HB 397

1	A bill to be entitled
2	An act relating to economic development; creating the
3	Commercialization Credit Transfer Program; providing
4	legislative findings that it is in the state's interest to
5	promote the commercialization of products and services
6	developed by technology companies; amending s. 213.053,
7	F.S.; authorizing the Department of Revenue to share
8	certain confidential information with the Office of
9	Tourism, Trade, and Economic Development; amending s.
10	220.02, F.S.; adding the certified credits available under
11	s. 220.194, F.S., to the list of credits that may be taken
12	against state corporate income tax; amending s. 220.13,
13	F.S.; redefining the term "adjusted federal income" in
14	relation to net operating losses transferred and payments
15	received for a certified credit pursuant to the
16	Commercialization Credit Transfer Program; amending s.
17	220.16, F.S.; providing for the allocation of financial
18	assistance pursuant to the Commercialization Credit
19	Transfer Program as income in this state; creating s.
20	220.194, F.S.; creating the Commercialization Credit
21	Transfer Program; providing a purpose, intent, goals, and
22	objectives; providing definitions; requiring the office to
23	certify eligible companies for the transfer of corporate
24	income tax net operating loss amounts as certified
25	credits; providing qualifications and an application
26	process and requirements; requiring an application fee;
27	providing for an application deadline; requiring the
28	office to grant or deny an application within a specified
29	time after receiving a completed application; providing
30	for calculating the certified credit amount; providing a
31	maximum amount that may be transferred; providing a
32	penalty; requiring each certified company to file an
33	annual report with the office; requiring the office to
34	create an annual report; requiring the office to adopt
35	rules; authorizing the Department of Revenue to adopt
36	rules; providing for future repeal of the
37	Commercialization Credit Transfer Program; providing
38	appropriations; providing an effective date.
39
40	Be It Enacted by the Legislature of the State of Florida:
41
42	Section 1.  Legislative findings.-The Legislature finds
43	that it is in the best interests of this state to promote the
44	commercialization of products and services developed by
45	technology companies in this state which can lead to the
46	creation of high-wage and high-skilled jobs. One mechanism to
47	this end is the Commercialization Credit Transfer Program.
48	Section 2.  Paragraph (dd) is added to subsection (8) of
49	section 213.053, Florida Statutes, as amended by section 3 of
50	chapter 2010-280, Laws of Florida, to read:
51	213.053  Confidentiality and information sharing.-
52	(8)  Notwithstanding any other provision of this section,
53	the department may provide:
54	(dd)  Information relative to tax credits taken under s.
55	220.194 to the Office of Tourism, Trade, and Economic
56	Development.
57
58	Disclosure of information under this subsection shall be
59	pursuant to a written agreement between the executive director
60	and the agency. Such agencies, governmental or nongovernmental,
61	shall be bound by the same requirements of confidentiality as
62	the Department of Revenue. Breach of confidentiality is a
63	misdemeanor of the first degree, punishable as provided by s.
64	775.082 or s. 775.083.
65	Section 3.  Subsection (8) of section 220.02, Florida
66	Statutes, is amended to read:
67	220.02  Legislative intent.-
68	(8)  It is the intent of the Legislature that credits
69	against either the corporate income tax or the franchise tax be
70	applied in the following order: those enumerated in s. 631.828,
71	those enumerated in s. 220.191, those enumerated in s. 220.181,
72	those enumerated in s. 220.183, those enumerated in s. 220.182,
73	those enumerated in s. 220.1895, those enumerated in s. 221.02,
74	those enumerated in s. 220.184, those enumerated in s. 220.186,
75	those enumerated in s. 220.1845, those enumerated in s. 220.19,
76	those enumerated in s. 220.185, those enumerated in s. 220.1875,
77	those enumerated in s. 220.192, those enumerated in s. 220.193,
78	those enumerated in s. 288.9916, those enumerated in s.
79	220.1899, and those enumerated in s. 220.1896, and those
80	enumerated in s. 220.194.
81	Section 4.  Paragraph (b) of subsection (1) of section
82	220.13, Florida Statutes, is amended to read:
83	220.13  "Adjusted federal income" defined.-
84	(1)  The term "adjusted federal income" means an amount
85	equal to the taxpayer's taxable income as defined in subsection
86	(2), or such taxable income of more than one taxpayer as
87	provided in s. 220.131, for the taxable year, adjusted as
88	follows:
89	(b)  Subtractions.-
90	1.  There shall be subtracted from such taxable income:
91	a.  The net operating loss deduction allowable for federal
92	income tax purposes under s. 172 of the Internal Revenue Code
93	for the taxable year,
94	b.  The net capital loss allowable for federal income tax
95	purposes under s. 1212 of the Internal Revenue Code for the
96	taxable year,
97	c.  The excess charitable contribution deduction allowable
98	for federal income tax purposes under s. 170(d)(2) of the
99	Internal Revenue Code for the taxable year, and
100	d.  The excess contributions deductions allowable for
101	federal income tax purposes under s. 404 of the Internal Revenue
102	Code for the taxable year, except that any net operating loss
103	transferred pursuant to s. 220.194 may not be deducted by the
104	seller.
105
106	However, a net operating loss and a capital loss shall never be
107	carried back as a deduction to a prior taxable year, but all
108	deductions attributable to such losses shall be deemed net
109	operating loss carryovers and capital loss carryovers,
110	respectively, and treated in the same manner, to the same
111	extent, and for the same time periods as are prescribed for such
112	carryovers in ss. 172 and 1212, respectively, of the Internal
113	Revenue Code.
114	2.  There shall be subtracted from such taxable income any
115	amount to the extent included therein the following:
116	a.  Dividends treated as received from sources without the
117	United States, as determined under s. 862 of the Internal
118	Revenue Code.
119	b.  All amounts included in taxable income under s. 78 or
120	s. 951 of the Internal Revenue Code.
121
122	However, as to any amount subtracted under this subparagraph,
123	there shall be added to such taxable income all expenses
124	deducted on the taxpayer's return for the taxable year which are
125	attributable, directly or indirectly, to such subtracted amount.
126	Further, no amount shall be subtracted with respect to dividends
127	paid or deemed paid by a Domestic International Sales
128	Corporation.
129	3.  In computing "adjusted federal income" for taxable
130	years beginning after December 31, 1976, there shall be allowed
131	as a deduction the amount of wages and salaries paid or incurred
132	within this state for the taxable year for which no deduction is
133	allowed pursuant to s. 280C(a) of the Internal Revenue Code
134	(relating to credit for employment of certain new employees).
135	4.  There shall be subtracted from such taxable income any
136	amount of nonbusiness income included therein, including
137	payments received for a certified credit pursuant to s. 220.194.
138	5.  There shall be subtracted any amount of taxes of
139	foreign countries allowable as credits for taxable years
140	beginning on or after September 1, 1985, under s. 901 of the
141	Internal Revenue Code to any corporation which derived less than
142	20 percent of its gross income or loss for its taxable year
143	ended in 1984 from sources within the United States, as
144	described in s. 861(a)(2)(A) of the Internal Revenue Code, not
145	including credits allowed under ss. 902 and 960 of the Internal
146	Revenue Code, withholding taxes on dividends within the meaning
147	of sub-subparagraph 2.a., and withholding taxes on royalties,
148	interest, technical service fees, and capital gains.
149	6.  Notwithstanding any other provision of this code,
150	except with respect to amounts subtracted pursuant to
151	subparagraphs 1. and 3., any increment of any apportionment
152	factor which is directly related to an increment of gross
153	receipts or income which is deducted, subtracted, or otherwise
154	excluded in determining adjusted federal income shall be
155	excluded from both the numerator and denominator of such
156	apportionment factor. Further, all valuations made for
157	apportionment factor purposes shall be made on a basis
158	consistent with the taxpayer's method of accounting for federal
159	income tax purposes.
160	Section 5.  Subsection (5) is added to section 220.16,
161	Florida Statutes, to read:
162	220.16  Allocation of nonbusiness income.-Nonbusiness
163	income shall be allocated as follows:
164	(5)  The amount of financial assistance received in
165	exchange for transferring a net operating loss as authorized by
166	s. 220.194 is allocable to this state.
167	Section 6.  Section 220.194, Florida Statutes, is created
168	to read:
169	220.194  Commercialization Credit Transfer Program;
170	transfer of net loss carryforward as a certified credit.-
171	(1)  PURPOSE; GOALS AND OBJECTIVES.-It is the intent of the
172	Legislature that the Commercialization Credit Transfer Program
173	act as a catalyst for eligible technology companies to
174	accelerate their revenue and job growth and their market
175	penetration by monetizing their net operating losses into
176	transferable credits. The program's objectives include:
177	(a)  Accelerating the entry of new technology-based
178	products and services into the marketplace;
179	(b)  Producing high-wage, technology-based jobs for this
180	state; and
181	(c)  Encouraging the expansion of high-impact technology-
182	based firms in this state.
183	(2)  DEFINITIONS.-As used in this section, the term:
184	(a)  "Certified credit" means the product of the net
185	operating loss generated in the current year apportioned to
186	Florida, multiplied by the corporate income tax rate imposed
187	during the year in which the loss occurred.
188	(b)  "Department" means the Department of Revenue.
189	(c)  "Office" means the Office of Tourism, Trade, and
190	Economic Development.
191	(3)  ELIGIBILITY.-A company seeking to transfer a certified
192	credit shall be certified by the office if it timely files a
193	completed application and meets the requirements of this
194	subsection. For purposes of this subsection, all conditions in
195	paragraphs (a)-(g) must be met by the date that the application
196	is filed with the office. In order to be certified, a company
197	must demonstrate that it:
198	(a)  Is registered with the Secretary of State to operate
199	in this state and is operating in Florida.
200	(b)  Is primarily engaged in developing, manufacturing,
201	producing, or providing technology for commercial or public
202	purposes and has a federally assigned NAICS code identifying the
203	company as such.
204	(c)  Has fewer than 100 full-time employees worldwide,
205	including full-time employees leased to the applicant, of which
206	at least 75 percent work full-time in this state at the time the
207	transfer of certified credits is first allowed.
208	(d)  Has been audited by an independent certified public
209	accountant, and:
210	1.  Has not had positive net income in any of the 2
211	previous years of ongoing operations;
212	2.  Has reported a net operating loss in any of the 2
213	previous years of operation; and
214	3.  Is not at least 50 percent owned or controlled,
215	directly or indirectly, by another corporation that has
216	demonstrated positive net income in any of the 2 previous years
217	of ongoing operations, or is not part of a consolidated group of
218	affiliated corporations, as filed for federal income tax
219	purposes, which in the aggregate demonstrated positive net
220	income in any of the 2 previous years of ongoing operations.
221	(e)  Has at least one active application for a patent under
222	35 U.S.C. s. 111(a) on file with the United States Patent and
223	Trademark Office.
224	(f)  Has received research grants from governmental
225	entities, foundations, or other private entities, or received
226	financial assistance from investors.
227	(g)  Has an established business plan that describes its
228	commercialization strategy, a business-development plan that
229	includes revenue projections and a strategy for becoming
230	profitable, and a timeline for development which addresses
231	revenue growth and job creation in this state.
232	(h)  Has certified that:
233	1.  It will not transfer a certified credit in exchange for
234	private financial assistance in an amount that is less than 80
235	percent of the certified credit;
236	2.  All proceeds from the transfer will be expended to
237	support the operation or expansion of the company's business
238	activity in this state; and
239	3.  Upon transfer of a certified credit, it will notify the
240	office of the amount within 30 days after each certified credit
241	is transferred, the amount of the financial compensation for the
242	credit received, and the identity of the purchaser of the
243	certified credit.
244	(4)  APPLICATION FOR CERTIFICATION.-
245	(a)  A completed application must be filed with the office
246	on or after 2 p.m., on the first business day of August
247	commencing in 2011. The office may investigate the
248	qualifications of each company applicant and may require by rule
249	the applicant to provide such evidence of its qualification as
250	is necessary to ensure compliance with the requirements of this
251	section, including, but not limited to, the state corporate
252	income tax return supporting the request for certification of a
253	certified credit, audited financial statements, federal tax
254	returns, and state and federal employment filings.
255	(b)  The office shall require a nonrefundable application
256	fee of $100 per application submitted. The department shall
257	cooperate with the office in its review of the applications.
258	(c)  The office shall grant or deny an application in full
259	or in part within 90 days after receiving a completed
260	application containing the necessary information, including
261	payment of the application fee. If the office denies any part of
262	the application, it shall inform the applicant of the grounds
263	for the denial.
264	(d)  This section does not create a presumption that a
265	company applicant will be approved by the office to transfer its
266	certified credits. However, the office may issue a nonbinding
267	opinion letter, upon the request of a prospective applicant, as
268	to its eligibility and the potential amount of certified credits
269	available.
270	(5)  CALCULATION OF CERTIFIED CREDIT TRANSFER AMOUNT AND
271	LIMITATIONS.-When submitting an application for certification, a
272	company shall state the amount of the net operating loss,
273	including any net operating loss carryover, which it requests to
274	be transferred as a certified credit. To the extent allowed as a
275	deduction in this state, a reported net operating loss not
276	otherwise taken may be certified by the office for transfer by a
277	certified company in exchange for private financial assistance
278	from a purchaser as follows:
279	(a)  The net operating loss shall be transferred as a
280	certified credit.
281	(b)  The maximum amount of certified credits which a
282	company may transfer during its existence may not exceed $1
283	million.
284	(c)  The office may not certify the transfer of more than
285	$3 million in certified credits during a state fiscal year.
286	(d)  The certified company is liable if, after a transfer,
287	its net operating loss is adjusted by amendment or as a result
288	of any other recomputation or redetermination of federal or
289	Florida taxable income or loss. The certified company is also
290	liable for a penalty equal to the amount of the credit
291	transferred, reduced in proportion to the amount of the net
292	operating loss certified for transfer over the amount of the
293	certified net operating loss disallowed.
294	(e)  The certified company and its successors shall
295	maintain all records necessary to support the reported amount of
296	certified credits.
297	(6)  PURCHASE OF TRANSFERRED CERTIFIED CREDITS.-
298	(a)  The certified credit must be reported as a credit
299	against tax due by the unaffiliated corporate purchaser on the
300	next tax return due to be filed by the purchaser, but in no case
301	may it be reported later than 1 year after the date of transfer.
302	(b)  If the certified credit is larger than the amount owed
303	the state on the tax return for the time period in which the
304	credit is claimed, after applying the other credits and unused
305	credit carryovers in the order provided in s. 220.02(8), the
306	amount of the credit for that time period shall be the amount
307	owed the state on that tax return. Unused certified credit
308	amounts remaining may not be carried forward.
309	(c)  The purchaser of a certified credit amount may not
310	further sell, or otherwise transfer, the certified credit
311	amount.
312	(d)  It is the responsibility of the certified company that
313	transferred the certified credit amount to notify the office,
314	within 30 days after transfer, of the amount of each certified
315	credit transferred, the amount of the financial assistance
316	received, and the identity of the purchaser of the certified
317	credit. The office shall certify to the department the same
318	information within 14 working days.
319	(7)  REPORTING REQUIREMENTS.-
320	(a)  Each company that is certified to transfer its
321	certified credit must provide the office with an annual report
322	on its development covering the year after it receives funds
323	from transferring its certified credits. The report must include
324	a summary of the company's commercialization strategy; business
325	development plan; timeline for development; and actual
326	employment and employment projections, both total and within
327	this state only. The report is due January 3 of each applicable
328	year.
329	(b)  The office shall provide a report by February 1 each
330	year to the Governor, the President of the Senate, and the
331	Speaker of the House of Representatives containing a synopsis of
332	the individual company reports described in paragraph (a).
333	(8)  RULEMAKING AUTHORITY.-
334	(a)  The office shall adopt rules to administer this
335	section. The rules must establish the criteria for qualified
336	technology research and experimental development, production, or
337	provision of technology for commercial or public purposes; the
338	format of application forms; and the procedures to implement the
339	program.
340	(b)  The department may adopt rules to administer this
341	section.
342	(9)  This section is repealed effective June 30, 20l6,
343	unless reviewed and saved from repeal through reenactment by the
344	Legislature.
345	Section 7.  (1)  The sum of $.... is appropriated to the
346	Economic Development Trust Fund to be drawn, as needed, to pay
347	the administrative costs incurred by the Office of Tourism,
348	Trade, and Economic Development and associated with implementing
349	the commercialization credit transfer program.
350	(2)  The sum of $.... is appropriated to the Department of
351	Revenue to pay the initial administrative costs associated with
352	amending tax forms, modifying computer software, creating a
353	tracking system for the transferred credits, and otherwise
354	implementing the commercialization credit transfer program.
355	Section 8.  This act shall take effect July 1, 2011.

CODING: Words stricken are deletions; words underlined are additions.