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HomeMy WebLinkAbout101921-06.9 ADMINISTRATIVE STAFF REPORT 6.9 TO: Mayor and Town Council October 19, 2021 SUBJECT: Resolution No. 69-2021, authorizing amendment and novation agreement between Municipal Resource Consultants and MuniServices, LLC for examination of sales, transactions and use tax records BACKGROUND On July 6, 2021, the Town Council adopted Resolution No. 34-2021, which authorized an amendment and novation agreement to the Town’s January 6, 2018 Professional Services Agreement with MuniServices, LLC (formerly Municipal Resource Consultants (MRC)). MuniServices is the consultant used by the Town to provide detailed sales tax information and audit services to the Town for its sales, transactions and use tax auditing and reporting services. The reason for the contract amendment was explained in detail in the July 6 staff report (Attachment B). After the Town Council’s action on July 6, the resolution was submitted to the California Department of Tax and Fee Administration (CDTFA) for their review and approval. CDTFA subsequently informed the Town and MuniServices that the Town’s resolution did not contain adequate verbiage regarding limitations on access to confidential data in the following areas: (1) MuniServices has an existing contract with the Town to examine those sales or transations and use tax records; (2) MuniServices is required by the contract to disclose information contained in, or derived from, those sales or transactions and use tax records only to the officer or employee authorized under Section 2 of this resolution to examine the information; (3) MuniServices is prohibited by the contract from performing consulting services for a retailer during the term of this contract; and (4) MuniServices is prohibited by the contract from retaining the information contained in, or derived from those sales or transactions and use tax records, after the contract has expired. The attached resolution has been revised to address the deficiencies identified by CDTFA and once adopted, it will supersede Resolution No. 34-2021. DISCUSSION In response to the CDTFA’s ruling, the attached resolution (Attachment A) has been reworded to address their concerns. After adoption of this resolution by the Town Amendment and Novation Agreement MuniServices 2 October 19, 2021 Council, it will be resubmitted to CDTFA for their approval. PUBLIC CONTACT Posting of the meeting agenda serves as notice to the general public. FISCAL IMPACT None. Funds for sales, transactions and use tax reporting and audit services have been appropriated as part of the FY 2021/22 Operating Budget. RECOMMENDATION Adopt Resolution No. 69-2021, authorizing the amendment and novation agreement between Municipal Resource Consultants and MuniServices examination of sales, transactions and use tax records. Prepared by: Lani Ha Finance Director/Treasurer Reviewed by: Joseph A. Calabrigo Town Manager Attachments: A - Resolution No. 69-2021 B – 070621-06.4 ASR RESOLUTION NO. 69-2021 AUTHORIZING THE AMENDMENT AND NOVATION AGREEMENT BETWEEN MUNICIPAL RESOURCE CONSULTANTS AND MUNISERVICES, LLC FOR EXAMINATION OF SALES, TRANSACTIONS AND USE TAX RECORDS WHEREAS, pursuant to Ordinance No. 14, §5, the Town of Danville 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 the Transactions and Use Tax Ordinances and the local sales and use taxes; and WHEREAS, the Danville Town Council deems it desirable and necessary for authorized officers, employees and representatives of the Town to examine confidential sales, transactions and use tax records of the CDTFA pertaining to sales and use taxes or sales or transactions and use taxes collected by the CDTFA for the Town, pursuant to that agreement; and WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth certain requirements and conditions for the disclosure of the CDTFA’s records and Section 7056.5 of the California Revenue and Taxation Code establishes criminal penalties for the unlawful disclosure of information contained in, or derived from sales or transactions and use tax records of the CDTFA; and WHEREAS, the Town has an existing Professional Services Agreement (PSA) with Municipal Resources Consultants (MRC), a legal entity of MuniServices, to examine the Town’s sales, transactions and use tax records; and WHEREAS, the PSA prohibits MRC from performing consulting services for a retailer during the term of the contract and prohibits MRC from retaining the information contained in or derived from sales or transaction use tax records after the contract expires; and WHEREAS, it has been determined that the PSA should be in the name of MuniServices, the legal entity that owns MRC, and that the PSA can be assigned to MuniServices only with the Town’s consent; and WHEREAS, Danville Resolution No. 34-2021 submitted to CDTFA did not contain adequate verbiage in certain areas regarding limitations on access to confidential data and this resolution addresses those concerns; now, therefore, be it RESOLVED, that MuniServices is hereby substituted for MRC and is designated and authorized to examine all of the sales, transactions and use tax records of the CDTFA pertaining to all sales and use taxes collected for the Town and any transaction and use taxes collected for the Town and any future transactions and use tax ordinances that DocuSign Envelope ID: D2FB361A-FE9C-40AA-9875-9F4E15A07FA3 ATTACHMENT A PAGE 2 OF RESOLUTION NO. 69-2021 may be enacted in the Town; and, be it further RESOLVED, that by the PSA, MuniServices, LLC shall be entitled to all rights, title, and interest of MRC in and to the assigned agreement in as much as MuniServices is the substituted party to the assigned agreement as of and after the effective date; and, be it further RESOLVED that the Town of Danville and MuniServices shall be bound by the terms of the assigned agreement in every way as if MuniServices is named in the novated assigned agreement in place of MRC; and, be it further RESOLVED that the information obtained by examination of the CDTFA’s records shall be used only for purposes related to the collection of the Town’s sales, transactions and use taxes by the CDTFA pursuant to the contracts between the Town and the California Department of Tax and Fee Administration and for purposes relating to the governmental functions of the Town listed in this resolution; and, be it further RESOLVED that this resolution supersedes Resolution No. 34-2021, adopted by the Danville Town Council on July 6, 2021; and, be it further RESOLVED that this resolution supersedes all prior sales, transactions and use tax resolutions of the Town adopted pursuant to subdivision (b) of Revenue and Taxation Code Section 7056; and, be it further RESOLVED, that the Finance Director/Treasurer or other officer or employee of the Town designated in writing by the Finance Director/Treasurer to the CDTFA is the only person authorized by the Town to examine those sales, transactions and use tax records of the CDTFA for purposes related to the following governmental functions of the Town: (a) tracking and economic development; (b) forecasting and budget related functions; (c) detecting misallocations and deficiencies; and the information obtained by examination of CDTFA records shall be used only for those governmental functions of the Town listed above. DocuSign Envelope ID: D2FB361A-FE9C-40AA-9875-9F4E15A07FA3 PAGE 3 OF RESOLUTION NO. 69-2021 APPROVED by the Danville Town Council at a regular meeting on October 19, 2021, by the following vote: AYES: NOES: ABSTAINED: ABSENT: MAYOR APPROVED AS TO FORM: ATTEST: CITY ATTORNEY CITY CLERK DocuSign Envelope ID: D2FB361A-FE9C-40AA-9875-9F4E15A07FA3 ATTACHMENT B