Florida Senate - 2015                              CS for SB 980
       
       
        
       By the Committee on Commerce and Tourism; and Senator Soto
       
       
       
       
       
       577-02336-15                                           2015980c1
    1                        A bill to be entitled                      
    2         An act relating to defense contracting; creating s.
    3         288.1046, F.S.; establishing the Defense Works in
    4         Florida Incentive; providing definitions; authorizing
    5         a Florida prime contractor to apply to the Department
    6         of Economic Opportunity to certify that it may reduce
    7         its computation of adjusted federal income by a
    8         specified amount; providing application requirements
    9         and procedures; providing caps for the aggregate
   10         amount of qualified subcontract awards that may be
   11         certified per calendar year; authorizing the
   12         Department of Economic Opportunity and the Department
   13         of Revenue to adopt rules; amending s. 220.13, F.S.;
   14         revising the definition of the term “adjusted federal
   15         income” to provide for a reduction in taxable income
   16         equal to a specified amount of qualified subcontract
   17         awards certified by the Department of Economic
   18         Opportunity; providing an effective date.
   19          
   20  Be It Enacted by the Legislature of the State of Florida:
   21  
   22         Section 1. Section 288.1046, Florida Statutes, is created
   23  to read:
   24         288.1046Defense Works in Florida Incentive.—
   25         (1) As used in this section, the term:
   26         (a) “Florida prime contractor” means a business entity
   27  operating in the state that is awarded a prime contract.
   28         (b) “Florida small business subcontractor” means a business
   29  entity that:
   30         1. Maintains its primary place of business in the state;
   31         2. Has 250 or fewer employees at the time a qualified
   32  subcontract award is made;
   33         3. Is awarded a subcontract from a Florida prime
   34  contractor; and
   35         4. Has no subsidiary or affiliate business relationship to
   36  the prime contractor making the award.
   37         (c) “Prime contract” means a contract that is awarded
   38  directly from the Federal Government.
   39         (d) “Qualified defense work” means a prime contract awarded
   40  for manufacturing, engineering, construction, distribution,
   41  research, development, or other activities related to equipment,
   42  supplies, technology, or other goods or services that directly
   43  or indirectly support the United States Armed Forces or that can
   44  be reasonably determined to support national security, including
   45  space-related activities.
   46         (e) “Qualified subcontract award” means qualified defense
   47  work, in part or in whole, subcontracted from a Florida prime
   48  contractor to a Florida small business subcontractor, which is
   49  executed in the state and valued at more than $250,000. The term
   50  does not include subcontracts executed before July 1, 2015.
   51         (2) A Florida prime contractor may apply to the department
   52  to certify that it may reduce its computation of adjusted
   53  federal income under s. 220.13 by 4 percent of the qualified
   54  subcontract award, divided by the apportionment factor as
   55  defined in s. 220.15, if such prime contractor:
   56         (a) Is subject to chapter 220;
   57         (b) Is awarded qualified defense work; and
   58         (c) Makes a qualified subcontract award.
   59         (3) A Florida prime contractor may reduce its adjusted
   60  federal income under subsection (2) only for taxable years
   61  beginning on or after January 1, 2016, and must apply separately
   62  to the department for each qualified subcontract award and
   63  provide the department required documentation, including, but
   64  not limited to, the award application and copies of contracts,
   65  tax records, or employment records.
   66         (4) The department may establish application, approval,
   67  appeal, and accountability processes as necessary. The
   68  department may consult with Enterprise Florida, Inc., and the
   69  Florida Defense Support Task Force as necessary to administer
   70  this section.
   71         (a) Within 10 days after certifying a qualified subcontract
   72  award, the department shall provide:
   73         1. A letter certifying the award to the applicant; and
   74         2. A copy of the letter certifying the award to the
   75  Department of Revenue.
   76         (b) The department may certify, for each Florida prime
   77  contractor applicant per calendar year, up to $250 million in
   78  aggregate qualified subcontract awards.
   79         (c) The department may certify in total, per calendar year,
   80  up to $2.5 billion in aggregate qualified subcontract awards.
   81         (d) For a multiyear qualified subcontract award, the
   82  department shall certify the full amount of the award under
   83  paragraphs (b) and (c) in the calendar year in which it was
   84  awarded.
   85         (e) The Florida prime contractor may reduce its adjusted
   86  federal income under subsection (2) in the taxable years in
   87  which payments are made to the Florida small business
   88  subcontractor.
   89         (5) The department and the Department of Revenue may adopt
   90  rules to administer this section.
   91         Section 2. Paragraph (b) of subsection (1) of section
   92  220.13, Florida Statutes, is amended to read:
   93         220.13 “Adjusted federal income” defined.—
   94         (1) The term “adjusted federal income” means an amount
   95  equal to the taxpayer’s taxable income as defined in subsection
   96  (2), or such taxable income of more than one taxpayer as
   97  provided in s. 220.131, for the taxable year, adjusted as
   98  follows:
   99         (b) Subtractions.—
  100         1. There shall be subtracted from such taxable income:
  101         a. The net operating loss deduction allowable for federal
  102  income tax purposes under s. 172 of the Internal Revenue Code
  103  for the taxable year, except that any net operating loss that is
  104  transferred pursuant to s. 220.194(6) may not be deducted by the
  105  seller,
  106         b. The net capital loss allowable for federal income tax
  107  purposes under s. 1212 of the Internal Revenue Code for the
  108  taxable year,
  109         c. The excess charitable contribution deduction allowable
  110  for federal income tax purposes under s. 170(d)(2) of the
  111  Internal Revenue Code for the taxable year, and
  112         d. The excess contributions deductions allowable for
  113  federal income tax purposes under s. 404 of the Internal Revenue
  114  Code for the taxable year.
  115  
  116  However, a net operating loss and a capital loss shall never be
  117  carried back as a deduction to a prior taxable year, but all
  118  deductions attributable to such losses shall be deemed net
  119  operating loss carryovers and capital loss carryovers,
  120  respectively, and treated in the same manner, to the same
  121  extent, and for the same time periods as are prescribed for such
  122  carryovers in ss. 172 and 1212, respectively, of the Internal
  123  Revenue Code.
  124         2. There shall be subtracted from such taxable income any
  125  amount to the extent included therein the following:
  126         a. Dividends treated as received from sources without the
  127  United States, as determined under s. 862 of the Internal
  128  Revenue Code.
  129         b. All amounts included in taxable income under s. 78 or s.
  130  951 of the Internal Revenue Code.
  131  
  132  However, as to any amount subtracted under this subparagraph,
  133  there shall be added to such taxable income all expenses
  134  deducted on the taxpayer’s return for the taxable year which are
  135  attributable, directly or indirectly, to such subtracted amount.
  136  Further, no amount shall be subtracted with respect to dividends
  137  paid or deemed paid by a Domestic International Sales
  138  Corporation.
  139         3. In computing “adjusted federal income” for taxable years
  140  beginning after December 31, 1976, there shall be allowed as a
  141  deduction the amount of wages and salaries paid or incurred
  142  within this state for the taxable year for which no deduction is
  143  allowed pursuant to s. 280C(a) of the Internal Revenue Code
  144  (relating to credit for employment of certain new employees).
  145         4. There shall be subtracted from such taxable income any
  146  amount of nonbusiness income included therein.
  147         5. There shall be subtracted any amount of taxes of foreign
  148  countries allowable as credits for taxable years beginning on or
  149  after September 1, 1985, under s. 901 of the Internal Revenue
  150  Code to any corporation which derived less than 20 percent of
  151  its gross income or loss for its taxable year ended in 1984 from
  152  sources within the United States, as described in s.
  153  861(a)(2)(A) of the Internal Revenue Code, not including credits
  154  allowed under ss. 902 and 960 of the Internal Revenue Code,
  155  withholding taxes on dividends within the meaning of sub
  156  subparagraph 2.a., and withholding taxes on royalties, interest,
  157  technical service fees, and capital gains.
  158         6. There shall be subtracted from such taxable income 4
  159  percent of the amount of the qualified subcontract award
  160  certified by the Department of Economic Opportunity and paid to
  161  the subcontractor pursuant to s. 288.1046, divided by the
  162  apportionment factor as defined in s. 220.15.
  163         7.6. Notwithstanding any other provision of this code,
  164  except with respect to amounts subtracted pursuant to
  165  subparagraphs 1. and 3., any increment of any apportionment
  166  factor which is directly related to an increment of gross
  167  receipts or income which is deducted, subtracted, or otherwise
  168  excluded in determining adjusted federal income shall be
  169  excluded from both the numerator and denominator of such
  170  apportionment factor. Further, all valuations made for
  171  apportionment factor purposes shall be made on a basis
  172  consistent with the taxpayer’s method of accounting for federal
  173  income tax purposes.
  174         Section 3. This act shall take effect July 1, 2015.