Tiger Natural Gas - Utility Tax (Period 4-1-14 to 2-28-18) 6-22-18MIAMI BEACH INTERNAL AUDIT REPORT
City of Miami Beach, 1700 Convention Center Drive, Miam i Beach , Florida 33139, www.miam i beachfl .gov
Office of Internal Audit
Tel : 305-673-7020
TO : Jimmy L. Morales, City Manager ~
VIA: Mark D. Coolidge, Interim Internal Auditor M1~
FROM : Jessica Romero, Auditor ::fe_L
DATE :
AUDIT :
PERIOD :
June 22, 2018
Tiger Natural Gas-Utility Tax Audit
April 1, 2014-February 28, 2018
This report is the result of a regularly scheduled audit of the Public Service Tax (Utility Tax) collected
and remitted to the City by Tiger Natural Gas between April 1, 2014 and February 28, 2018.
INTRODUCTION
Article Ill entitled "Public Service Tax" (Utility Tax) of the City Code details the terms and conditions
concerning the charging , collecting and remitting of utility taxes on all purchases in the corporate limits
of the City of electricity, metered gas, bottled gas, and fuel oil. More specifically, section 102-152
states that the seller is to collect and remit ten (1 0) percent, exclusive of governmental charges and
taxes, of the total amount shown on such bill on account of the purchase of electricity, metered gas and
bottled gas, and four ( 4) cents per gallon on fuel oil. Other terms listed include the requirement of
remitting any monies owed by the 201h day of each month for revenues incurred during the prior month,
submitting a semiannual listing (June 301h and December 31 51 ) of all deliveries for resale within Miami
Beach, the charging of interest on any late payments, etc. Lastly, City Code Section 102-155 requires
records of taxable sales transactions to be kept by the seller for inspection by the City and allows for
enforcement of rules and regulations pertaining to Article Ill of the City Code .
Tiger Natural Gas is a company that sells natural gas to end use customers. A review of the City's
Financial Systems (Eden for all payments remitted prior to April 2016 and Munis for all subsequent
payments) showed that Tiger Natural Gas reported and remitted the amounts below to the City for the
stated periods :
*
! ! I I 2013-2014 I 2014-2015 2015-2016 2016-2017 2017-2018
I Apr-Sept I Oct-Sept Oct-Sept Oct-Sept Oct-Feb Total '
I
Taxable Sales Reported $ 83,763 .17 $ 261 ,027.17 $ 270 ,172.05 $ 252 ,979 .19 $ 81,863.85 $ 949,805.43 I
Utility Tax 10% $ 8,376 .32 I $ 26 ,102.72 $ 27 ,017.21 $ 25 ,297.92 $ 8,186 .39 $ 94,980.54
Adjustments* $ (4.06) $ (19.00) $ -$ -$ $ (23 .06 ) I
Total Utlity Tax Due $ 8 ,372 .27 $ 26 ,083.72 $ 27 ,017 .21 $ 25 ,297 .92 $ 8 ,186 .39 $ 94 ,957.49
I 'Utility Tax Paid as per Munis and I
Eden $ 8 ,372.25 . $ 25 ,321.93 $ 8,186 .39 : $ 94,981.50
Since Tiger Natural Gas remitted utility taxes based on their bill ings, when a customer did not pay, they recognized
those transactions as non-payment and deducted the taxes previously remitted to the City .
We are committed to providing excellent public service and safety to all who live, work , and play in our vibrant, tropical, historic community.
Internal Audit Report
Tiger Natural Gas -Utility Tax Audit June 22. 2018
OVERALL OPINION
A review of Tiger Natural Gas's invoices confirmed that tested gross receipts were properly charged
and collected during the audit period. Although Tiger Natural Gas has generally complied with the City
Code provisions during the audit period, the following deficiencies were noted:
• Tiger Natural Gas mistakenly included $24.01 in utility taxes from a December2016 transaction
occurring in Palm Beach County in their monthly remittance to the City.
• 30 of 47 tested utility tax payments, or 63.83%, were submitted after City Code Section 102-
155(b )'s specified due date of the 201h day of the following month in which the natural gas was
purchased by Miami Beach customers. The Finance Department did not invoice Tiger Natural
Gas for interest on any of these late payments which totaled $68.17 due primarily to the fact
that they were received on average only two (2) days late.
PURPOSE
The purpose of the audit was to determine Tiger Natural Gas's compliance with the rules and
regulations set forth in Article Ill, entitled "Public Service Tax", of the City Code with a primary focus on
whether the utility taxes paid were accurately calculated, fully collected and timely remitted to the City
during the audit period.
SCOPE
1. Review Tiger Natural Gas's records and documentation to confirm that tested utility taxes were
accurately calculated and fully collected.
2. Confirm that all tested monthly utility tax collections were timely remitted and correctly recorded
in the City's Financial System.
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSE
1. Finding-Tiger Natural Gas Mistakenly Included $24.01 in Utility Taxes from a December 2016
Transaction Occurring in Palm Beach County in their Monthly Remittance to the City
City Code Section 1 02-155(b) requires companies such as Tiger Natural Gas that sell natural
gas to customers within Miami Beach to submit a statement setting forth the amount of such
public service tax to which the City became entitled under the provisions of this section on
account of bills paid by purchasers during the preceding month. As a result, Tiger Natural
Gas's tax liability was calculated using provided documentation (customer invoices, sales
reports, etc.) and compared to the amounts recorded in the City's Financial System (Eden for all
payments remitted prior to April 2016 and Munis for all subsequent payments). In addition,
confirmation letters were mailed to selected customers with any responses received compared
to the reported amounts.
The only exception noted was that $24.01 in utility taxes was mistakenly paid to the City from a
December 2016 transaction occurring on Yamato Drive in Palm Beach County. Under Section
166.234(4)(b), 2017 Florida Statutes, Tiger Natural Gas may apply to the City for a refund for
any overpayments submitted. Overpayment to a municipality means and includes all
remittances of public service tax, interest, or penalty which was not due to the municipality,
including amounts properly collected but remitted to the incorrect municipality.
Page 2 of 4
Internal Audit Report
Tiger Natural Gas -Utility Tax Audit June 22. 2018
Recommendation( s ):
Tiger Natural Gas should better ensure that all future utility tax remittances are accurately
calculated on transactions originating from within Miami Beach's boundaries in compliance with
City Code Section 1 02-155(b ).
2. Finding -30 of 47 Tested Months' Utility Tax Payments, or 63.83%, were Submitted on
Average Two (2) Days after City Code Section 102-155(b)'s Specified Due Date of the 2CJh Day
of Each Month
City Code Section 102-155(b) summarized requires Tiger Natural Gas to execute and file
monthly statements accompanied by the amount of utility tax owed no later than the 20th day of
each month to the City's Finance Department for relevant purchases made during the previous
month. Furthermore, City Code Section 1 02-157(b) states "In addition to any penalties imposed
in subsection (a) of this section, any seller who fails to remit or is delinquent in remitting tax due
under this article shall pay interest at the rate of ten percent per annum or the rate as specified
by F. S. § 687.01, whichever is higher, on the unpaid amount of tax from the date on which the
tax first became delinquent until paid."
An analysis of Tiger Natural Gas's monthly payment dates recorded in the City's Financial
Systems with Section 1 02-155(b )'s designated due dates found that 30 of the 4 7 tested utility_
tax payments, or 63.83%, were received late ranging from one (1) to twelve (12) days with an
average of two (2) days. Although interest of $68.17 is due on these late payments using a
10% per annum interest rate, the City's Finance Department did not invoice Tiger Natural Gas
any interest during the audit period.
Recommendation( s ):
The Finance Department should create a City Bill invoicing Tiger Natural Gas a total of $68.17
in interest. Tiger Natural Gas should remit their future utility tax payments timely or be subject
to interest charges in accordance with the City Code.
Lastly, the City should consider revising City Code Section 102-157 to reflect interest and/or
penalty measures used in some other Florida municipal and county governments to better
incentivize companies to pay their utility taxes timely:
• Interest shall be assessed, for failure to pay any tax when due or to file any required
return, at a rate of 1 percent per month of the delinquent tax from the date the tax was
due until paid.
• Penalties shall be assessed at a rate of five percent per month of the delinquent tax, not
to exceed a total penalty of twenty-five percent. In no event shall the penalty for failure
to file a return be less than fifteen dollars ($15.00).
• Sellers filing fraudulent returns or willfully attempting to evade payment of the tax shall
be liable for a specific penalty of one hundred (1 00) percent of the tax.
Page 3 of 4
Internal Audit Report
Tiger Natural Gas -Utility Tax Audit June 22, 2018
EXIT CONFERENCE
Audit findings were emailed to Tiger Natural Gas on June 22, 2018 which agreed with the stated
findings.
F:\OBPI\$AUD\INTERNAL AUDIT FILES\DOC17-18\REPORTS-FINAL\Tiger Natural Gas Report 06-22-2018.doc
cc: John Woodruff, Chief Financial Officer
Jennifer St. Clair, Comptroller, Tiger Natural Gas
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