9-1445. Review and audit; bundling discounts; action to recover underpayment or overpayment

A. Not more than once every three years, a local government, on reasonable written notice, may audit the business books and records of a video service provider to the extent necessary to ensure payment of license fees pursuant to this chapter. A local government may assess additional license fees due at any time within four years after the date on which the fees were required to be paid. Any audit of a period of time before issuance of a uniform video service license shall be conducted pursuant to the local laws in effect during the period of time.

B. Except as otherwise provided by federal law, if a video service provider offers video service bundled with other services that are not video service for a single discounted price, all of the following apply:

1. The method that the video service provider uses to determine gross revenue subject to license fees by allocating the single discounted price among the bundle of video service and nonvideo services shall be reasonable and supported by the video service provider's books and records.

2. The local government shall accept as reasonable, for purposes of meeting the video service provider's burden of proof, an allocation based on an objective and verifiable method using the books and records that the video service provider kept in the regular course of business for other purposes, including nontax purposes.

3. A video service provider may not use bundled offerings as a means to evade paying license fees.

C. The local government and the video service provider shall each pay its own costs and fees relating to each audit performed pursuant to subsection A of this section. If the sum determined to be underpaid exceeds five percent of the total fees that the audit determines should have been paid for the period, the video service provider shall pay the local government's reasonable costs of the audit.

D. The rate of interest for both underpayments and overpayments is the federal short-term rate determined pursuant to 26 United States Code section 6621(b), plus three percentage points.

E. A person that performs a review and audit under subsection A of this section may not receive compensation that is based, in whole or in part, on either of the following:

1. Finding a particular result.

2. The amount of any underpayment or overpayment of the license fee that is identified because of the review and audit.

F. A complaint by a local government for underpayment of a license fee from a video service provider or by a video service provider for overpayment of a license fee to a local government shall be made pursuant to article 5 of this chapter.

G. A complaint for a violation of the license fee obligations under this chapter may not be made unless a written demand by a local government for payment of the license fees or a written demand by a video service provider for refund of license fees is made within four months after the local government or video service provider realizes it has been damaged or knows or reasonably should know of the damage caused by the alleged violation.

H. A complaint must be filed pursuant to article 5 of this chapter within three years after the written demand is made pursuant to subsection G of this section but not sooner than six months after the written demand.