HomeMy WebLinkAboutAgenda - 09-06-2007-4iORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 6, 2007
Action Agenda
Item No.
SUBJECT: Letter of Agreement for Sales Tax Reallocation
DEPARTMENT: Finance PUBLIC HEARING: (Y/N) No
ATTACHMENT(S):
Letter of Agreement
Revenue Spreadsheet
INFORMATION CONTACT:
Ken Chavious, 245-2450
PURPOSE: To consider approving 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.
BACKGROUND: The County has worked with Robert Segal, CPA over the past several. years
on 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 the school systems, non-profit corporations and the University to determine accuracy.
Inaccurate refund requests often impact the sales tax revenue received by the County and
municipalities. Over the years, Mr. Segal's firm has helped to recover significant amounts of
revenue for the County and municipalities. The most recent sales tax reallocation project
yielded a total of $505,538 in additional revenue for the County and Municipalities. Attached is
a spreadsheet that provides the detail of the revenues recovered. The amounts recorded are
net of Mr. Segal's fees.
The consultant's fees are based on a percentage of the revenue recovery recognized and are
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. As indicated previously,
each municipality also receives a portion of any additional revenue resulting from the
consultants work and they also pay their proportionate share of the associated fees. Each
municipality is listed as a party to the agreement. Discussions of the agreement have occurred
between the County Manager and the Managers of each of the municipalities with favorable
outcomes.
FINANCIAL IMPACT: As mentioned above, the fees associated with the agreement are based
upon funds identified and returned to the County. Other costs include a minimal amount of staff
time involved with providing information to the Consultant.
RECOMMENDATION(S): The Manager recommends that the Board approve the Letter of
Agreement with Robert S. Segal, CPA and authorize the Chair to sign.
a
ROBERT S. SEGAL CPA PA
EXPENSE REDUCTION & REVENUE ENHANCEMENT 1912 EASTCHESTER DRIVE
SUITE 2
HIGH POINT, NC 27265
336-886-2100
FAX 336-886-2101
www.segalepa.com
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 written 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:
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 and
Town of Hillsborough) 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.
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.
3
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 Letter of Agreement is entered into effective as of the day of ,
ORANGE COUNTY
[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.
Name, Title
Approved as to form:
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
County Attorney
TOWN OF CHAPEL HILL
Name, Title
Approved as to form:
Town Attorney
[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
[SEAL]
ATTEST:
Clerk to the Board
TOWN OF HILLSBOROUGH
Name, Title
Approved as to form:
Town Attorney
TOWN OF CARRBORO
Name, Title
This instrument has been pre-audited
In the manner required by the Local
Government Budget and Fiscal
Control Act. . Approved as to form:
Town Finance Officer Town Attorney
[SEAL]
ATTEST:
496 C_
C rporation Se r" etary
ROBERT S. SEGAL, CPA PA
x&dx_r'x
Robert S. Segal, side t
Robert S. Segal, CPA PA
Client: Orange County
Services: Sales Tax Reallocation
• This is the net amount of the benefit (amount of the sales tax adjustment minus the fee).
Invoice date» 8/23/2004 1/17/2005 2/21/2005 10/24/2005 2/27/2006 3/27/2006 8/17/2006 1/19/2007 Total
Orange County 8,027.57 15,103.74 8,933.45 19,686.11 117,567.87 132,276.08 1,074.27 10,980.46 313,649.55
Carrboro 1,170.49 2,197.20 1,299.58 2,872.07 17,152.38 19,298.21 156.73 1,658.26 45,804.93
Chapel Hill 3,261.48 6,177.14 3,653.61 8,126.53 48,532.65 54,604.27 443.46 4,524.10 129,323.25
Durham 2.95 5.50 3.25 7.16 42.76 48.11 0.39 4.23 114.36
Hillsborough 371.06 692.33 409.50 922.91 5,511.74 6,201.28 50.36 554.64 14,713.82
Mebane 47.73 92.34 54.61 121.41 725.05 815.76 6.63 68.77 1,932.29
Net benefit 12,881.28 24,268.25 14,354.00 31,736.20 189,532.45 213,243.71 1,731.84 17,790.46 505,538.20