77,452 in
new revenue.
City staff recommends the City Council approve an amendment to the agreement to
extend the term of the original agreement for an additional three years plus a one-year
optional extension. All other terms remain the same as in the original agreement.
MuniServices provides a comprehensive audit of all entities which includes but is not
limited to: the State Board of Equalization records, cross-referenced with City records,
to ensure that businesses are in full compliance with the Code requirements for
payment of business license taxes.
Section 7.04.030 of the Municipal Code provides that the City Council may authorize the
acquisition of supplies, equipment or services without competition when it is determined
that an unusual or unique situations exists, in that due to experience and expertise
demonstrated in prior contracts with the city a particular contractor is uniquely qualified
for a particular task, that makes the application of all requirements of competitive sealed
bidding or competitive sealed proposals contrary to the public interest. Pursuant to the
requirements of Section 7.04.030, the Procurement Manager and the Director of
Finance have determined that prior exemplary contract performance and special
expertise of MuniServices LLC for similar tax auditing services (sales tax and utility
users tax) for the City is acceptable and will adequately protect the public interest in that
the total cost of the services to be provided will likely be equal to or less than what could
be obtained through an independent City competitive process at this time.
FISCAL IMPACT:
The fee to MuniServices is 40% of the revenue recovered, and the total amount of fees
paid under the contract is completely dependent on the amount of business license
taxes recovered and collected.
The City may terminate the agreement for any reason by providing 30-days written
notice to MuniServices.
Geoffrey S. iehl, Finance Director Zames Thompson,
Chief of Staff/ City Clerk
David H. Ready, City ager
Attachments:
Amendment No. 1 to Consulting Services Agreement
Agreement No. A6205 Scope of Services 02
AMENDMENT NO. 1
TO
CONSULTING SERVICES AGREEMENT
FOR BUSINESS LICENSE DISCOVERY AND ASSESSMENT SERVICES
(Agreement No. A6205)
THIS FIRST AMENDMENT to the Consulting Services Agreement No. A6205 for Business
License Discovery and Assessment Services is made and entered into to be effective on the date that
the City Manager executes this Amendment by and between the City of Palm Springs, a California
charter city and municipal corporation(hereinafter referred to as the City), and MuniServices LLC
(hereinafter referred to as the Consultant) (collectively, the "Parties").
RECITALS
A. City and Consultant entered into a Consulting Services Agreement ("Agreement") for
Business License Discovery and Assessment Services to assist the City with identifying
entities subject to taxation,which are not properly registered,or otherwise not reporting taxes
to the City;or are registered but are not properly reporting the full amount of tax which they
are subject to under the City's ordinances, made and entered into on March 13, 2012 in an
amount not to exceed $25,000.
B. City and Consultant desire to extend the term of the agreement for 3 additional years plus a 1
year optional extension at the mutual consent of the parties for a maximum contract term
ending June 30, 2017.
C. Consultant shall be compensated and reimbursed for the services rendered under this
Agreement in accordance with the Schedule of Fees as set forth in Exhibit"A".
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the Parties agree as follows:
AGREEMENT
1. Section 4.4, "Term", of the Agreement is hereby amended to read as follows: "Unless
earlier terminated in accordance with Section 4.5 of this Agreement,this Agreement shall
continue in full force and effect from the date executed by the City and ending on June
30, 2016. Thereafter the Parties will have the option to extend the Agreement for one
(1) additional year to June 30, 2017,
2. Section 3.1,"Compensation of Consultant",of the Agreement is hereby amended to read
as follows: "Consultant shall be compensated and reimbursed for the services rendered
under this Agreement in accordance with the Schedule of Fees set forth in Exhibit"A".
03
IN WITNESS WHEREOF,the Parties have executed and entered into this Amendment as
of the date first written above.
"CITY"
CITY OF PALM SPRINGS,
ATTEST: a California charter city and municipal
corporation
By: By:
James Thompson, City Clerk David H. Ready, City Manager
Date
APPROVED AS TO FORM:
By:
Douglas H. Holland, City Attorney
SIGNATURES CONTINUED ON NEXT PAGE]
2 l� 4
"CONSULTANT"
MUNISERVICES, LLC
a California corporation
CONSULTANT: Check one: _Individual Partnership_Corporation
Corporations require two notarized signatures: One from each of the following: A.Chairman of Board,President,or any
Vice President: AND B. Secretary, Assistant Secretary,Treasurer,Assistant Treasurer, or Chief Financial Officer).
By: By:._
Signature(notarized) Signature(notarized)
Name: Name:
Title: Title:
State of State of
County of Iss County of �ss
On before me, On before
me,
personally appeared personally appeared
personally personally
known to me(or proved to me on the basis of satisfactory known to me(or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their authorized capacity(ies), and that by his/her/their
signature(s)on the instrument the person(s),or the entity signature(s)on the instrument the person(s),or the entity
upon behalf of which the person(s) acted, executed the upon behalf of which the person(s) acted, executed the
instrument. instrument.
WITNESS my hand and official seal. WITNESS my hand and official seal.
Notary Notary
Signature: Signature:
Notary Seal: Notary Seal:
3 05
EXHIBIT "A"
CONSULTANT'S
SCOPE OF SERVICESIWORK
Including,
Schedule of Fees
And
Schedule of Performance
11 PAWN AM&Mu
7M599.1 - p
ATTACHMENtTA
Local Tax Compliance Services
(Discovery and Assessment)
Article 1-Objectives and Methods
MuniServices's Local Tax Compliance service("LTC)is designed to assist the City in locating tax revenue that the City may not
be receiving from Its local tax registry MuniServfces provides detection,documentation and correction of errors and omissions
causing deficiencies thereby producing new revenue that would not otherwise have been realized by the City. Moreover,our
team works In full and collaborative partnership with City revenue staff to supplement the operations and procedures
currently in place.
The LTC service also afros to reduce future errors by informing the businesses that are Identified as having errors or omissions
about the proper methods of compliance informing business owners of the requirements of the ordinance helps to prevent
future mistakes by businesses making future enforcement efforts bythe City less burdensome for the City.
Article 2-Scope of Work
1.1.Initial Meeting. Muniservices meets with the City staff to review the procedures and objectives of the LTC service,
business entity relations and logistical matters, Including establishing an appropriate liaison with City management and
staff and logical checkpoints for measuring progress (the 'Inttlai MgQU1 ^). MuniServices and City shall schedule the
meeting within 10 days after MuniServices receives the fullysigned copy of this addendum from the City.
12.Workplan. Based on the Initial Meeting, MuniServices develops a workplan that incorporates the logistical matters
agreed to In the Initial Meeting and describes in derail how the objectives of the LTC service shall be met(the
1.3,Commencement of services, After the Workplan is developed,MuniServices shall begin providing the services described
In paragraphs 1.4 thru 1.5 below. MuniServices' obligation to provide services is contingent on the City providing the
necessary Information and cooperation.
1,4.Disc6very Services. Discovery Services are designed to provide a full service solution to the City's business license
enforcement procedures. It does not replace current functions, but provides a focused and fulltime solution to the
identification of entities subjeetto taxation by the City,which are not properly registered,or otherwise not reporting taxes
to the City. rt performing the Discovery Services,MuniServices shall;
a. Establish a comprehensive Inventory of the entities subject to taxation by the City and the database elements
needed to facilitate a comprehensive comparative analysis with the City's records of those entities that are
properly registered;
b. Compare MunlServices' database of business records with the City's records to identify potential non-reporting
and non-registered entities subject to taxation;
c, For each unregistered or non-reporting entities identified and confirmed, assist the entities, as necessary, to
complete the City's applicable registration form(s) and determine the amount of tax due for current and prior
periods(plus applicable interest and penalties,where appropriate);
d. Invoice entities (including supporting documentation) on behalf of the City for the amount of identified
deficiencies,with payment to be remitted to MuniServices;
e. Ensure that all submitted registration forms are completed correctly and in their entirety;
f. Forward all Completed registration forms and associated payments to the City in batches at the frequency
directed by the City. Applications will be forwarded with copies of the payments and payments deposited into an
account designated by the City;
g. Collect the amount of Identified deficiencies, together with supporting documentation, and remit payment
received to the City in weekly batches. (Muniservices shall follow the Cityrs business rules in collecting partial
payments or the tax in full at the Citys direction.);
h. Establish a call center open during normal business hours to assist entities with questions concerning application
of the City's taxes,and reporting and remittance requirements;
I. Educate entities regarding the City's reporting requirements to prevent retuning deficiencies in future years;
J. Contact personnel in sales, operations and/or tax accounting at each target business to determine whether a
business license fee is due,when necessary and appropriate. This is accomplished with the highest regard to
discretion and professional conduct. MunJServicee LTC assessments are predicated on a non-controversial,
Potm Springs,fit-LTLD&A0JZO1z 1
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constructive public relations approach that emphasizes the importance of each business to the City and the
mutual benefits of correcting non-reporting errors;
It. Provide reports addressing each taxpayer not reporting, including the business name, address, and telephone
number to the City;and
L Monitor and analyze the business license registration files of the City each quarter in order to determine non-
reporting businesses.
1.5.Deficiency Assessment Services.Deficiency Assessment Services are designed to identify entities subject to taxation by
the City that are not properly reporting the full amount of tax which they are subject to under the City's ordinances,
Deficiency Assessment Services also identifies entities that are potentially underreporting,or not reporting all applicable
taxes. MuniServices reviews entities records to ensure compliance with the City's taxes. In performing the Deficiency
Assessment Services,MuntServices shall:
a. Establish a comprehensive inventory of the registered entities subject to taxation by the City and the database
elements needed to facilitate an analysis of records of those entity's current and prior year's tax remittance;
b. Compare MunServices' records with the City's records to identify potential under-reporting entities subject to
taxation;
c Meet with designated City staff to review and discuss potential assessment candidates and mutually agree which
entities will be subject to review. Only entities mutually agreed by MuniServices and the City to be reviewed shall
be subject to MuniServices'assessment services.
d. For potential underreporting entities identified,MuniServices shall obtain authorization from the City to conduct
a review of the entities' records and determine the amount of tax due for current and prior periods (plus
applicable interest and penalties,where appropriate}
e. Submit assessment summaries(also referred to as"Deftciengr Netice to the City to permit the City to determine
the amount of a deficiency awed,if any.
Article 3-Deliverables .
MuniServices shall provide the City with assessment progress reports to include the following;
1. Status of work in progress, including copies of reports provided to taxpayers/intermediaries addressing each
reporting error/omission individually, including where applicable the business name, address, telephone number,
account Identification number, individuals contacted, date(s) of contact, nature of business, reason(s) for error/
omission and recommended corrective procedure;
2. Actual revenue produced for the City by MunlServices'service on a quatterly;and cumulative basis;
3. Projected revenue forthcoming to the City as a result of MuniServices' assessment service, specified according to
source,timing,and one-time versus ongoing;and
4. Alphabetical listing of all errors/omissions detected for the City by MunlServices, Including the account number,
correction status,payment amount received by the City, period to which payment is related and payment type (e.g.,
reallocation,deficiency assessment)for each one.
Timing and Reporting
MuniServices shall commence project planning within 10 worldng days following authorization.
Article 4-Compensation
What the City shall pay MuntServices
DiscoveryServdces
MuniServices' compensation for providing Discovery Services shall be a contingency fee of 40% of the additional revenue
--received by the City from the services. The 40%shall apply to the current tax year,all eligible prior period revenues,and any
applicable penalties,interest,and late charges. The contingency fee only applies to revenue actually received by the City.The
term"current tax year'shall mean the most recent tax year for which local taxes are due and payable to the City,and in which
MuniServices has identified deficiencies.
Not-to-Exceed
The Discovery Services are not-to-exceed ("NTE")$25,000 without the prior written approval of the City.if the billing for the
Discovery Services come close to the NTE MuniServices will notify the City and the City0e encumber additional funds.The
Palm SPHn"CA-LTCD&A 012012
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Parties will then amend the Agreement to increase the NTg.If the City does not encumber additional funds then MunlServlces
may stop working until additional funds are encumbered
Assessment Services
MuniServices' compensation for the Assessment Service shall be a contingency fee of 40%, The 40% contingency fee shall
apply to revenue received by the City as a result of deficiencies identified in the review and shall include any eligible prior
period revenues together with all applicable penalties, interest and late charges. The City agrees to use reasonable and
diligent efforts to collect deficiencies identified by MuniServices.
Taxpayers'payments and MuniServims'invoice Process
The following section describes how MuniServices handles the taxpayers'payments and invoices the City for its fees.
a. Taxpayers' payments received by MuniServices shall be deposited into a general escrow account maintained by
MuniServices. The taxpayers'payments deposited into the escrow account shall be remitted to the City on a monthly
basis net of MuniServices fees.
h MuniServices shall send to the City a remittance package no less frequently than once per month that shall contain the
taxpayer business license application, copy of the taxpayer payment,other supporting documents received from the
taxpayer, a MuniServices generated report identifying each taxpayer payment received and the amount of
MuniServices fees attributed to the taxpayer payment, a check made payable to the City for the amount of fees
collected less MuntServices'fees,andan invoice showing our contingency fee.
c. The interest earned on the escrow account shall be used by MurdServices to offset the costs of the program
d. Should there be any disputed payments; MuniServices shall work with City to mutually resolve these issues. If the
resolution results in City's favor,MuniServices shall refund the applicable portion of the fee to City within 10 days of
resolution.
Additional Consulting
City may request that MuniServices provide additional consulting services at any time during the term of the Agreement to
which this Addendum is attached. if MuniServices and City agree on the scope of the additional consulting services requested,
then MuniServices shall provide the additional consulting on a Time and Materials basis. Depending on the personnel
assigned to perform the work,MuniServices'standard hourly rates range from$75 per how to$300 per hour.
These additional consulting services shall be invoiced at least monthly based on actual time and expenses incurred. AU
reimbursable expenses shall receive prior approval from the City and shall be reimbursed at cost to MuniServicm
Article 5—City Obligations
The City agrees to:
a Provide an electronic copy of the City's License Registration File and License Payment History file to Mun&rvices,
together with any other Information necessary for MuniServices to compute MuniServices' billing for services, in
electronic format to MuniServices on no less than a quarterly basis during the term of the Agreement and thereafter
for so long as MunlServices'right to Invoice for services rendered continues;
b. Use reasonable and diligent efforts to collect,or to assist MuniServices: in the collection of, deficiencies identified by
MuniServices pursuant to this Agreement;and
c. Notify MuniServices within 10 days following receipt by the City of payments, if there is any, resulting from
deficiencies Identified by MuntServices.
Because MuniServices' LTC Service may result in collection of deficiencies after termination of the Agreement the City's
obligation to coilectfees and notify MuniServices,and MunfServices'right to continue to receive contingency fees,shall survive
""termination of this Addendum or the Agreement for any reason.
The City shall have the right, at the City s option, to elect not to proceed with recovery of any identified deficiencies.
Deficiencies which are uncollectible due to insolvency or dissolution of the entity liable, or for deficiencies which are
otherwise incapable of collection.(eg. statute of limitations expiration or other legal defense) shall not be considered an
"election"by the City for the purposes of this Agreement For deficiencies otherwise collectable but for which the City elects
not to collect, the City shall notify MuniServices of its election not to pursue ("waive') collection of said deficiencies.
MuniServices shall be entitled to one-half(rya) of the fee MunlServices would have been entitled to for the waived portion of the deficiency.
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