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HomeMy WebLinkAboutPR 17494: AMENDING TERMS OF CONTRACT WITH MUNISERVICES, LLP FOR LOCAL HOTEL OCCUPANCY TAX AND HOSPITALITY CONSULTING PROGRAM SERVICES City of Port Arthur Memorandum To: Floyd T. Johnson, City Manager From: Deborah Echols, Director of Finance ,6? Date: January 11, 2013 Re: PR 17494 I recommend that the City Council adopt Proposed Resolution 17494 amending the terms of a contract with MuniServices, LLC for local Hotel Occupancy Tax and Hospitality Consulting Program Services replacing the agreement with Consultants Local Occupancy Tax Program Audit and Administration Services. The previous, $11,400, contract was for auditing, only. This contract provides for auditing of our Local Hotels /Motels for compliance as well as administering the Hotel /Motel Tax collections. The costs of this consulting contract are not to exceed $10,000. S:\ Finance\ Resolutions\Muniservices Cotnract 2.docx P.R. 17494 1/11/13 ASK RESOLUTION NO. A RESOLUTION AMENDING THE TERMS OF A CONTRACT WITH MUNISERVICES, LLP FOR LOCAL HOTEL OCCUPANCY TAX AND HOSPITALITY CONSULTING PROGRAM SERVICES REPLACING THE AGREEMENT WITH CONSULTANTS LOCAL OCCUPANCY TAX PROGRAM AUDIT AND ADMINISTRATION SERVICES NOT TO EXCEED $10,000. ACCOUNT NO. 140 - 1405 - 551.59 -00; M1004 WHEREAS, pursuant to Resolution No. 09 -549, the City has a contract with MuniServices, LLC for Local Hotel Occupancy Tax auditing services; and WHEREAS, it is necessary to amend the terms of said contract to include administration services, to make the contract annual and to lower the fees. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: THAT the City Manager of the City of Port Arthur is hereby authorized and directed to execute on behalf of the City of Port Arthur a consulting contract between the City and MuniServices, LLC for Local Hotel Occupancy Tax Consulting Program audit and Administration services to assist the city in realizing all of the lodging tax revenue to which it is entitled; and THAT a copy of said contract is attached hereto and made a part hereof as Exhibit "A "; and, THAT a copy of the caption of this resolution be spread upon the Minutes of the City Council. READ, ADOPTED, AND APPROVED, this day of January, 2013, A.D., at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: Mayor: Council members: NOES: S:\ Finance\Resolutions\Muniservices Cotnract 2.docx ATTEST: Sherri Bellard, City Secretary APPROVED AS TO FORM: e 1 Valecia Tizeno, City ( torney APPROVED FOR ADMINISTRATION: Floyd T. Johnson, City Manager APPROVED AS TO AVAILABILITY OF FUNDS: De orah Echols, Director of Finance S:\ Finance \Resolutions\Muniservices Cotnract 2.docx Exhibit "A" S:\ Finance \Resolutions\vluniservices Cotnract 2.docx III Amendment to Consultant Services Agreement This Amendment No. 1 is made as of , 2012, by and between MuniServices, LLC, a Delaware limited liability company ( "MuniServices ") and the City of Port Arthur, a municipal corporation of the State of Texas ( "City") (collectively, the "Parties "). RECITALS • On or about April 12, 2010 the City and MuniServices entered into an agreement for Local Hotel Occupancy Tax and Hospitality Consulting Program Services (the "Agreement"). • City now desires to replace the Agreement with Consultants Local Occupancy Tax Program Audit and Administration Services. The Parties therefore agree as follows: 1. Delete Agreement. Delete the above - referenced Agreement in its entirety and replace it with the attached Consultant Services Agreement for Local Occupancy Tax Program Audit and Administration Services. The parties are signing this Amendment on the date stated in the introductory clause. MuniServices, LLC City of Port Arthur, a municipal corporation By: By: Marc Herman, President (signature) (print name /title) MuniServices, LLC Consultant Services Agreement 1. Us. We are MuniServices, LLC, a Delaware limited City of Port Arthur liability company, and a wholly owned Attn: Deborah Echols, Finance Director subsidiary of Portfolio Recovery Associates, 444 4th Street Inc.; with an office at 7335 N. Palm Bluffs Port Arthur, TX 77640 Avenue, Fresno, California 93711. In this Email: deborah.echols(portarthur.net Agreement we are referred to as Facsimile: 409.984.5463 "MuniServices" or "we ", "our ", "us. We use our sister company, RDS, to assist us with work. 3. Our Services and your payment. Sometimes we will refer to you and us as the We will provide you with the services listed in "Parties." Attachment 1 (the "Services "). You will pay us the fees listed in that same Attachment. If we If you need to contact us a short list of helpful are providing more than one Service, each contacts is attached as Attachment 3. service will have a separate attachment and will be labeled Attachment 1- 1,1 -2, etc. If you are sending us a notice required by this Agreement, send it to: 4. What our Services do not include. We do not provide to you or any third - parties MuniServices, LLC any legal advice or services. We also do not Attn: Legal Department provide tax advice to you or third parties. Also 7625 N. Palm Avenue, Suite 108 we cannot and therefore do not establish: the Fresno, CA 93711 tax rates due from taxpayers; and the Email: legak muniservices.com penalties and fees that are assessed against Facsimile: 559.312.2957 taxpayers (though we will calculate these amounts for you as part of the Services once When providing notice to us, you must also you have established the rates). We also do provide a copy of the notice to: PRA General not determine either the amount of refunds or Counsel, 120 Corporate Blvd., Suite 100, the proper government account(s) that Norfolk, VA 23502. All notices, including taxpayer receipts shall be deposited into. notices of address changes, provided under this Agreement are deemed received on the 5. Term of this Agreement. third day after mailing if sent by regular mail, The initial term of this Agreement begins on or the next day if sent overnight delivery. We , 2012 (the "Effective do not accept notices by email or facsimile. Date ") and continues for a period of one year Notice of rate changes or distribution changes from the Effective Date. Thereafter the City must be sent by certified mail. will have the option to renew the Agreement for successive one year terms (each a 2. You. "Renewal Term "). There are some other ways You are the City of Port Arthur. You are a this Agreement can end and those are found in municipal corporation of the State of Texas. In Article I of the General Provisions, Attachment this Agreement we will refer to you as "you ", 2. "your ", "yours ". If we are sending you a notice required by this Agreement, we will send it to: Port Arthur, TX - HOT Audit & Admin rev 112012 1 MUNISERVICES 6. General Provisions. The parties are also bound by the General Provisions as set forth in Attachment 2 of this Agreement, which are by this reference incorporated into this Agreement. If something in this Agreement contradicts the General Provisions, then what is said in this Agreement governs rather than the General Provisions The Parties are signing this Agreement on the Effective Date indicated in Section 5 above. MuniServices, LLC City of Port Arthur, a Municipal Corporation By 0-1.- 4 ..--- By: Marc Herman Title: President Title: ATTEST: By: Jt — - - P Jensen City Clerk Title: " P Client Services Port Arthur, TX - HOT Audit & Admin 112012 QMUNISERVICES I TML ATTACHMENT 1 .TML Local Occupancy Tax Program Business p tz „ TEXAS MUNICIPAL LEAGUE Audit and Administration Services Article 1- Objectives and Methods MuniServices' Local Occupancy Tax Program Audit service is intended to assist the City in maximizing lodging tax revenue it is entitled to through an on -site examination of records and education of the lodging providers to ensure the appropriate collection and remittance of the lodging tax. The Administration service offers a turnkey approach to ensure appropriate collection, deposit, recording, delinquency follow up and reporting of the local lodging tax. This service includes all correspondence, forms and other such services to ensure appropriate and timely remittance of the tax. Article 2 -Scope of Work 1. Field Audit Services a. Perform on -site examinations of the records of those providers requested by City to warrant further investigation; b. Provide City staff with a detailed list of all records required to be made available by lodging providers for the further reviews, together with a draft engagement announcement letter to be sent to each lodging provider requiring examination; c. In coordination with City staff, schedule and conduct reviews at the property locations of those providers identified and authorized for examination; d. Verify accuracy of filed lodging tax returns with daily and monthly activity summaries; e. Review a random sample of the daily and monthly summaries to determine if the daily summaries reconcile to the monthly summaries; f. Review bank statements to verify that deposits reconcile with the reported revenue on the lodging tax returns'; g. Review exempted revenue for proper qualifying documentation; h. Review a random sample of exempted guest revenue and trace registration and /or other source documents to verify compliance with the City ordinance; i. Where possible, compare the State lodging tax filings with City's tax returns; j. For each error /omission identified and confirmed, submit substantiating documentation to designated City staff in order to facilitate collection of revenue due from lodging providers for prior periods; k. Coordinate with designated City official(s) as necessary to review findings and recommendations; 1. Prepare draft Notices of Deficiency Determination, and commendation, warning and credit letters, as applicable, for City to advise lodging providers of examination results Port Arthur, TX - HOT Audit & Admin 112012 © MUNISERVICES .Myw.M wfw6wy dNMa. R.ca.4.xaw._ I.e m. Provide assistance to City in reviewing any matters submitted in extenuation and mitigation by lodging providers in contesting a deficiency determination; and n. Prepare and document any changes to the review findings and provide revised tax, interest or penalty amounts due the City. 2. Administration Services A. Remittance Processing 1. Taxes Processed: MuniServices will perform remittance processing for lodging taxes as designated by the City. 2. Taxpayer Notification and Remittance: MuniServices will send individualized tax forms to all known lodging providers ( "Taxpayer(s) "). Taxpayers will remit payments as indicated in Exhibit A, Distribution Confirmation, attached and incorporated herein by reference. Upon reasonable notice to City, MuniServices may change the address for payments. Optional Online File and Pay - For an additional set up fee, online filing and remittance using standard MuniServices formatting will be provided for the Taxpayers convenience. 3. Deposit Process: Deposits are made to the extent that funds have been received, via Automated Clearing House of the amounts and to the designated recipients as instructed by the City for each type of tax collected, as shown in more detail on Exhibit A 4. Posting Process: Taxpayer accounts are posted with payment information captured in the MuniServices revenue system. Additional information such as net sales, deductions, credit sales, measure of tax, name change and address change is captured and added to the payment data and taxpayer master file (as determined necessary by MuniServices). Late payments (postmarked by U.S. Postal Service after the due date) are invoiced at penalty amounts required by State code. Under - payments are invoiced for remaining tax due plus any required penalties. 5. Changes to Exhibit A: The City shall notify MuniServices in writing immediately of all changes in amounts to be deposited into the accounts of designated recipients. An amended Exhibit A shall be prepared and executed by the Parties as soon as reasonably possible. In addition, MuniServices shall provide documentation confirming each change under the preceding sentence with the first monthly report reflecting the applicable change. If the changes reflected in the monthly report do not properly reflect the intended changes of the City, then the City shall immediately notify MuniServices and, thereafter, MuniServices shall take the steps necessary to insure that designated recipients receive the amounts intended by the City. B. Compliance Services 1. Taxes Reviewed: MuniServices will perform compliance services for lodgings taxes designated by City under Remittance Processing Services. MuniServices will provide delinquency notification and follow -up. This includes correspondence, calls, and collection procedures and the related documentation. Delinquency policies and procedures will be applied consistently and within applicable tax laws. Unless otherwise directed by the City, MuniServices will make reasonable efforts to collect taxes designated by the City hereunder. Where deemed reasonably appropriate accounts may be turned over to audit or third party collection. If the City elects to have its attorney pursue collection of certain uncollected accounts, MuniServices will assist the City attorney as reasonably requested at its normal hourly rate as reflected herein. Port Arthur, TX -HOT Audit & Admin 112012 © MUNISERVICES - M1dv -.d wl..£ dMdio R.m..ry N..w. .e i 2. Conduct of Compliance Services: To assure that all taxpayers are treated fairly and consistently and all compliance services are performed in a similar manner, MuniServices representatives who perform compliance services will use a similar compliance plan for each compliance service conducted. All funds due from compliance services will be remitted to City in the same manner as provided for pursuant to Section B, above. C. General Provisions 1. Information Provided: The City represents that the information provided to MuniServices in theperformance of services hereunder shall be provided free and clear of the claims of third parties. The City represents that it has the right to provide this information to MuniServices and that said information shall not be defamatory or otherwise expose MuniServices to liability to third parties. 2. Compliance with laws: Each Party accepts responsibility for its compliance with federal, state, or local laws and regulations. 3. Taxpayer service: MuniServices will provide a taxpayer assistance number for taxpayer questions. MuniServices will provide standard informational brochures for placement in the City offices, Chamber of Commerce offices, libraries and any other facilities as requested and /or deemed necessary. 3. Mandatory Reporting to the State of Texas - Required Compliance The Bill requires that, if, as a result of an audit conducted, a City obtains documentation or other information showing a failure to collect or pay local and state occupancy taxes when due, the City shall notify and submit the relevant information to the Texas Comptroller. The City will receive a 20% finder's fee from the State of Texas upon receipt of payment from the lodging provider. During MuniServices meetings with the Texas Comptroller regarding HB 2048 and it's administration„ the report submitted to the State must have these additional specifications, but is not limited to: a. Summary of all hotels with local and state deficiencies discovered during our audit. b. Detailed Audit Support for findings over $2,000 (qualifying audits) due to the state. c. Audit report should include audit period. d. Separate documentation that breaks down the findings in each area by month. e. Separate documentation that itemizes the state only exemption details. f. Audit Communication executed by the hotel. g. Audit Report based on State Auditing Procedures. Article 3 Deliverables 1. Field Audit Services a. Provide City staff with a draft Audit Announcement Letter to be sent to each lodging provider to be examined. b. For each error /omission identified and confirmed, submit a written report substantiating documentation to designated City staff in order to facilitate collection of revenue due from lodging providers for prior Port Arthur, TX - HOT Audit & Admin 112012 ©MUNISERVICES periods together with draft Notices of Deficiency Determination, and /or credit, warning or commendation letters as applicable; c. Prepare and document any changes to the review findings and provide revised tax, interest or penalty amounts due the City. d. Review any extenuation or mitigation proffered to deficiency determinations and prepare draft response to City staff; and e. Provide other collections advice upon request. 2. Adminstration Services a. MuniServices will make available to City detailed online reporting, including detailed payment listing, daily /weekly /monthly reconciliation reports, etc. MuniServices will provide the City with monthly reports including, but not limited to, payment listings showing all taxes received related to net receipts reported, a general ledger distribution that corresponds to the City's account numbers and all fees paid to MuniServices. These reports will be provided by the 10th of the month following the tax month; The City AGREES TO EXAMINE THIS REPORT IMMEDIATELY. IF NO ERROR IS REPORTED BY THE City TO MuniServices WITHIN 60 DAYS, THE STATEMENT WILL BE DEEMED ACCURATE; All items credited will be subject to receipt of payment. 3. Mandatory Reporting to the State of Texas Should the City authorize MuniServices to provide the additional services as required, MuniServices shall: a. Provide a complete report, with supporting documentation, to the Texas State Comptroller (and the City) based on the requirements outline in HB 2048 for each applicable local audit performed on behalf of the City. The report will be provided to the Comptroller within 30 days of the completion of the audit and will include all substantiation of the issues and findings reported. b. Provide a monthly status to the City that tracks the submissions to the Comptroller's Office. This tracking tool's purpose is to provide the City with necessary information to ensure proper administration and follow up for the 20% finder's fee. c. Act as the City's advocate and representative in all communications with the Texas State Comptroller in regards to the local hotel occupancy tax audit sharing program, including Notifying the Comptroller's office if they should expect disputes or protest of an audit. Should the City elect to have MuniServices provide the services necessary to comply with HB 2048, the City will be required to provide a Letter of Authorization to the State Comptroller's Office designating MuniServices as an authorized agent of the City for the purposes of administration of this local hotel occupancy tax audit sharing program. Port Arthur, TX - HOT Audit & Admin 112012 ® MUNISERVICES �df'•'^d..bd�ydMbr e....y N.anw. w Article 4- Compensation Audit The Audit Services shall be provided for a fixed fee of one thousand five- hundred ($1,500) for each lodging property audited with 50% due at the time of audit approval and 50% upon completion of the audit. Administration The Administration Services shall be provided for a one -time set up fee of one thousand dollars ($1,000), plus an annual fixed fee of two hundred dollars ($200) per each lodging property. Discount If the City permits on -site examination of the records of ten percent (10 %) of the City's standard lodging properties per year to insure compliance in collecting and returning the local hotel occupancy tax, MuniServices shall discount the Administration services to an annual fixed fee of one hundred dollars ($100) per each lodging property. Optional Online File and Pay By initialing in the space provided here, the City indicates it is selecting the optional online file and pay and authorizing MuniServices to bill the City for the one -time set up fee of $1,500 which will be invoiced upon execution of this Agreement. Mandatory Reporting to the State of Texas Should the City authorize MuniServices to provide the additional services (Mandatory Reporting to the State), the City agrees to pay MuniServices as follows: a. Cost per Audit: A flat fee of $400.00 per qualifying audit will be charged for each audit submitted to the State Comptroller under the program and includes all the services outlined in the above "Proposal for Additional Services" section. b. The $400 flat fee will be billed on a monthly basis for each report submitted to the Comptroller during that month. c. If, in order for the state to collect on an audit and /or the city to receive their finder's fee, additional or non- standard work is required outside of the above listed services, MuniServices will bill the City an hourly rate plus additional expenses incurred. Examples of additional or non - standard work includes, but is not limited to, additional field visits after an audit has been submitted as final, , testifying at hearings or court proceedings to support the work performed by our auditors, and any other activities requested by either the City or the Comptroller in regards to collection on an audit, etc. d. Any work required outside of $400 flat fee will only be performed with prior written approval from the City. The hourly services will be billed at the rate of $100 per hour, plus actual expenses. These additional hours will be invoiced at the time the case is resolved to the Comptroller's satisfaction. Travel and Out -of- Pocket Reasonable travel and other out -of- pocket expenses associated with the performance of field audits will not exceed $150 per audited property without the prior written approval of the City. Such reimbursement shall be billed annually. Additional Consulting City may request that MuniServices provide additional consulting services at any time during the term of this Agreement. 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, standard hourly rates range from $75 per hour to $300 per hour. Port Arthur, TX -HOT Audit & Admin 112012 JMUNISERVICES