Loading...
HomeMy WebLinkAbout15 BRADLEY-BURNS 09-05-95 NO. 15 9-5-95 I n t e r- C o m ..,,JE: AUGUST 29, 1995 TO: WILLI/~M ~ ~USTON, CITY MANAGER FROM' RONALD A.~~~FiNANCE~O/~ / DIRECTOR SUBJECT: BRADLEY-BURNS BILL OF RIGHTS RECOMMENDATION: Adopt Resolution No. 95-79 supporting the adoption of the Bradley- Burns Bill of Rights by the State Board of Equalization (SBE). FISCAL IMPACT: Unknown at this time. May have impact on future allocations of Sales Tax if disputes with the SBE can not be satisfactorily resolved. DISCUSSION: The City of Tustin has contracted with Municipal Resource Consultants (MRC) for several years to conduct audits of our Sales Tax Collections. While they have been very successful in correcting errors that benefit the City there are many occasions when they are stymied by the bureaucracy of the SBE and reporting errors do not get corrected resulting in on going loss of revenue to the city. There is not a formal policy in place to settle disputes between SBE staff and City's or their representatives.' Our consultants have developed the Bradley-Burns Bill of Rights and are asking their clients to support it's implementation. The proposed Bill of Rights would provide for: · An administrative appeals process · Timely notification of taxpayer actions that impact city Revenues · Conflict resolution between State Codes and SBE Regulations and/or Staff policies The single largest source of Revenue to the City of Tustin is Sales Tax. It is in the best interest of the city to capture all the 1 2 3 5 6 ? 8 9 10 11 12 13 15 16 17 18 19 20 21 23 25 26 27 28 RESOLUTION NO. 95-79 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN DECLARING THE NEED FOR AND SUPPORT OF THE BRADLEY-BURNS BILL OF RIGHTS WHEREAS, the Bradley-Burns Uniform Local Sales and Use Tax Law provides for administration of local sales and use tax by the Board of Equalization pursuant to a statewide contract; and WHEREAS, sales and use tax has become the primary source of local government general revenue for most of California's cities and is a major s'ource of revenue for California's counties; and WHEREAS, cities and counties contract with and pay a significant fee to the Board of Equalization for administration of their sales and use tax; and WHEREAS, disputes arise regularly between Board of Equalization staff and the contracting local jurisdictions over the proper, consistent and responsive administration of the City's and County's local sales and use tax; and WHEREAS, these disputes, which often go unresolved, may involve either simple factual disagreements or administrative policies applied by Board of Equalization staff without statutory, regulatory, contractual or Board Member support; and WHEREAS, there are no established procedures whereby a contracting local jurisdiction can seek to resolve such disputes; and WHEREAS, the establishment of clear and specific rights of contracting local jurisdictions and a formal dispute resolution process will help to promote fair, equitable and responsive administration of local sales and use tax by Board of Equalization stall. NOW, THEREFORE, the City Council of the City of Tustin does hereby resolve as follows: i · That the BRADLEY-BURNS BILL OF RIGHTS is a necessary set of tenets which should be recognized by the Board of Equalization and the State of California; and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 26 27 28 Page 2 Bradley-Burns · That the Board of Equalization should adopt the appropriate resolutions or regulations to enact the provisions of the BRADLE¥-BUP. NS BILL OF RIGHTS. PASSED, APPROVED kND ADOPTED at a regular meeting of the City of Tustin, California, held on the 5th day of September, 1995. ATTEST: Jim Potts, Mayor Valerie Crabill, Chief Deputy City Clerk a: reso95.79 BACKGROUND ON THE BRADLEY-BURNS CONTRACT BETWEEN THE BOE AND ITS CLIENT CITIES AND COUNTIES In response to client requests for fair, consistent and responsive administration of their local sales and use tax by the Board of Equalization (BOE), MRC has prepared the attached statement of principles for the BRADLEY-BURNS BILL OF RIGHTS. We remain optimistic that administrative remedies are possible for the current list of unresolved issues concerning local jurisdictions' Bradley-Burns Contract with the BOE, and that legislative changes will not be required. This memo provides summary background on Bradley-Bums, along with examples of issues that are creating recurring, unresolved disputes between local.contracting jurisdictions and the BOE. BRADLEY-BURNS CONTRACT Prior to contracting with the BOE, California cities levied and collected local sales and use taxes imposed through ordinances they administered as part of their general tax levying authority. These ordinances were not uniform with respect to tax rates and exemptions. In 1955, the Bradley-Burns Uniform Local Sales and Use Tax Law was adopted, which extended to counties the authority to impose uniform local sales and use tax and permit-ted cities and counties to contract with the BOE for the collection, distribution and general administration of the tax. By 1967, each city and county in the state had elected to enter into the AGREEMENT FOR STATE ADMZNIS~TION OF LOCAL SALES AND USE TAXES (the "Contract") for the BOE to administer their local tax. CONTRACT LACKS ADMINISTRATIVE APPEALS PROCESS The BOE charges its chent cities and counties a substantial fee ($34.9 million for 1993-94) to administer their local sales and use tax under the Contract. However, BOE staff and the contracting local jurisdictions frequently disagree on the services to be performed under the Contract. Unlike the other major taxes administered by the BOE, its Bradley- Burns regulations do not provide for an administrative appeals process to clarify service performance standards and facilitate resolution of disputes and other issues of concern. The failure to provide the BOE's chent cities and counties with a fair dispute resolution process, thoUgh more likely the result~ of oversight rather than conscious design, is now having a serious adverse impaCt on many local jurisdictions. Examples of disputes that arise between BOE staff and contracting jurisdictions over the proper, consistent and responsive administration of their local sales and use tax include the following: Lack of timely and specific notice to affected jurisdictions of taxpayer actions involving significant refunds of local sales and use tax (i.e., the ~ case refunds); Denial of access to local sales and use tax records on file with the BOE pertaining to businesses located within the requesting jurisdiction; Refusal of BOE staff to issue a permit to established places of business so the taxpayer can report local sales and use tax to the entitled local jurisdiction; and Creation and enforcement of informal and unpublished administrative staff policies that are used to override existing statutes and formal BOE regulations. BRADLEY-BURNS BILL OF RIGHTS The BRADLEY-BURNS BILL OF RIGHTS is designed to establish the clear and specific rights of contracting local jurisdictions ~and a formal dispute resolution process to promote fair, consistent and responsive administration of their local sales and use tax by BOE staff. A~achment BRADLEY-BURNS BILL OF RIGHTS Statement of Principles August 21, 1995 To promote fair, equitable and responsive administration of the Agreement for State Administration of Local Sales and Use Taxes (the "Contract"), the Board of Equalization (BOE) should establish an appeals process to facilitate resolution of disputes and other issues between the BOE and its client cities, counties and districts. Each local jurisdiction contracting with the BOE has the right to depend on BOE staff to provide informative and responsive services to help jurisdictions understand the local sales and use tax laws administered by the BOE. Jurisdictions have the right to receive and the BOE has an obligation to provide open, uniform and consistent administration of the local sales and use tax in order that local jurisdictions may perform competent audit oversight and accountability of those revenues on their own behalf. The Bradley-Burns Bill of Rights is designed to establish the clear and specific rights of contracting local jurisdictions and a formal dispute resolution process to promote fair, consistent and responsive administration of their local sales and use tax by BOE staff. The Bradley-Bums Bill of Rights includes the following principles: NOTIFICATION Jurisdictions have the right to receive notice of any proposed regulatory action by the BOE a minimum of 45 days before the BOE considers the action. RECORDS Any duly authorized officer, employee, or other person designated by resolution of the legislative body of a jurisdiction contracting with the BOE has the right to examine all of the sales, transactions, or use tax, situs and pool data records of the BOE pertaining to businesses located in the requesting jurisdiction, as permitted under existing law. UNIFORM LAW OVERSIGHT AND ACCOUNTABILITY Jurisdictions have the right for the law to be administered in a uniform manner. Y~rRI~N INFORMATION Jurisdictions have the right to rely on the BOE's written information and answers to inquiries. Jurisdictions have the right to prompt and accurate responses from the B©E or its staff. When writing to the BOE with a question or notifying the BOE in writing of a local tax distribution error, jurisdictions have the right to a written response and resolution within 90 days. DISTRIBUTIONS Jurisdictions have the right to rely on' the BOE to use its best efforts to ensure that local tax collected is distributed directly to jurisdictions and to distribute or charge such local tax to all conforming taxing jurisdictions, statewide or countywide, only when direct distribution is impractical in accordance with the Contract. To facilitate the distribution of sales and use tax in accordance with local ordinances and BOE regulations, BOE staff shall issue sales and use tax permits at the request of a local jurisdiction to any business located within that jurisdiction which may incur a sales or use tax liability. APPEALS Jurisdictions have the right to appeal findings of BOE staff. If a jurisdiction disagrees with the findings or determinations of a BOE department, that jurisdiction may: File an appeal with the BOE; the appeal will be assigned to a BOE staff attorney who is independent of the department from which the appealed action originated, within 30 days of filing the appeal; Request and be granted an informal hearing or conference with the BOE staff attorney or Other hearing officer assigned to the case and the auditor and department supervisor from which the appeal originated, within 60 days of the request; and Receive a written disposition of the appeal (issued by the BOE staff attorney or other hearing officer), which need not include findings of fact or conclusions of law, within 45 days of the informal hearing. BOARD HEARINGS If a jurisdiction disagrees with the disposition of the BOE staff attorney or the hearing officer, the jurisdiction may file an appeal with the elected Board Members within 90 days from the date of issuance of such disposition. Jurisdictions' have the right to: Waive a hearing before the Board Members in which case the Board Members may decide the case based solely on the record established in the informal hearing or conference; or A hearing before the Board Members to present the case for the appeal, within 120 days of the date of the appeal; hearings will' be held at one of the Board's regular meeting sites and, when practical, will be held at a meeting site near the appealing jurisdiction; jurisdictions will be notified of the hearing date and location a minimum of 45 days before the hearing.