Florida Senate - 2010 SB 1184
By Senator Thrasher
8-01192-10 20101184__
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; providing that any unused
11 credit may be carried forward for a specified period;
12 authorizing the sale or assignment of unused credit to
13 certain taxpayers under certain conditions; requiring
14 that a party to a sale or assignment file certain
15 information and documents with the Department of
16 Revenue; requiring that parties to a sale or
17 assignment obtain the department’s approval before
18 completing such sale or assignment; prohibiting the
19 department from unreasonable withholding of such
20 approval; providing requirements for the use tax
21 credits sold or assigned; limiting the total amount of
22 tax credits that may be assigned in a calendar year;
23 providing that applications for credits may be filed
24 on or after a specified date; requiring that the
25 credits be granted in the order in which applications
26 are received; authorizing the department to adopt
27 rules; amending s. 220.02, F.S.; revising legislative
28 intent to include the research and development tax
29 credit in the ordered list according to which credits
30 against corporate income tax or franchise tax are
31 applied; providing an effective date.
32
33 WHEREAS, research and development has become the underlying
34 source of wealth in the 21st century by generating ideas and
35 technologies that encourage productivity and economic growth,
36 and
37 WHEREAS, corporations generate the main body of growth
38 stimulating innovations, and
39 WHEREAS, research and development tax credits provide
40 incentives for corporate research and development beyond
41 expected levels, and
42 WHEREAS, research shows that the federal research and
43 development tax credit is an effective tool for stimulating
44 additional research and development, which in turn leads to
45 faster economic growth, and
46 WHEREAS, state research and development tax credit programs
47 are nearly as important to corporate research and development as
48 the federal research and development tax credit program, and
49 WHEREAS, the typical state research and development tax
50 credit program increases general, corporate-funded research and
51 development within a state, often enhancing the state’s
52 competitiveness by enabling a state to draw research and
53 development activity away from other states, and
54 WHEREAS, this state needs a state research and development
55 tax credit program to ensure economic competitiveness, and
56 WHEREAS, more than half of the states of this nation have a
57 research and development tax credit program, and
58 WHEREAS, Florida lags behind the rest of the nation in
59 important corporate research and development activities because
60 the state does not have a research and development tax credit,
61 and
62 WHEREAS, the Legislature must create a research and
63 development tax credit in order to encourage corporate research
64 and development activity within this state, level the playing
65 field with the state’s regional and national economic
66 competitors, support the state’s vibrant innovation economy, and
67 attract high-wage, professional research jobs to this state,
68 NOW, THEREFORE,
69
70 Be It Enacted by the Legislature of the State of Florida:
71
72 Section 1. Section 220.194, Florida Statutes, is created to
73 read:
74 220.194 Research and development tax credit.—
75 (1) DEFINITIONS.—As used in this section, the term:
76 (a) “Base amount” means the average of the business
77 enterprise’s qualified research expenses in this state allowed
78 under 26 U.S.C. s. 41 for the 4 taxable years preceding the
79 taxable year for which the credit is being determined. The
80 qualified research expenses taken into account in computing the
81 base amount shall be determined on a basis consistent with the
82 determination of qualified research expenses for the credit
83 year.
84 (b) “Base period” means the 4 taxable years preceding the
85 taxable year for which the credit is being determined.
86 (c) “Business enterprise” means any corporation as defined
87 in s. 220.03(1)(e) which is also a target industry business as
88 defined in s. 288.106(1)(o).
89 (d) “Qualified research expenses” means research expenses
90 qualifying for the credit under 26 U.S.C. s. 41 for in-house
91 research expenses incurred in this state or contract research
92 expenses incurred in this state. The term does not include
93 research conducted outside this state, research that is excluded
94 under 26 U.S.C. s. 41, or research conducted by a business
95 enterprise that is not within its principal business activity.
96 (2) TAX CREDIT.—Subject to the limitations contained in
97 paragraph (e), a business enterprise is eligible for a credit
98 against the tax imposed by this chapter if the business
99 enterprise has qualified research expenses in this state in the
100 calendar year exceeding the base amount and, for the same
101 calendar year, claims and is allowed a research credit for such
102 qualified research expenses under 26 U.S.C. s. 41.
103 (a) The tax credit shall be 10 percent of the excess
104 qualified research expenses over the base amount. However, the
105 maximum tax credit for a business enterprise that has not been
106 in existence for the entire base period is reduced by 25 percent
107 for each taxable year for which the business enterprise, or a
108 predecessor corporation that was a business enterprise, did not
109 exist during the base period.
110 (b) The credit taken in any single tax year may not exceed
111 50 percent of the business enterprise’s remaining net income tax
112 liability under this chapter after all other credits have been
113 applied under s. 220.02(8).
114 (c) Any unused credit authorized pursuant to this section
115 may be carried forward and claimed by the taxpayer for up to 5
116 years following the close of the taxable year in which the
117 qualified research expenses are incurred.
118 (d) Any unused credit authorized pursuant to this section
119 may be assigned or sold to another business enterprise if a
120 claim for the allowance has not been filed within 1 calendar
121 year following the date on which the department approved the
122 credit. The business enterprise selling the tax credit and the
123 purchaser or assignee must file an application, waivers of
124 confidentiality, and affidavits to transfer the credit on a form
125 provided by the department and obtain the prior approval of the
126 department for such transfer. The department may not
127 unreasonably withhold such approval. The purchaser or assignee
128 must use the tax credit in the taxable year in which the
129 purchase or assignment of the credit is made. The transfer or
130 purchase of any amount of the tax credit may not be exchanged
131 for less than 75 percent of the credit’s value.
132 (e) The combined total amount of tax credits that may be
133 granted and approved to all business enterprises under this
134 section during any calendar year is $15 million. Applications
135 may be filed with the department on or after March 20 for
136 qualified research expenses incurred within the preceding
137 calendar year, and credits shall be granted in the order in
138 which completed applications are received.
139 (3) RULES.—The department may adopt rules to administer
140 this section, including, but not limited to, rules prescribing
141 forms, application procedures and dates, and notification or
142 other procedures for the sale or assignment of a credit, and may
143 establish guidelines for making an affirmative showing of
144 qualification for a credit and any evidence needed to
145 substantiate a claim for credit under this section.
146 Section 2. Subsection (8) of section 220.02, Florida
147 Statutes, is amended to read:
148 220.02 Legislative intent.—
149 (8) It is the intent of the Legislature that credits
150 against either the corporate income tax or the franchise tax be
151 applied in the following order: those enumerated in s. 631.828,
152 those enumerated in s. 220.191, those enumerated in s. 220.181,
153 those enumerated in s. 220.183, those enumerated in s. 220.182,
154 those enumerated in s. 220.1895, those enumerated in s. 221.02,
155 those enumerated in s. 220.184, those enumerated in s. 220.186,
156 those enumerated in s. 220.1845, those enumerated in s. 220.19,
157 those enumerated in s. 220.185, those enumerated in s. 220.187,
158 those enumerated in s. 220.192, those enumerated in s. 220.193,
159 and those enumerated in s. 288.9916, and those enumerated in s.
160 220.194.
161 Section 3. This act shall take effect July 1, 2010, and is
162 effective for tax years beginning on or after January 1, 2011.