Florida Senate - 2011                                     SB 942
       
       
       
       By Senator Bogdanoff
       
       
       
       
       25-00613-11                                            2011942__
    1                        A bill to be entitled                      
    2         An act relating to tax credits for research and
    3         development; creating s. 220.194, F.S.; providing
    4         definitions; providing a tax credit for certain
    5         research and development expenses; providing
    6         eligibility requirements for research and development
    7         tax credits; providing limitations regarding
    8         eligibility; providing an amount for such credit;
    9         providing a maximum amount of credit that may be taken
   10         during a single tax year by a business enterprise;
   11         providing that any unused credit may be carried
   12         forward for a specified period; authorizing the sale
   13         or assignment of unused credits to certain taxpayers
   14         under certain conditions; requiring prior approval
   15         from the Department of Revenue before an unused tax
   16         credit amount may be sold; prohibiting the Department
   17         of Revenue from unreasonably withholding approval to
   18         sell or transfer an unused tax credit amount;
   19         requiring that a party to a sale or assignment file
   20         certain information and documents with the department;
   21         providing requirements for the use of tax credits sold
   22         or assigned; limiting the total amount of tax credits
   23         which may be approved by the department in a calendar
   24         year; providing that applications for credits may be
   25         filed on or after a specified date; requiring that the
   26         credits be granted in the order in which applications
   27         are received; authorizing the department to adopt
   28         rules; amending s. 220.02, F.S.; revising legislative
   29         intent to include the research and development tax
   30         credit in the ordered list according to which credits
   31         against corporate income tax or franchise tax are
   32         applied; providing for application; providing an
   33         effective date.
   34  
   35         WHEREAS, research and development has become the underlying
   36  source of wealth in the 21st century by generating ideas and
   37  technologies that encourage productivity and economic growth,
   38  and
   39         WHEREAS, corporations generate the main body of growth
   40  stimulating innovations, and
   41         WHEREAS, research and development tax credits provide
   42  incentives for corporate research and development beyond
   43  expected levels, and
   44         WHEREAS, research shows that the federal research and
   45  development tax credit is an effective tool for stimulating
   46  additional research and development, which, in turn, leads to
   47  faster economic growth, and
   48         WHEREAS, state research and development tax credit programs
   49  are nearly as important to corporate research and development as
   50  the federal research and development tax credit program, and
   51         WHEREAS, the typical state research and development tax
   52  credit program increases general, corporate-funded research and
   53  development within a state, often enhancing the state’s
   54  competitiveness by enabling a state to draw research and
   55  development activity away from other states, and
   56         WHEREAS, this state needs a state research and development
   57  tax credit program to ensure economic competitiveness, and
   58         WHEREAS, more than one-half of the states in this nation
   59  have a research and development tax credit program, and
   60         WHEREAS, Florida lags behind the rest of the nation in
   61  important corporate research and development activities because
   62  the state does not have a research and development tax credit,
   63  and
   64         WHEREAS, the Legislature must create a research and
   65  development tax credit in order to encourage corporate research
   66  and development activity within this state, level the playing
   67  field with the state’s regional and national economic
   68  competitors, support the state’s vibrant innovation economy, and
   69  attract high-wage, professional research jobs to this state,
   70  NOW, THEREFORE,
   71  
   72  Be It Enacted by the Legislature of the State of Florida:
   73  
   74         Section 1. Section 220.194, Florida Statutes, is created to
   75  read:
   76         220.194Research and development tax credit.—
   77         (1) DEFINITIONS.—As used in this section, the term:
   78         (a) “Base amount” means the business enterprise’s qualified
   79  research expenses in this state allowed under 26 U.S.C. s. 41
   80  divided by the number of complete taxable years in the base
   81  period immediately preceding the taxable year for which the
   82  credit is being determined. The qualified research expenses
   83  taken into account in computing the base amount shall be
   84  determined on a basis consistent with the determination of
   85  qualified research expenses for the credit year.
   86         (b) “Base period” means the 4 taxable years preceding the
   87  taxable year for which the credit is being determined, or the
   88  number of complete taxable years the business enterprise has
   89  been in existence, whichever is shorter.
   90         (c)“Business enterprise” means any corporation as defined
   91  in s. 220.03 which is also a target industry business as defined
   92  in or pursuant to s. 288.106(1)(o).
   93         (d)“Qualified research expenses” mean research expenses
   94  qualifying for the credit under 26 U.S.C. s. 41 for in-house
   95  research expenses incurred in this state or contract research
   96  expenses incurred in this state. The term does not include
   97  research conducted outside this state or expenses for research
   98  that does not qualify for a credit under 26 U.S.C. s. 41.
   99         (2)TAX CREDIT.Subject to the limitations contained in
  100  paragraph (e), a business enterprise is eligible for a credit
  101  against the tax imposed by this chapter if the business
  102  enterprise incurred qualified research expenses in this state in
  103  the taxable year which exceed the base amount and, for the same
  104  taxable year, claims and is allowed a research credit for such
  105  qualified research expenses under 26 U.S.C. s. 41.
  106         (a)The tax credit shall be 10 percent of the excess
  107  qualified research expenses over the base amount. However, the
  108  maximum tax credit for a business enterprise that has not been
  109  in existence for at least 4 taxable years is reduced by 25
  110  percent for each complete taxable year for which the business
  111  enterprise, or a predecessor corporation that was a business
  112  enterprise, did not exist during the base period.
  113         (b)The credit taken in any single tax year may not exceed
  114  50 percent of the business enterprise’s remaining net income tax
  115  liability under this chapter after all other credits have been
  116  applied in the order specified in s. 220.02(8).
  117         (c)Any unused credit authorized under this section may be
  118  carried forward and claimed by the taxpayer for up to 5 years
  119  following the close of the taxable year in which the qualified
  120  research expenses are incurred.
  121         (d) Upon prior approval by the department, any unused
  122  credit authorized pursuant to this section may be assigned or
  123  sold to another business enterprise if a claim for the credit
  124  has not been filed within 1 calendar year following the date on
  125  which the department approved the credit. The business
  126  enterprise selling the tax credit and the purchaser or assignee
  127  must file an application, waivers of confidentiality, and
  128  affidavits to transfer the credit on a form provided by the
  129  department. The department may not unreasonably withhold such
  130  approval. The purchaser or assignee must use the tax credit in
  131  the taxable year in which the purchase or assignment of the
  132  credit is made. The transfer or purchase of any amount of the
  133  tax credit must be exchanged for at least 75 percent of the
  134  value of the credit.
  135         (e)The combined total amount of tax credits which may be
  136  granted to and approved for all business enterprises under this
  137  section during any calendar year is $15 million. Applications
  138  may be filed with the department on or after March 20 for
  139  qualified research expenses incurred within the preceding
  140  calendar year, and credits shall be granted in the order in
  141  which completed applications are received.
  142         (3)RULES.—The department may adopt rules to administer
  143  this section, including, but not limited to, rules prescribing
  144  forms, application procedures and dates, and notification or
  145  other procedures for the sale or assignment of a credit, and may
  146  establish guidelines for making an affirmative showing of
  147  qualification for a credit and any evidence needed to
  148  substantiate a claim for credit under this section.
  149         Section 2. Subsection (8) of section 220.02, Florida
  150  Statutes, is amended to read:
  151         220.02 Legislative intent.—
  152         (8) It is the intent of the Legislature that credits
  153  against either the corporate income tax or the franchise tax be
  154  applied in the following order: those enumerated in s. 631.828,
  155  those enumerated in s. 220.191, those enumerated in s. 220.181,
  156  those enumerated in s. 220.183, those enumerated in s. 220.182,
  157  those enumerated in s. 220.1895, those enumerated in s. 221.02,
  158  those enumerated in s. 220.184, those enumerated in s. 220.186,
  159  those enumerated in s. 220.1845, those enumerated in s. 220.19,
  160  those enumerated in s. 220.185, those enumerated in s. 220.1875,
  161  those enumerated in s. 220.192, those enumerated in s. 220.193,
  162  those enumerated in s. 288.9916, those enumerated in s.
  163  220.1899, and those enumerated in s. 220.1896, and those
  164  enumerated in s. 220.194.
  165         Section 3. This act shall take effect July 1, 2011, and is
  166  effective for tax years beginning on or after January 1, 2012.