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ORIGINAL
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Dept: City Clerk
Date: January 25, 2005
Subject:
Appeal hearing regarding the results of
a transient lodging tax audit for the Astro
Motel.
From: Rachel Clark, City Clerk
MICC Meeting Date:February 22, 2005
Synopsis of Previous Council Action:
April 19, 2004 - The Mayor and Common Council upheld the findings of the City Clerk
relating to TL T audits of the Sahara Motel and EI Patio Motel.
July 21,2003 - Resolution No. 2003-204 authorizing Progressive Solutions to perform
Transient Lodging Tax audits~
Recommended Motion:
That the hearing be closed; and that the Mayor and Common Council uphold the decision of the
City Clerk and adopt her letter of December 7, 2004, as Its findings and conclusions, based upon
the back-up Information submitted and any additional evidence presented at the hearing; or
That the hearing be closed; and that the Mayor and Common Council uphold the appeal of the
applicant and reverse the decision of the City Clerk; or
That the hearing be closed; and that the Mayor and Common Council uphold the appeal of the
applicant In part and direct the City Attorney's Office to are findings and conclusions
consistent with Its decision. h. ~
Signature
Contact person: r.lfldy Rlle~htAr
Business Reg. Supervisor
Supporting data attached: Yes
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Ward:
FUNDING REQUIREMENTS: Amount:
Source: (Acct. No.)
(A,..,..t Description)
Finance:
Council Notes:
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
SUBJECT:
Appeal hearing regarding the results of a transient lodging tax audit for the Astro Motel
located at 111 S. "E" Street.
BACKGROUND:
A transient lodging tax audit for the Astro Motel was conducted by Progressive Solutions
on October 31,2003. The audit was performed in accordance with GAAP (Generally
Accepted Accounting Principles) which utilize a statistical sampling to arrive at an Audit
Opinion. The review of the hotel's records covered the time period of April 1, 2000 to
December 31, 2002. A detailed review was performed of the transactions recorded for
the month of August 2002. The review included the following:
· Testing, by random selection, the daily summaries which include the date, room
number, registration number, and the name of each guest in-house, for completeness
and accuracy.
· Testing, by random selection, the monthly summary, which includes daily room
revenue, tax and exempt revenue, for completeness and accuracy.
· Review of the operating records for the purpose of determining the existence of the
practice of allowing complimentary rooms to be occupied without TLT being
collected and remitted.
· Testing the exemptions claimed in the compilation of the taxable room revenues
reported to determine that the exemptions were allowable under the City of San
Bernardino Municipal Code Section 3.55.035 A and B.
The review found discrepancies in the motel's operating procedures that resulted in errors
in assessment, collection, and payment of the transient lodging taxes in accordance with
the requirements set forth in the San Bernardino Municipal Code Chapter 3.55 and 3.54.
Review notes specifically identifying the errors are included in the audit narrative
provided as backup to this appeal. Snecificallv. the hotel was assessed additional taxable
room revenue for the following:
~~...None of the records that were examined displayed the room rent and the transient
lodging tax separately.. .It is the motel's practice to show a flat rate on every record of
the occupant, which the motel reports as taxable room rents that are the basis of
assessing and remitting the transient tax. There is no evidence that the tax is assessed
and collected from the occupant. The proprietor represents that the motel absorbs the
burden paying the tax for the occupant, which also is a violation of the city ordinance.
We tested the completeness of the records presented for our examination by comparing
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our audit revenue compilation with the amounts reported on the Federal tax return,
which indicated that the motel had understated the taxable revenue to the City..."
The hotel's operating procedures that were found to be in violation of the San Bernardino
Municipal Code resulted in the assessment of additional Transient Lodging Tax as
follows:
Additional Transient Lodging Tax
Penalty
Interest
TOTAL AMOUNT DUE
$ 4,462.04
4,462.04
1.348.60
$10,272.68
March 29. 2004
A hearing was held before the City Clerk regarding the Astro Motel's request to postpone
payment until completion of an appeal of additional transient lodging taxes assessed as a
result of an audit of the motel's transient lodging tax.
Julv 2.2004. August 5. 2004 & November 19. 2004
Letters sent to Mr. Frank A. Weiser, Esq., representing the Astro Motel's, requesting
communication from Mr. Weiser concerning the Transient Lodging Tax Appeal Hearing
and evidence presented.
December 7. 2004
Notice of Final Determination of Transient Lodging Tax and Penalty sent via certified
mail to the Astro Motel.
December 21. 2004
Appeal received from the Astro Motel regarding the decision of the City Clerk to assess
$10,272.68 in additional transient lodging tax, penalty, and interest.
FINANCIAL IMPACT:
The hearing found an additional $10,272.68 was owed to the City for transient lodging
taxes. Other motels that have been audited and found to owe additional transient lodging
tax have paid accordingly, including the assessed penalties and interest.
RECOMMENDATION:
That the hearing be closed; and that the Mayor and Common Council uphold the decision
of the City Clerk and adopt her letter of December 7,2004, as its findings and
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conclusions, based upon the back-up information submitted and any additional evidence
presented at the hearing; or
That the hearing be closed; and that the Mayor and Common Council uphold the appeal
of the applicant and reverse the decision of the City Clerk; or
That the hearing be closed; and that the Mayor and Common Council uphold the appeal
of the applicant in part and direct the City Attorney's Office to prepare findings and
conclusions consistent with its decision.
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CITY OF SAN BERNARDINO
APPEAL FORM
Office Use Onlv
Copies Distributed To:
o City Attorney 0 City Administrator
Date:
DatefI'ime Stamp:
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IMPORTANT INFORMATION: All appeals to the Mayor and Common Council, Board of
Building Commissioners (BBC) and Animal Control Commission must be filed in the City
Clerk's Office.
Appellant
Name:
Address:
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Contact Person
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Name:
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Evening Phone:
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E-mail:
Affected Property Address:
Assessor's Parcel Number (APN #):
Whose Decision Are You Appealing:
Date of that Decision:
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OBoard of Building Commissioners - $75.00
~Mayor and Common Council - 575.00*
OPlanning Commission - Fee Adjusted Annually
OAnimal Control Commission - 575.00
OPolice Commission - No Charge
OOther: - No Charge
*Note: Appeals to the Mayor and Common Council can only be from the Planning Commission and Police Commission.
City of San Bernardino.. City Clerk's Office.. 300 N. "0" Street - San Bernardino, CA92418.. (909) 384-5002
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1. The action appealed:
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2. The grounds for appeal:
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3. The action(s) sought:
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LAW OFFICES
FRANK A. WEISER
LEONARD NASATlR
OF COUNSEL
3460 WILSHIRE BOULEVARD,SUITE 903
LOS ANGELES. CALIFORNIA 90010
TELEPIIONE: (113) 384..4;964
FACSIMILE: (113) 383.7368
REFER TO FILE NO.
December 20, 2004
BY EXPRESS MAIL AND FACSIMILE
Rachel C. Clark
City Clerk
Office of the City Clerk
City of San Bernardino
300 North "0" Street
San Bernardino, CA 92418-0001
Facsimile: (909) 384-5158
Re: Appeal Notice/Transient Lodging Tax
Audit/Desert Inn Motel at 607 W. 5th
Street/Terrace Motel at 2606 W. Foothill
Blvd./Sunshine Motel at 570 N. "H" Streett
Knights Inn at 1150 S. "E" Streett
Foothill Motel at 2512 Foothill Blvd./
Econo Lodge at 606 N. "H" Street/Astro
Motel at 111 S. "E" Street/Budget Lodge
c/o Larry Hall
Dear Ms. Clark:
As you know, I represent the above referenced
motels located in the City of San Bernardino. I received your
letter dated December 7, 2004, notifying my clients of the
final determination of transient lodging tax and penalties
for eacj motel. Pursuant to your letter and Chapter 2.64 of
the San Bernardino Municipal Code, each motel wishes to
appeal your individual decision to the Common Council.
The grounds for the appeal are as follows:
None of the motels owe any monies to the City as
they have reported and collected all monies due. Any
technical reporting deficiencies noted in your reports are
not subject to a tax assessment, as they are just that;
technical deficiencies at the most and do not impact the
amount of monies collected. Nevertheless, each motel owner
denies any such reporting deficiencies.
Nothwithstanding this, the City repealed Chapter
3.54 of the muncipal code in November 2002. It is a violation
of due process to collect a tax repealed and declared
unconstitutionally suspect by the voters. Morevover, both
Chapters 3.54 and newly amended Chapter 3.55 violate
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Rachel C. Clark
City Clerk
Office of the City Clerk
City of San Bernardino
Re: Appeal Notice/Transient Lodging Tax
Audit/Desert Inn Motel at 607 W. 5th
Street/Terrace Motel at 2606 W. Foothill
Blvd./Sunshine Motel at 570 N. "H" Street/
Knights Inn at 1150 S. "E" Street/
Foothill Motel at 2512 Foothill Blvd./
Econo Lodge at 606 N. "H" Street/Astro
Motel at 111 S. "E" Street/Budget Lodge
c/o Larry Hall
fundamental due process as they attempt to collect a
transient tax in violation of the residency requirement of
the Fourteenth Amendment of the United States Constitution.
This classification also violates the Equal
Protection Clause of the Fourteenth Amendment of the United
States Constitution.
Notwithstanding this, Chapters 3.54 and 3.55
violate due process as they are "void for vagueness."
We seek to completely overturn your determination
decisions on each motel before the Common Council and
respectfully request a hearing at the Council's earliest
convenience.
Please advise me accordingly. Your courtesy and
cooperation in the matter is appreciated.
Sincerely,
-.-
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Frank A. Weiser
Attorney at Law
cc: City Attorney's Office
(Facsimile: (909) 384-5238)
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OFFICE OF THE CITY CLERK
RACHEL G. CLARK, C.M.C. . CITY CLERK
300 North "D" Street. San Bernardino. CA 92418-0001
909.384.5002. Fax: 909.384.5158
www.cLsan-bernardino.ca.us
VIA CERTIFIED MAIL
December 7, 2004
Kanti & Jashoda Patel
Astro Motel
1 I I S. "En Street
San Bernardino, CA 9240 I
RE: NOTICE OF FINAL DETERMINATION OF TRANSIENT
LODGING TAX AND PENALTY
Dear Mr. & Mrs. Patel:
After due consideration of the testimony and evidence presented at your appeal hearing on March
29, 2004, it is the decision of the City Clerk that your appeal on behalf of the Astra Motel is denied
and the total amount of $10,272.68 is now due and owing to the City of San Bernardino. The audit
period which is the subject of this appeal was April 1, 2000 through December 31, 2002. The
substance of the San Bernardino Municipal Code Sections which were not complied with are the
same for the ordinance which was in effect from January 1, 2000 through November 5, 2002
(Chapter 3.54), and for the ordinance which has been in effect since November 5, 2002 (Chapter
3.55).
It is the decision of the City Clerk, based upon the testimony and evidence so presented, that the
Astro Motel was not in compliance with the following San Bernardino Municipal Code
requirements:
Collection of Tax - Failure to assess and collect the transient lodging tax. Failure to provide a receipt
to each transient at the time the rental payments are made. Failure to report the amount of transient
lodging tax to the transient. Failure to not represent that the transient lodging tax will be added to
the room rental charge and the operator absorbing the payment of the tax.
Registration Cards - Failure to use preprinted registration cards. Failure to reflect expected date of
termination. Failure to designate the room rental separately.
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CITY OF SAN BERNARDINO
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Daily Summary Sheets - Failure to contain the required information, with the only exception being
the amount of payment received.
The afore-mentioned violations set forth in this decision were detailed and sent to you as part of the
audit performed by Progressive Solutions, Inc., via letter dated November 20, 2003. This audit was
made part of the appeal hearing record at the March 29, 2004 hearing.
As indicated previously herein, the violations set forth in this decision result in a total assessment
due to the City of San Bernardino in the amount of $10,272.68. This amount contains three
components:
Additional Transient Lodging Tax
Penalty
Interest
$4,462.04
$4,462.04
$1,348.60
$10,272.68
The amount of$IO,272.68 is now due within fifteen (15) days of the date of this decision unless this
decision is appealed to the Common Council in accordance with the provisions of Chapter 2.64 of
the San Bernardino Municipal Code (a copy of said Chapter 2.64 is enclosed with this letter for your
information). However, the City Clerk determines that this amount of$1 0,272.68 may be paid over
a four month period in four equal one-quarter payments of the lump sum in order to avoid any undue
hardship. If you choose this method of payment instead of one lump sum payment, you must contact
Ms. Cindy Buechter, Business Registration Supervisor, immediately at (909) 385-5035 in order to
make payment arrangements.
Sincerely,
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Rachel G. Clark, CMC
City Clerk
encl.
cc: Mr. Frank Weiser
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PROGRESSIVE SOLUTIONS-
October 31, 2003
Rachel G. Clark, City Clerk
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
Dear Ms. Clark,
Progressive Solutions, Inc. has applied the procedures enumerated below to the accounting
records of the Astro Motel with respect to the transient lodging taxes owed to the City of San Bernardino
for the three year period beginning April 1, 2000 and ending December 31, 2002. The procedures
performed are summarized as follows:
1. We reviewed the City ordinance relating to the levy of transient Lodging tax.
2. We reviewed the operating records for the purpose of determining the existence of the
practice of allowing complimentary rooms to be occupied without TL T being collected
and remitted.
3. We tested, by random selection, the daily summaries which include the date, room
number, registration number, and name of each guest in-house, for completeness and
accuracy.
4. We tested by random selection, the monthly summary, which includes daily room
revenue, tax and exempt revenue, for completeness and accuracy.
5. We tested the exemptions claimed in the compilation of the taxable room revenues
reported to determine that the exemptions were allowable under the City of San
Bernardino code section 3.55.035, under the exemption sub-sections (A) and (B).
6. We performed additional procedures, as we deemed necessary.
Our review determined that the motel's operating procedures were found to be in violation of the
San Bernardino code, which resulted in the assessment of additional transient lodging taxes in the amount
of $4,462.04. penalties in the amount of $4,462.04, interest in the amount of $1,348.60, for a total amount
of $10,272.68 due to the City of San Bernardino. Review notes specifically identifying the errors have
been included in the contents of the Audit Narrative.
This report is intended for the information of City management and the taxpayer. This restriction
is not intended to limit the distribution of this report, which is a matter of public record.
Sincerely,
jt.. II. tI..!iJ
Glenn R. Vodhanel, Audit Review Manager
Audit Divislon-OcelUlSlde; P.O. Box 4489; Oceanside. CA 92052-4489
Tel: (760) 533-7808 FAX: (760) 722-2123 Emai/: ACAPUCHINO@aol.com
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CITY OF SAN BERNARDINO
TRANSIENT LODGING TAX
ASTRO MOTEL
AUDIT REPORT
OCTOBER 31, 2003
Performed by
PROGRESSIVE SOLUTIONS-
Al Capuchino-Principal Auditor
Audit Division-Oceanside; P.O. Box 4489; Oceanside. CA 92052-4489
Tel: (760) 533-7808 FAX: (760) 722-2123 Email: ACAPUCHINO@aol.com
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PROGRESSIVE SOLUTION~
ASTRO MOTEL
TRANSIENT LODGING TAX
AUDIT NARRATIVE
Progressive Solutions, Inc. completed the assigned review of the motel's records for the period
beginning April 1, 2000 and ending December 31, 2002 in the presence of the motel's proprietor,
Kanri Patel.
A detailed review, as previously described, was performed of the transactions recorded for the
month of August 2002. Our review included the examination of the motel's registration cards,
and the manually prepared daily revenue summary, which is only a listing of the adding machine
totals of the amounts recorded on the registration cards that are dated for that particular day. The
hotel does not prepare receipts for every payment made by the occupants. In addition the daily
revenue summary does not reflect the information that is required by the city ordinance. FOur
review noted that the hotel records revenue on a "cash basis" as monies are received. This
practice does not properly reflect daily revenue for rooms occupied, which is required by the city
ordinancefRegistration cards are not pre-numbered and do not show the date of departure which
does not allow an audit trail for the length of occupancy and the room rental charges for each
occupant for their term of occupancy. None of the records that were examined displayed the
room rent and the transient lodging tax separately, which is in violation of the city ordinance. It
is the motel's practice to show a flat rate on every record of the occupant, which the motel
reports as taxable room rents that are the basis of assessing and remitting the transient tax. There
is no evidence that the tax is assessed and collected from the occupant. *The proprietor represents
that the motel absorbs the burden paying the tax for the occupant, which also is a violation of the
city ordinance,Jf We have informed the motel that this practice is in violation of the city code,
which requires the motel to assess and collect the tax directly from the transient. We tested the
completeness of the records presented for our examination by comparing our audit revenue
compilation with amounts reported on the Federal tax return, which indicated that the motel had
understated the taxable revenue to the City. We have taken the gross receipts on the Federal tax
return as an independent source of revenue, and accordingly, assessed the motel for additional
taxable revenue, in spite of the hotel's declaration that the tax had never been collected from the
transient. This detection has been applied to the entire period of our review. The tax return, by
including the amount of the tax as an integral portion of the gross receipts, represents that the tax
was collected from the transient/In addition, in the lack of internal control over the accounting
for each transaction, by not having a numerical and sequential "folio" number assigned to the
records of each occupant, there exists a potential risk of not recording every rental charge, and
the related assessment and collection of the transient tax, and the reporting and remitting the tax
to the City. Consequently, we are not able to express an opinion as to the completeness of the
records.
In summary, the review process disclosed four sections of the city ordinance in which the motel
was not in compliance relative to the requirements of the transient lodging tax section.
Audit Division-Ocetlllsidllj P.O. Box 4489; Oceanside. CA 92052-4489
Tel: (760) 533-7808 FAX: (760) 722-2/23 Email: ACAPUCHINO@aol.com
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PROGRESSIVE SOLUTIONS-
Astro Motel
Page 2
Section 3.33.030 (A), (D) Collection of tax
A. Each operator receiving a room rental payment that is subject to the transient lodging tax,
at the time of receipt of the room rental payment, shall collect the amount of tax imposed.
The operator shall provide a receipt for payment of the transient lodging tax to the
transient
D. No operlltor shall represent to the public that the transient lodging tax will not be added to
the room rental charge, will be absorbed by the operator or will be refunded in a manner
contrary to this Chapter.
Violation: Failure to (1) Failure to assess and collect the transient lodging tax, (2) Failure to
provide a receipt to each transient at the time the rental payments are made, (3) Failure to report
the amount of transient lodging tax to the transient, (4) Failure to not represent that the transient
lodging tax will be added to the room rental charge and the operator absorbing the payment of
the tax.
Section 3055.070 (A) Records - Registration Cards
A. Registration Cards. Each operator shall complete and maintain a transient registration
card for every transient that is provided lodging space in the operator's hotel. At a
minimum, transient registration cards shall list the following information:
1. The name of the person who will occupy, or who is entitled to occupy the
lodging space.
2. The total number of people who will occupy, or who are entitled to occupy
the lodging space.
3. The identification of the lodging space.
4. The date the occupancy will commence and the expected date of
termination.
5. The room rental to be charged for the lodging space.
Transient registration cards shall bear consecutive numbers that shall be preprinted on the
cards by a print shop or manufacturer of the cards. Voided cards shall be kept for audit
purposes.
Alldlt Division-Oceanside; P.O. Box 4489: Oceanside. CA 92052-4489
Tel: (760) 533-7808 FAX: (760) 722-2123 Email: ACAPUCHINO@aol.com
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PROGRESSIVE SOLUTIONS-
Astro Motel
Page 3
Violation: Failure to use preprinted registration cards. Failure to reflect expected date of
termination. Failure to designate the room rental separately.
Section 3055.070 (B) Records - Daily Summary Sheets
B. Daily Summary Sheets. Each operator shall maintain a daily summary sheet for each day
it's hotel is open for business. At a minimum, daily summary sheets shall contain the
following information:
1. The name of the person who will occupy, or who is entitled to occupy each
lodging space that is provided to a customer that day.
2. The identification number of each lodging space provided to a customer.
3. The daily room rental charge and amount paid for each lodging space provided to
a transient.
4. The number of the transient registration card applicable to each lodging space
provided to a transient.
Violation: Failure to contain the required information, with the only exception being the
amount of payment received.
Alldit Div/s/on-OcelUlSlde; P.O. Box 4489; Oceanside. CA 92052-4489
Tel: (760) 533-7808 FAX: (760) 722-2/23 Email: ACAPUCHINO@aol.com
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Audit Summary
City of San Bernardino
Transient Lodging Tax Review
Hotel: Astro Motel
Tax rate: 10.0 %
Taxable Revenl Audit nder Reporte
Reported axable Revenl axable Reven Transient Tax Penalties Interest Total
January 31, 0.00 0.00 0.00 0.00 0.00 0.00 0.00
February 28, 0.00 0.00 0.00 0.00 0.00 0.00 0.00
March 31, 0.00 0.00 0.00 0.00 0.00 0.00 0.00
April 3D, 8,927.00 9,820.00 893.00 89.30 89.30 49.58 228.16
May 31, 13,270.00 14,597.00 1,327.00 132.70 132.70 71.66 337.06
June 3D, 12,050.00 13,255.00 1,205.00 120.50 120.50 83.26 304.26
July 31, 13,600.00 14,960.00 1,360.00 136.00 136.00 69.36 341.36
August 31, 13,911.00 15,302.10 1,391.10 139.11 139.11 70.95 349.17
September 3D, 14,099.00 15,508.90 1,409.90 140.99 140.99 67.66 349.66
October 31, 12,654.00 13,919.40 1,265.40 126.54 126.54 58.84 311.92
November 3D, 11,846.00 13,030.60 1,184.60 118.46 118.46 53.31 290.23
December 31, 13,574.00 14,931.40 1,357.40 135.74 135.74 59.05 330.53
Total 2000 113,931.00 125,324.40 11,393.40 1,139.34 1,139.34 563.86 2,842.34
January 31, 12,742.00 14,016.20 1,274.20 127.42 127.42 53.52 308.36
February 28, 12,810.00 14,091.00 1,281.00 128.10 128.10 51.88 308.08
March 31, 13,422.00 14,784.20 1,342.20 134.22 134.22 52.35 320.79
April 3D, 13,654.00 15,019.40 1,365.40 136.54 136.54 51.20 324.28
May 31, 14,350.00 15,785.00 1,435.00 143.50 143.50 51.86 338.66
June 3D, 13,143.00 14,457.30 1,314.30 131.43 131.43 45.34 308.20
July 31, 13,853.00 15,238.30 1,385.30 138.53 138.53 45.71 322.77
August 31, 12,935.00 14,228.50 1,293.50 129.35 129.35 40.75 299.45
September 3D, 13,115.00 14,426.50 1,311.50 131.15 131.15 39.35 301.65
October 31, 12,827.00 14,109.70 1,282.70 128.27 128.27 36.56 293.10
November 3D, 13,406.00 14,746.60 1,340.60 134.06 134.06 36.20 304.32
December 31, 12,073.00 13,280.30 1,207.30 120.73 120.73 30.79 272.25
Total 2001 158,330.00 174,163.00 15,833.00 1,583.30 1,563.30 535.29 3,701.89
January 31, 12,200.00 13,420.00 1,220.00 122.00 122.00 29.28 273.28
February 28, 13,000.00 14,300.00 1,300.00 130.00 130.00 29.25 289.25
March 31, 13,500.00 14,850.00 1,350.00 135.00 135.00 28.35 298.35
April 3D, 15,000.00 16,500.00 1,500.00 150.00 150.00 27.00 327.00
May 31, 15,150.00 16,665.00 1,515.00 151.50 151.50 25.00 328.00
June 3D, 14,830.00 16,313.00 1,463.00 146.30 148.30 22.25 318.85
July 31, 15,200.00 16,720.00 U20.00 152.00 152.00 20.52 324.52
August 31, 16,010.00 17,611.00 1,601.00 160.10 160.10 19.21 339.41
September 3D, 15,200.00 16,720.00 1,520.00 152.00 152.00 15.96 319.96
October 31, 14,500.00 15,950.00 1,450.00 145.00 145.00 13.05 303.05
November 3D, 14,500.00 15,950.00 1,450.00 145.00 145.00 10.88 300.66
December 31, 14,850.00 16,335.00 1,485.00 148.50 148.50 8.91 305.91
Total 2002 173,940.00 191,334.00 17,394.00 1,739.40 1,739.40 249.65 3,728.45
Combined Total 446,201.00 490,821.40 44,620.40 4,482.04 4,462.04 1,348.60 10,272.66
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JAMES F. PENMAN
CITY ATTORNEY
July 2, 2004
Mr. Frank A. Weiser, Esq.
3460 Wilshire Blvd., Suite 903
Los Angeles, CA 900 I 0
RE: Transient Lodging Tax Appeal Hearings and Evidence Presented
Dear Mr. Weiser:
I called your office last week concerning the above-indicated subject matter, left a message
on your answering machine, but as of the date of this letter have not heard back from you.
As you know, several transient lodging tax ("TLT") appeal hearings were held a couple of
months ago wherein you submitted boxes of registration cards, etc. to demonstrate that the random
sampling conducted by Progressive Solutions, Inc. was not an accurate measure of any moneys owed
to the City of San Bernardino as a result of under or inaccurate reporting ofTL T by your clients. It
was indicated at the hearings that the records would be reviewed by Progressive Solutions. It was
further indicated that such review could not commence until sometime in May.
The City Clerk was advised by Progressive Solutions after the TL T appeal hearings had been
concluded that the fee for such an "audit" would be $250 per hour, with a 5 hour minimum
requirement, payable before the audit commences. Subsequent costs would be billed as incurred.
Further, Progressive Solutions advised the City Clerk that such costs would be borne by the applicant
motels since they were requesting this audit service. This financial information was not known to
either side at the time of the TL T appeal hearings. After grappling with various ways to resolve this
dilemma, this letter is being sent to you to seek your thoughts on a course of action. It is proposed
that the boxes of registration cards, etc. be returned to you and/or your clients to be organized in such
a fashion as you deem appropriate so that the financial information contained in them can be
presented in a concise manner to the City Clerk to address the issue of the accuracy of the random
sampling method employed by Progressive Solutions. In this manner, you control the costs in the
presentation of your evidence. Obviously, if you and your clients wish to employ Progressive
Solutions at the rates indicated, that is your decision. The City cannot make that decision for you,
nor is the City going to incur these costs since the "evidence" to be offered is in your defense.
. ~ _ __. . .._n _.......,..,.T . c:.6.1\1 R~RNAROINO. CA 92418-000 1 . (909) 384.5355 · FAX (909) 384-5238
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Please let me know as soon as possible what your thoughts are on this matter so that the
appeal hearings can be resolved. As you may know, there are no additional penalties or interest
being incurred by your clients as a result of this situation, but I am sure that you are like me and
would want this matter brought to a conclusion. You will recall that in one of the TL T appeal
hearings it was conceded by Progressive Solutions that it had made a mistake and thus that hearing
will be decided in your client's favor.
~c: Rachel Clark, City Clerk
.
./
OFFICE OF THE CITY ATTORNEY
CITY OF SAN BERNARDINO
JAMES F. PENMAN
CITY ATTORNEY
August 5, 2004
Mr. Frank A. Weiser, Esq.
3460 Wilshire Blvd., Suite 903
Los Angeles, CA 90010
RE: Transient Lodging Tax Appeal Hearings and Evidence Presented (2nd Letter)
Dear Mr. Weiser:
This letter is sent as a follow-up to my prior correspondence to you dated July 2, 2004
concerning the same above-referenced subject matter. As of the date of this letter, I have not heard
from you. I know from past experience that you are a very busy sole practitioner, and for that reason
I have waited to send this second letter. However, it appears that at least one of your clients is
inquiring as to the status of his appeal hearing, and since you represent him, I have not taken nor
returned his phone calls. Hence, this second letter to you.
As you know, several transient lodging tax ("TL T") appeal hearings were held a couple of
months ago wherein you submitted boxes of registration cards, etc. to demonstrate that the random
sampling conducted by Progressive Solutions, Inc. was not an accurate measure of any moneys owed
to the City of San Bernardino as a result of under or inaccurate reporting ofTLT by your clients. It
was indicated at the hearings that the records would be reviewed by Progressive Solutions. It was
further indicated that such review could not commence until sometime in May.
The City Clerk was advised by Progressive Solutions after the TL T appeal hearings had been
concluded that the fee for such an "audit" would be $250 per hour, with a 5 hour minimum
requirement, payable before the audit commences. Subsequent costs would be billed as incurred.
Further, Progressive Solutions advised the City Clerk that such costs would be borne by the applicant
motels since they were requesting this audit service. This financial information was not known to
either side at the time of the TL T appeal hearings. The boxes of registration cards, etc. are ready for
you and/or your clients to pick up to be organized in such a fashion as you deem appropriate so that
the financial information contained in them can be presented in a concise manner to the City Clerk
to address the issue of the accuracy of the random sampling method employed by Progressive
Solutions. If you and your clients wish to employ Progressive Solutions at the rates indicated, that
300 NORTH "0" STREET. SAN BERNARDINO. CA 92418-0001 . (909) 384-5355. FAX (909) 384-5238
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is your decision. The Hearing Officer does not incur these costs since she is the initial decision-
maker and the evidence is being offered by one of the parties.
Again, there are no additional penalties or interest being incurred by your clients as a result
of this situation, but I am sure that you are like me and would want this matter brought to a
conclusion. You will recall that in one of the TLT appeal hearings it was conceded by Progressive
Solutions that it had made a mistake and thus that hearing will be decided in your client's favor. As
for the other appeal hearings involving the afore-mentioned boxes of evidence, the Hearing Officer
is prepared to render her decisions by no later than the end ofthis month if she or I have not heard
from you by August 19,2004, which is two weeks from the date of this letter.
~c: Rachel Clark, City Clerk
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JAMES F. PENMAN
CITY ATTORNEY
November 19, 2004
Mr. Frank A. Weiser, Esq.
3460 Wilshire Blvd., Suite 903
Los Angeles, CA 90010
RE: Transient Lodging Tax Appeal Hearings and Evidence Presented (3,d Letter)
Dear Mr. Weiser:
This letter is sent as a final follow-up to my two prior letters to you dated July 2, 2004, and
August 5, 2004.
You will recall that both prior letters concerned the issue of the costs associated with
ferreting through boxes of records which you produced at the several transient lodging tax ("TL T")
appeal hearings in support of your position that the audits performed by Progressive Solutions were
flawed, and thus the amount of taxes allegedly owed, as well as penalties and interest, were equally
In error.
The first letter solicited your thoughts on the best way to proceed concerning your burden of
proof requirement vis-a-vis your production of records in boxes, rather than in a fashion which
would be readily presentable to the hearing officer. The second letter stated the following:
\
"
"The boxes of registration cards, etc. are ready for you and/or your
clients to pick up to be organized in such a fashion as you deem ap-
propriate so that the financial information contained in them can be
presented in a concise manner to the City Clerk to address the issue
of the accuracy of the random sampling method employed by Pro-
gressive Solutions. . . .the Hearing Officer is prepared to render her
decisions by no later than the end of this month if she or I have not
heard from you by August 19,2004, which is two weeks from the
date of this letter."
Neither this office nor the City Clerk's office ever received a written response from you or
300 NORTH "0" STREET. SAN BERNAROINO. CA 92418-0001 · (909) 384-5355' FAX (909) 384-5238
heard from you as a result of either letter. This office and the Hearing Officer have even waited an
additional three months (from August 19), just in case you were on an extended vacation or involved
in a multi-month court proceeding and could not respond in a timely fashion. Again, no response
of any kind has been forthcoming.
Please make arrangements to have the boxes of registration cards, etc. which are currently
in the possession of the City Clerk's office picked up - you and your clients may need them in the
future. The Hearing Officer will be issuing her decisions within two (2) weeks of the date of this
letter. As you have been advised twice before, there are no additional penalties or interest being
incurred by your clients as a result of this situation, but this matter needs to be brought to closure,
even though the City has not received any response from you to its prior two letters.
cc: RJchel Clark, City Clerk
~indy Buechter, Business
Registration Supervisor