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Home My WebLink AboutS Finance - Letter for Sales Tax ReallocationAgenda #4c ~ Letter Agreement for Sale Tax Reallocation . MEMORANDUM TO: Roger L. Stancil, Town Manager FROM: Loris R. Colclough SUBJECT: Letter Agreement for Sale Tax Reallocation DATE: September 24, 2007 PURPOSE Page 1 of 1 9/~/a ~ AGENDA #4c ~~ RECEI NOV 2 R 2007 BY: Council consideration and approval of a Letter of Agreement with Robert S. Segal, CPA for consulting services related to the examination and analysis of refunds of sales and use tax for potential reallocation to the County and the Municipalities therein. This Letter of Agreement represents a joint agreement between Orange County, the Towns of Chapel Hill, Carrboro, and Hillsborough, and Robert S. Segal. BACKGROUND AND DISCUSSION The Town of Chapel Hill has entered into a previous agreement with Orange County and the Towns of Carrboro and Hillsborough for services provided by Robert Segal, CPA (the • "consultant") for sales tax reallocation projects resulting in additional funds discovered and returned to the county as well as each municipality. Mr. Segal's firm examines and analyzes sales tax refund requests submitted by the county and the municipalities, as well as refund requests submitted by school systems, non-profit corporations and the University of North Carolina to determine accuracy. Inaccurate refund requests often impacts the local sales tax revenue received by the county and municipalities, therein. In recent years, Mr. Segal's firm has helped to recover significant amounts of revenue for the county and municipalities. An attached exhibit presents the detail distribution of the additional sales tax revenues recovered during Fiscal Years 2006 and 2007 totaling $505,538 for the county and municipalities. The amounts recorded are net of Mr. Segal's fees. The consultant's fees are based on a percentage of the revenue recovery recognized as outlined in the attached Letter of Agreement. The percentages quoted by the consultant for this engagement are less than those paid on the previous engagement. The county and each municipality pay their proportionate share of the fees. RECOMMENDATION That the Council approve the Letter of Agreement representing a joint agreement between Orange County, the Towns of Chapel Hill, Carrboro, and Hillsborough, and Robert S. Segal, CPA PA and authorizes the Town Manager to execute the document. ATTACHMENTS • 1. Sales Tax Reallocation for August 2004 to January 2007 (p. 4). 2. Sales Tax Letter of Agreement (p. 5) http://townhall.townofchapelhill.org/agendas/2007/09/24/4c/ 10/25/2007 • LETTER OF AGREEMENT Robert S. Segal, CPA, PA ("SEGAL") and Orange County, Town of Chapel Hill, Town of Hillsborough and Town of Carrboro (together referred to as "CLIENT") hereby enter into this Letter of Agreement whereby SEGAL shall serve as a consultant to CLIENT to examine and analyze the following revenue of CLIENT for the purpose of obtaining any tax refunds available in all prior years still open under the statute of limitations. North Carolina Sales/Use Tax Reallocation The Client agrees that the above listed revenue is not currently under tax refund evaluation by CLIENT and all refunds received will be eligible for full payment of fees to SEGAL at the contract rate stipulated below. SEGAL will furnish CLIENT with a wriften report as to sales/use tax refunds discovered. SEGAL will then prepare the respective refund claims to achieve the refunds. • CLIENT agrees to pay SEGAL a fee in accordance with the following FEE SCHEDULE due to Segal's amending of refund returns upon the CLIENT'S receipt of documentation from the North Carolina Department of Revenue evidencing the additional sales/use tax revenue being transferred to the CLIENT. FEE SCHEDULE A sliding scale based on the sales and use tax adjustment based on point of delivery as follows: 00.0% if no additional refunds are obtained, 15.0% for the first $200,000 of additional refunds obtained, 20.0% for the next $200,000 of additional refunds obtained, 25.0% for the next $200,000 of additional refunds obtained, 30.0% for all additional refunds obtained. CLIENT agrees that SEGAL shall invoice each entity (Orange County, Town of Chapel Hill, Town of Hillsborough and Town of Carrboro) for its pro-rata share of the fee based upon its percentage of that quarter's sales and use tax distribution from the state of North Carolina. This agreement may be terminated by any party upon 60 days written notice to all of the other parties. SEGAL AGREES TO MAINTAIN IN STRICT CONFIDENCE ALL INFORMATION RECEIVED FROM CLIENT CONCERNING ITS EXPENSES AND METHODS OF DOING BUSINESS. FURTHERMORE, SEGAL ACTS AS A CONSULTANT ONLY AND DOES NOT RECEIVE ANY COMMISSIONS OR REMUNERATION OF ANY KIND FROM ANY VENDORS OR SERVICE • PROVIDERS. ROBERT S. SEGAL, CPA PA has contracted with DIXON HUGHES PLLC to assist with this project. The persons signing below are authorized to do so on behalf of their respective organizations This Letter of Agreement shall be binding upon the parties hereto, their heirs, successors and assigns. This Lette ~t~ r~'~a+f~nt is entered into effective as of the~~ay of GT'. ,~ [SEAL ~Q~~ ~ '~~\ ~ ORANGE COUNTY w9t ATTEST: CI rk to the Board This instrument has been pre-audited In the manner required by the Local Government Budget and Fiscal Control Act. County Finance Officer [SEAL] ATTEST: ,~=' Clerk to the Board This instrument has been pre-audited In the manner required by the Local Government Budget and Fiscal Control Act. Town Finance Officer • p~~ //a OF ~0~~ Title Approve as to form: unty ne TOWN OF CHAPEL HILL Title "~ o „~ ~ th~-ti. Yn c,~ ~~ r v ~~ CH A Approved as to form: To n Attorne ~ ~~9 o ~_`' o , ~. Town ~ G 1JJS ~ ~ ,~, ~ALJ , A ` ~~ ~~~ii~ns~~~~ ATTEST: Jerk to the Board This instrument has been pre-audited In the manner required by the Local Government Budget and Fiscal Control Act. ~l^ - !~ Town F.,i~l O ~~ O O [S~AL~ '~ 911 • •' • A , T!~~uHaCAR~~a~~ Clerk to the Board This instrument has been pre-audited In the manner required by the Local Government Budget and Fiscal Control Act. ~ ~~b G~ , P~ ~ ~ Town Finar~~e Officer [SEAL] ATTEST: r# ~ orporation Se retary TOWN OF HIL BOROUGH ~'~ ~`~ 1// r, Name, Title Approved as to form: Town Attorney TOWN OF CARRBORO Name, Title :J Approved as to form: ,, ~~~~~ Town Attorney ROBERT S. SEGAL, CPA PA Robert S. Segal, esident