| 1 | A bill to be entitled |
| 2 | An act relating to research and development corporate |
| 3 | income tax credit; creating s. 220.194, F.S.; providing |
| 4 | legislative findings and intent; creating the Florida |
| 5 | Research and Development Tax Credit for certain purposes; |
| 6 | providing definitions; providing a corporate income tax |
| 7 | credit for research and development expenses; providing |
| 8 | requirements, criteria, procedures, and limitations for |
| 9 | the credit; providing for carrying forward, assignment, or |
| 10 | sale of unused credits; providing restrictions; specifying |
| 11 | a maximum credit amount each state fiscal year; requiring |
| 12 | the Department of Revenue to adopt rules; providing an |
| 13 | effective date. |
| 14 |
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| 15 | Be It Enacted by the Legislature of the State of Florida: |
| 16 |
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| 17 | Section 1. Section 220.194, Florida Statutes, is created |
| 18 | to read: |
| 19 | 220.194 Research and development tax credit.-- |
| 20 | (1) LEGISLATIVE FINDINGS AND INTENT; CREATION OF FLORIDA |
| 21 | RESEARCH AND DEVELOPMENT TAX CREDIT.-- |
| 22 | (a) The Legislature finds that research and development |
| 23 | has become an underlying source of wealth in this century by |
| 24 | generating ideas and technologies that spur productivity and |
| 25 | economic growth. Further, more market sensitive than other |
| 26 | sources of research and development, companies generate the main |
| 27 | body of growth-stimulating innovations. |
| 28 | (b) The Legislature further finds that research and |
| 29 | development tax credits are proven to provide incentives for |
| 30 | corporate research and development beyond expected levels. |
| 31 | Research shows convincingly that, not only is the federal |
| 32 | research and development tax credit an effective tool for |
| 33 | stimulating additional research and development that in turn |
| 34 | leads to faster economic growth, but also that state research |
| 35 | and development tax credit programs are nearly as important to |
| 36 | corporate research and development as the federal research and |
| 37 | development tax credit program and that the typical state |
| 38 | research and development tax credit program has been shown to |
| 39 | increase general, company-funded research and development within |
| 40 | a state, often enhancing the state's competitiveness by enabling |
| 41 | the state to draw research and development activity away from |
| 42 | other states. |
| 43 | (c) Additionally, the Legislature finds that this state |
| 44 | needs a state research and development tax credit program to |
| 45 | ensure economic competitiveness. Unlike this state, more than |
| 46 | half of the other states have research and development tax |
| 47 | credit programs. Without a state research and development tax |
| 48 | credit, this state lags behind the nation in all-important |
| 49 | corporate research and development. |
| 50 | (d) The Legislature therefore hereby creates the Florida |
| 51 | Research and Development Tax Credit to incentivize corporate |
| 52 | research and development activity within the state, sharpen the |
| 53 | state's competitive edge by leveling the playing field with the |
| 54 | state's regional and national competitors, and spur the state's |
| 55 | vibrant innovation economy and attract high-wage, professional |
| 56 | research jobs to the state. |
| 57 | (2) DEFINITIONS.--As used in this section: |
| 58 | (a) "Base amount" means the same as that term is defined |
| 59 | in s. 41 of the Internal Revenue Code of 1986, as amended. |
| 60 | (b) "Business enterprise" means any business or the |
| 61 | headquarters of any such business that is engaged in |
| 62 | manufacturing, warehousing and distributing, processing, |
| 63 | telecommunications, tourism, or research and development |
| 64 | industries. Such term does not include retail businesses. |
| 65 | (c) "Qualified research expenses" means qualified research |
| 66 | expenses for any business enterprise as that term is defined in |
| 67 | s. 41 of the Internal Revenue Code of 1986, as amended, except |
| 68 | that all wages paid and all purchases of services and supplies |
| 69 | must be for research conducted within this state. |
| 70 | (3) TAX CREDIT; AMOUNT; LIMITS; CARRYFORWARD, ASSIGNMENT, |
| 71 | AND SALE.-- |
| 72 | (a) A credit against the tax imposed by this chapter is |
| 73 | authorized for a business enterprise that has qualified research |
| 74 | expenses in this state in a taxable year exceeding a base |
| 75 | amount, provided the business enterprise for the same taxable |
| 76 | year claims and is allowed a research credit under s. 41 of the |
| 77 | Internal Revenue Code of 1986, as amended. |
| 78 | (b) The tax credit provided in paragraph (a) shall be 10 |
| 79 | percent of the expenses exceeding the base amount. |
| 80 | (c) The credit taken in any one taxable year shall not |
| 81 | exceed 50 percent of the business enterprise's remaining net |
| 82 | income tax liability in this state after all other credits have |
| 83 | been applied. |
| 84 | (d) Any unused credit claimed under this section may be |
| 85 | carried forward 10 years from the close of the taxable year in |
| 86 | which the qualified research expenses were made. |
| 87 | (e) Any unused credit claimed under this section may be |
| 88 | assigned or sold to another taxpayer in the state if there has |
| 89 | been no claim for allowance filed within 1 year after the date |
| 90 | the Department of Revenue approved the credit. The purchaser or |
| 91 | assignee must use the newly obtained research and development |
| 92 | tax credit in the taxable year in which the purchase or |
| 93 | assignment of the credit is made. The purchased or assigned |
| 94 | research and development credit cannot be used to offset more |
| 95 | than 75 percent of a tax liability for a taxable year. The |
| 96 | purchased or assigned credit cannot be carried over, carried |
| 97 | back, resold, or refunded. |
| 98 | (f) The maximum credit amount that may be approved during |
| 99 | any state fiscal year is $20 million. |
| 100 | (4) RULES.--The Department of Revenue shall adopt rules |
| 101 | governing the manner and form of applications for credit and may |
| 102 | establish guidelines concerning the requisites for an |
| 103 | affirmative showing of qualification for the credit under this |
| 104 | section. |
| 105 | Section 2. This act shall take effect July 1, 2007. |