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Consultant describes how sales-tax monitoring finds misallocated revenue
Summary
HDL, a sales- and use-tax recovery firm, described data-matching and state-review steps it uses to find local sales-tax allocations that were credited to other jurisdictions and to recover revenue for Willows.
Matt Hinderliter, a principal at HDL Companies, gave a 30-minute presentation at the May 13 Willows City Council meeting describing how his firm identifies misallocations of local sales and use tax and works with the California Department of Tax and Fee Administration (CDTFA) to correct them.
Hinderliter said HDL compares multiple data sources — the city’s business-license files, a commercial business directory (Data Axle USA), and CDTFA extracts — to find businesses that appear in the city but are coded to the wrong tax area or the wrong permit. "I lead the sales and use tax recovery or discovery team here at HDL," he said, explaining the firm runs automated queries and manual analyst reviews to isolate anomalies.
Hinderliter walked council members through two broad problem types: registration errors, such as a business moving without updating its state permit or being assigned the wrong five‑digit tax-area code; and reporting errors, such as mistakes on supporting schedules that can cause funds to go to county pools instead of directly to the city. He said HDL also looks for large single use‑tax transactions and large construction subcontractor activity that may qualify for direct allocation to a jurisdiction.
The consultant described a prior local outcome, saying HDL’s work recovered sales tax that had been allocated to a corporate headquarters instead of the local dealer. Hinderliter emphasized that HDL’s work focuses on allocation — "ensuring what has already been paid into the system gets credited to the proper jurisdiction" — and is distinct from compliance audits that examine business records.
Council members asked about county-pool mechanics and whether HDL reviews transaction‑use taxes and district taxes beyond the Bradley‑Burns 1% local allocation. Hinderliter said county pools use a formula tied to Bradley‑Burns local transactions and that HDL can and does monitor transactions‑tax districts if contracted to do so; he confirmed HDL provides business‑license administration services to Willows and coordinates with Ian Davis, the head of that group.
After the presentation council members thanked Hinderliter and discussed following up offline on county‑pool detail and whether HDL also provides services to nearby jurisdictions.
Ending: The council did not take action on the presentation; Hinderliter said he would meet with staff and council members for follow-up questions.
