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174? <br />August 16, 2011 <br />Office of the County Manager <br />To: Brian Hiatt, City of Concord, Michele Reapsmith, Town of Harrisburg, Mike Legg, City of <br />Kannapolis, James Inman, City of Locust, David Pugh, Town of Midland, Adrian Cox, Town of Mt. <br />Pleasant <br />From: Pam Dubois, Deputy County Manager <br />Subject: Sales tax Audit <br />Over the past year, the County experienced a slight decline in sales tax revenues, while many <br />other local governments realized an increase of 2 % or more. It appears this decline may be the <br />result of very large sales tax refunds made to one particular company. <br />There is a large medical supply operation in Cabarrus County, with its corporate headquarters <br />based in Forsyth County. It is possible that the suppliers to this company are reporting to the <br />state that they collected sales tax in Forsyth County, which is where they send invoices, rather <br />than Cabarrus County, which is the point of delivery and where the sales taxes should actually be <br />collected. When the tax - exempt company files for its sales tax refunds, it claims them all in <br />Cabarrus County, the point of delivery. <br />We have the authority to audit these sales transactions to determine if erroneous reporting <br />resulted in sales tax refunds being charged to Cabarrus County, when in fact the original sales <br />taxes were never paid here. <br />We propose hiring a firm to perform such an audit. Fees for this service can range from 20% to <br />35% of the revenues recovered, and the fee is only paid if revenues are recovered. Since all <br />jurisdictions would benefit from any recovered sales tax revenues, it appears the most equitable <br />method of sharing this fee is to split it based on the percentage of each jurisdiction's share of the <br />recovery. These percentages follow: <br />Cabarrus County <br />67.77366 <br />Concord <br />22.11452 <br />Harrisburg <br />01.65996 <br />Kannapolis <br />07.76457 <br />Locust <br />00.11556 <br />Midland <br />00.24938 <br />Mt. Pleasant <br />00.32235 <br />Total <br />100.00 <br />At this point, we only plan to have the audit performed if all jurisdictions agree to participate. <br />Remember, your jurisdiction will not incur any cost unless revenues are recovered. Thank you for <br />your time and expressed interest in this issue. Please advise as to whether your jurisdiction will <br />participate by August 29 <br />65 Church Street SE (28025) • P.O. Box 707 Concord, NC 28026 -0707 <br />Phone: 704.920.2100 • Fax: 704.920.2820 <br />Website: www.cabar ch s ount us <br />F�t ac men 1 <br />G -6 Page 587 <br />