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4311
MICROFLEX
Audits - Utility Tax Compliance
Admin Svcs
LEG 12-1
10/10/2002
12/31/2007
02/15/2009
01/01/2009
Microflex
2201 SW 152nd St
Bu~fen, WA 98166
206-248-2650 Fax243-6164
Octobor 3, 2002
Paula Johnston
City of Bremerton
239 Fourth St
Bremerton, WA 98337
Dear Panla,
Microflex is pleased to propose utility tax auditing services for the City of Bremerton. The following is our
suggested approach to conducting such an audit:
Audit Scooe and Oeneral Approach
We propose to conduct utility tax compliance audits for any utility tax payers the City desires to audit.
Specifically, we will:
· Prepare an audit notice letter to request the audit. The audit notice letter will request customer
information from the utility company.
· Process the customer information received fa'om the utility company and determine if the accounts
in Bremerton are being properly taxed. We will calculate an error rate based on mislocated
· Prepare a preliminary audit finding letter and assessment if appropriate.
· Work with the utility company to obtain their concurrence with the mislooated accounts we find
and provide them with a correction file if appropriate.
· Prepare a final assessment letter and follow through with the utility company until the assessment
is paid.
Data we need from the City
We need to get the following information from the City:
1. For each utility compliance audit we do, we will need the date and mount of each monthly receipt
for the current year and five previous years.
2. A current detailed city map of sufficient size to clearly show city boundaries.
3. Copies of the appropriate utility tax ordinances.
Audit Costs
The City may choose either of the following fee structures;
Tax Audit Proposal to the Cit~ o£Bremerton Page ?
1. 20% ofall back tax and fi-anchise fee assessments reeeived by the City. Ifnoaddifioanltaxor ~'o~q. JL~
franchise fees are due, there would be no fee to the City.
2. A fiat fee of $7,500 due when the final assessment, if any, is determined.
Audit Termination
The audit can be terminated with 30 days advance written notice by either party. In the case of
termination, Microflex will proceed to complete any individual compliance audits for which audit data has
been received and will be compensated as described above but no new audits will be started and audits for
which no audit data has been received fxom the company will be cancelled.
Experience of Firm and Assigned Personnel
Microflex is the developer of the TaxTools software system which currently processes sales tax data for
over 60 cites and counties in the State of Washington. Additionally, Microflex has been retained to
conduct tax discovery and compliance audits for over 40 cities in Washington. This audit will be managed
by Michael J. Mulcahy who is the president of Microflex Inc. As a former data processing professional
and city finance director, Mr. Mulcahy is uniquely qualified to conduct this audit. Mr. Mulcahy has
developed special data processing techniques which will locate as many potential missing taxes as possible.
He is familiar with the issues in administering tax and heense systems and interpreting business tax
ordinances and is sensitive to what the City's role should be.
Indemnification of City
Microflex agrees to save and hold harnfless the City of Bremerton, its officers, agents and employees from
and against any and all liabilities, costs, damages, lawsuits, including the cost of all reasonable attorney
fees, arising out of the negligent performance of Microflex's responsibilities pursuant to this agreement.
If you would like us to proceed, you may simplify the contracting process by signing below and returning a
cepy to ns as authorization to proceed. Meanwhile, please call me at 206-248-2650 xl 1 if you have any
questions regarding our proposal.
Respectfully submitted, Proposal accepted by:
Mieroflex, Inc. City of Bremerton
President ' ' '
Date
Attac~ts (3)
Microflex Baek~round
TaxTools User List
Audit Chent List