Florida Senate - 2022                                    SB 1878
       
       
        
       By Senator Gruters
       
       
       
       
       
       23-00592B-22                                          20221878__
    1                        A bill to be entitled                      
    2         An act relating to the capital investment tax credit;
    3         amending s. 220.191, F.S.; defining and redefining
    4         terms; providing a credit against the corporate income
    5         tax, the sales and use tax, or a stated combination of
    6         the two taxes to a qualifying business that
    7         establishes a qualifying project for the creation of
    8         intellectual property which meets a certain capital
    9         investment threshold; specifying the calculation of
   10         the credit; authorizing use of the credit or portions
   11         of the credit by the business or members of its
   12         affiliated group of corporations; authorizing use of
   13         the credit within a certain timeframe; requiring the
   14         department to grant credits within a certain timeframe
   15         after costs are certified by the Department of
   16         Economic Opportunity; providing for revocation and
   17         rescindment of credits under certain circumstances;
   18         conforming provisions to changes made by the act;
   19         amending s. 288.1089, F.S.; revising the definition of
   20         the term “cumulative investment”; providing
   21         applicability; providing an effective date.
   22          
   23  Be It Enacted by the Legislature of the State of Florida:
   24  
   25         Section 1. Section 220.191, Florida Statutes, is amended to
   26  read:
   27         220.191 Capital investment tax credit.—
   28         (1) DEFINITIONS.—As used in For purposes of this section,
   29  the term:
   30         (a) “Commencement of operations” means the beginning of
   31  active operations by a qualifying business of the principal
   32  function for which a qualifying project was constructed.
   33         (b) “Cumulative capital investment” means the total capital
   34  investment in land, buildings, and equipment made in connection
   35  with a qualifying project during the period from the beginning
   36  of construction of the project to the commencement of
   37  operations.
   38         (c) “Cumulative intellectual property investment” means the
   39  total investment for the development of intellectual property
   40  during the period from the start date of the project to the
   41  completion of the project in buildings or equipment; in wages,
   42  salaries, or other compensation paid to employees, including
   43  amounts paid through an employee leasing company; and any
   44  employer-paid taxes and benefits, regardless of location.
   45         (d)“Direct production costs” means direct expenses related
   46  to the preproduction, development or filming, and postproduction
   47  of intellectual property. The term does not include the
   48  distribution and marketing of intellectual property.
   49         (e)1. “Eligible capital costs” means all expenses incurred
   50  by a qualifying business in connection with:
   51         a. The acquisition, construction, installation, and
   52  equipping of a qualifying project during the period from the
   53  beginning of construction of the project to the commencement of
   54  operations; or
   55         b.A qualifying project for the development or creation of
   56  intellectual property during the period from the start date of
   57  the project to the completion of the project.
   58         2.The term includes, including, but is not limited to:
   59         a.1. The costs of acquiring, constructing, installing,
   60  equipping, and financing a qualifying project, including all
   61  obligations incurred for labor and obligations to contractors,
   62  subcontractors, builders, and materialmen.
   63         b.2. The costs of acquiring land or rights to land and any
   64  cost incidental thereto, including recording fees.
   65         c.3. The costs of architectural and engineering services,
   66  including test borings, surveys, estimates, plans and
   67  specifications, preliminary investigations, environmental
   68  mitigation, and supervision of construction, as well as the
   69  performance of all duties required by or consequent to the
   70  acquisition, construction, installation, and equipping of a
   71  qualifying project.
   72         d.4. The costs associated with the installation of fixtures
   73  and equipment; surveys, including archaeological and
   74  environmental surveys; site tests and inspections; subsurface
   75  site work and excavation; removal of structures, roadways, and
   76  other surface obstructions; filling, grading, paving, and
   77  provisions for drainage, storm water retention, and installation
   78  of utilities, including water, sewer, sewage treatment, gas,
   79  electricity, communications, and similar facilities; and offsite
   80  construction of utility extensions to the boundaries of the
   81  property.
   82  
   83  Eligible capital costs do shall not include the cost of any
   84  property previously owned or leased by the qualifying business.
   85         (f)“Employer-paid taxes and benefits” includes social
   86  security tax; Medicare tax; federal unemployment and state
   87  reemployment assistance taxes; workers compensation premiums
   88  and benefits; vacation pay, holiday pay, and sick pay; payroll
   89  handling fees; mileage; car allowances; housing allowances; and
   90  per diem.
   91         (g)(d) “Income generated by or arising out of the
   92  qualifying project” means the qualifying project’s annual
   93  taxable income as determined by generally accepted accounting
   94  principles and under s. 220.13. If a qualifying business has
   95  more than one qualifying project pursuant to subparagraph
   96  (2)(a)1., the term means the annual taxable income as determined
   97  by generally accepted accounting principles and under s. 220.13
   98  for each qualifying project, aggregated during the years that
   99  more than one qualifying project is allowed to claim credits.
  100         (h)(e)“Intellectual property” means a qualifying
  101  copyrightable project for which the cumulative intellectual
  102  property investment is principally paid directly or indirectly
  103  for the creation of the project.
  104         (i) “Jobs” means full-time equivalent positions, as that
  105  term is consistent with terms used by the Department of Economic
  106  Opportunity and the United States Department of Labor for
  107  purposes of reemployment assistance tax administration and
  108  employment estimation, resulting directly from a project in this
  109  state. The term does not include temporary construction jobs
  110  involved in the construction of the project facility.
  111         (j)(f) “Qualifying business” means a business which
  112  establishes a qualifying project in this state and which is
  113  certified by the Department of Economic Opportunity to receive
  114  tax credits pursuant to this section.
  115         (k)“Qualifying copyrightable project” means television or
  116  streaming video projects that include only the following
  117  content: series, pilots, commercial advertisements, music
  118  videos, music, animation, interactive entertainment, or sound
  119  recording projects used in series or pilots. The term is limited
  120  to projects recorded in this state, in whole or in part. The
  121  term includes projects provided for distribution using delivery
  122  systems that include film, videotape, computer disc, laser disc,
  123  and any element of the digital domain from which the program is
  124  viewed or reproduced and which is intended for licensing for
  125  exhibition by individual television stations, groups of
  126  stations, networks, cable television stations, public
  127  broadcasting stations, corporations, live venues, the Internet,
  128  or any other channel of exhibition except for theaters. The term
  129  does not include software or feature-length films exceeding 80
  130  minutes in length.
  131         (l)(g) “Qualifying project” means a facility or project in
  132  this state meeting one or more of the following criteria:
  133         1. A new or expanding facility in this state which creates
  134  at least 100 new jobs in this state and is in one of the high
  135  impact sectors identified by Enterprise Florida, Inc., and
  136  certified by the Department of Economic Opportunity pursuant to
  137  s. 288.108(6), including, but not limited to, aviation,
  138  aerospace, automotive, and silicon technology industries.
  139  However, between July 1, 2011, and June 30, 2014, the
  140  requirement that a facility be in a high-impact sector is waived
  141  for any otherwise eligible business from another state which
  142  locates all or a portion of its business to a Disproportionally
  143  Affected County. For purposes of this section, the term
  144  “Disproportionally Affected County” means Bay County, Escambia
  145  County, Franklin County, Gulf County, Okaloosa County, Santa
  146  Rosa County, Walton County, or Wakulla County.
  147         2. A new or expanded facility in this state which is
  148  engaged in a target industry designated pursuant to the
  149  procedure specified in s. 288.106(2) and which is induced by
  150  this credit to create or retain at least 1,000 jobs in this
  151  state, provided that at least 100 of those jobs are new, pay an
  152  annual average wage of at least 130 percent of the average
  153  private sector wage in the area as defined in s. 288.106(2), and
  154  make a cumulative capital investment of at least $100 million.
  155  Jobs may be considered retained only if there is significant
  156  evidence that the loss of jobs is imminent. Notwithstanding
  157  subsection (2), annual credits against the tax imposed by this
  158  chapter may not exceed 50 percent of the increased annual
  159  corporate income tax liability or the premium tax liability
  160  generated by or arising out of a project qualifying under this
  161  subparagraph. A facility that qualifies under this subparagraph
  162  for an annual credit against the tax imposed by this chapter may
  163  take the tax credit for a period not to exceed 5 years.
  164         3. A new or expanded headquarters facility in this state
  165  which locates in an enterprise zone and brownfield area and is
  166  induced by this credit to create at least 1,500 jobs which on
  167  average pay at least 200 percent of the statewide average annual
  168  private sector wage, as published by the Department of Economic
  169  Opportunity, and which new or expanded headquarters facility
  170  makes a cumulative capital investment in this state of at least
  171  $250 million.
  172         4.A project involving the development or creation of
  173  intellectual property, provided that the project’s jobs in this
  174  state pay an annual average wage of at least 150 percent of the
  175  average private sector wage in the area as defined in s.
  176  288.106. A project that qualifies under this subparagraph may
  177  consist of one or more projects with different start and
  178  completion dates.
  179         (2)(a) An annual credit against the tax imposed by this
  180  chapter shall be granted to any qualifying business in an amount
  181  equal to 5 percent of the eligible capital costs generated by a
  182  qualifying project, for a period not to exceed 20 years
  183  beginning with the commencement of operations of the project.
  184  Unless assigned as described in this subsection, the tax credit
  185  shall be granted against only the corporate income tax liability
  186  or the premium tax liability generated by or arising out of the
  187  qualifying project, and the sum of all tax credits provided
  188  pursuant to this section may shall not exceed 100 percent of the
  189  eligible capital costs of the project. In no event may any
  190  credit granted under this section be carried forward or backward
  191  by any qualifying business with respect to a subsequent or prior
  192  year. The annual tax credit granted under this section may shall
  193  not exceed the following percentages of the annual corporate
  194  income tax liability or the premium tax liability generated by
  195  or arising out of a qualifying project:
  196         1. One hundred percent for a qualifying project which
  197  results in a cumulative capital investment of at least $100
  198  million.
  199         2. Seventy-five percent for a qualifying project which
  200  results in a cumulative capital investment of at least $50
  201  million but less than $100 million.
  202         3. Fifty percent for a qualifying project which results in
  203  a cumulative capital investment of at least $25 million but less
  204  than $50 million.
  205         (b) A qualifying project which results in a cumulative
  206  capital investment of less than $25 million is not eligible for
  207  the capital investment tax credit. An insurance company claiming
  208  a credit against premium tax liability under this program may
  209  shall not be required to pay any additional retaliatory tax
  210  levied pursuant to s. 624.5091 as a result of claiming such
  211  credit. Because credits under this section are available to an
  212  insurance company, s. 624.5091 does not limit such credit in any
  213  manner.
  214         (c) A qualifying business that establishes a qualifying
  215  project that includes locating a new solar panel manufacturing
  216  facility in this state that generates a minimum of 400 jobs
  217  within 6 months after commencement of operations with an average
  218  salary of at least $50,000 may assign or transfer the annual
  219  credit, or any portion thereof, granted under this section to
  220  any other business. However, the amount of the tax credit that
  221  may be transferred in any year shall be the lesser of the
  222  qualifying business’s state corporate income tax liability for
  223  that year, as limited by the percentages applicable under
  224  paragraph (a) and as calculated before prior to taking any
  225  credit pursuant to this section, or the credit amount granted
  226  for that year. A business receiving the transferred or assigned
  227  credits may use the credits only in the year received, and the
  228  credits may not be carried forward or backward. To perfect the
  229  transfer, the transferor shall provide the department with a
  230  written transfer statement notifying the department of the
  231  transferor’s intent to transfer the tax credits to the
  232  transferee; the date the transfer is effective; the transferee’s
  233  name, address, and federal taxpayer identification number; the
  234  tax period; and the amount of tax credits to be transferred. The
  235  department shall, upon receipt of a transfer statement
  236  conforming to the requirements of this paragraph, provide the
  237  transferee with a certificate reflecting the tax credit amounts
  238  transferred. A copy of the certificate must be attached to each
  239  tax return for which the transferee seeks to apply such tax
  240  credits.
  241         (d) If the credit granted under subparagraph (a)1. is not
  242  fully used in any one year because of insufficient tax liability
  243  on the part of the qualifying business, the unused amounts may
  244  be used in any one year or years beginning with the 21st year
  245  after the commencement of operations of the project and ending
  246  the 30th year after the commencement of operations of the
  247  project.
  248         (3)(a) Notwithstanding subsection (2), a credit against the
  249  tax imposed by this chapter, against state taxes collected or
  250  accrued under chapter 212, or against a stated combination of
  251  the two taxes must be granted to a qualifying business that
  252  establishes a qualifying project pursuant to subparagraph
  253  (1)(l)4. for which the cumulative intellectual property
  254  investment of one or more projects is, at the election of the
  255  qualifying business, at least an aggregate of $500 million over
  256  a 3-year period. The tax credit must be granted in an amount
  257  equal to 20 percent of the eligible wages, salaries, employer
  258  paid taxes and benefits, or other compensation paid to any
  259  individual, including amounts paid through an employee leasing
  260  company, and the direct production costs paid to any business,
  261  regardless of the location, generated by the qualifying project.
  262  The tax credit must be granted against the tax liability of the
  263  qualifying business.
  264         (b)The credit granted under this subsection may be used in
  265  whole or in part by the qualifying business or any corporation
  266  that is a member of that qualifying business’ affiliated group
  267  of corporations. Any credit may be used by any of the affiliated
  268  corporations to the same extent as it could have been used by
  269  the qualifying business. However, any such use may not operate
  270  to increase the amount of the credit or extend the period within
  271  which the credit must be used.
  272         (c)A qualifying business that elects to use the tax credit
  273  may use the tax credit in any one year or years beginning with
  274  the commencement of the project and ending the second year after
  275  the completion of the project.
  276         (d)Notwithstanding the cumulative intellectual property
  277  investment threshold under paragraph (a), the department must
  278  grant tax credits to a qualifying business within 30 days after
  279  the date any costs described in this subsection are certified by
  280  the Department of Economic Opportunity.
  281         (e)1.If the qualifying business fails to meet the level of
  282  cumulative intellectual property investment required by this
  283  subsection, then any previously granted tax credit issued
  284  pursuant to this subsection must be revoked and rescinded.
  285         2.This paragraph may not result in the revocation or
  286  rescindment of any credits or incentives awarded to a project
  287  outside of this subsection.
  288         3.If such revoked and rescinded credit has already been
  289  claimed on a return, the business must repay the credit plus the
  290  interest applicable under s. 213.235 and a 10 percent penalty.
  291         4.If such revoked and rescinded credit has already been
  292  transferred to another business, the transferor must repay the
  293  credit plus the interest applicable under s. 213.235 and a 10
  294  percent penalty.
  295         (4)(a) Notwithstanding subsection (2), an annual credit
  296  against the tax imposed by this chapter must shall be granted to
  297  a qualifying business that which establishes a qualifying
  298  project pursuant to subparagraph (1)(l)3. (1)(g)3., in an amount
  299  equal to the lesser of $15 million or 5 percent of the eligible
  300  capital costs made in connection with a qualifying project, for
  301  a period not to exceed 20 years beginning with the commencement
  302  of operations of the project. The tax credit must shall be
  303  granted against the corporate income tax liability of the
  304  qualifying business and as further provided in paragraph (c).
  305  The total tax credit provided pursuant to this subsection must
  306  shall be equal to no more than 100 percent of the eligible
  307  capital costs of the qualifying project.
  308         (b) If the credit granted under this subsection is not
  309  fully used in any one year because of insufficient tax liability
  310  on the part of the qualifying business, the unused amount may be
  311  carried forward for a period not to exceed 20 years after the
  312  commencement of operations of the project. The carryover credit
  313  may be used in a subsequent year when the tax imposed by this
  314  chapter for that year exceeds the credit for which the
  315  qualifying business is eligible in that year under this
  316  subsection after applying the other credits and unused
  317  carryovers in the order provided by s. 220.02(8).
  318         (c) The credit granted under this subsection may be used in
  319  whole or in part by the qualifying business or any corporation
  320  that is either a member of that qualifying business’s affiliated
  321  group of corporations, is a related entity taxable as a
  322  cooperative under subchapter T of the Internal Revenue Code, or,
  323  if the qualifying business is an entity taxable as a cooperative
  324  under subchapter T of the Internal Revenue Code, is related to
  325  the qualifying business. Any entity related to the qualifying
  326  business may continue to file as a member of a Florida-nexus
  327  consolidated group pursuant to a prior election made under s.
  328  220.131(1), Florida Statutes (1985), even if the parent of the
  329  group changes due to a direct or indirect acquisition of the
  330  former common parent of the group. Any credit can be used by any
  331  of the affiliated companies or related entities referenced in
  332  this paragraph to the same extent as it could have been used by
  333  the qualifying business. However, any such use may shall not
  334  operate to increase the amount of the credit or extend the
  335  period within which the credit must be used.
  336         (5)(4)Before Prior to receiving tax credits pursuant to
  337  this section, a qualifying business must achieve and maintain
  338  the minimum employment goals beginning with the commencement of
  339  operations or the completion date of at a qualifying project and
  340  continuing each year thereafter during which tax credits are
  341  available pursuant to this section.
  342         (6)(5) Applications must shall be reviewed and certified
  343  pursuant to s. 288.061. The Department of Economic Opportunity,
  344  upon a recommendation by Enterprise Florida, Inc., shall first
  345  certify a business as eligible to receive tax credits pursuant
  346  to this section before prior to the commencement of operations
  347  or the completion date of a qualifying project, and such
  348  certification must shall be transmitted to the Department of
  349  Revenue. Upon receipt of the certification, the Department of
  350  Revenue shall enter into a written agreement with the qualifying
  351  business specifying, at a minimum, the method by which income
  352  generated by or arising out of the qualifying project will be
  353  determined.
  354         (7)(6) The Department of Economic Opportunity, in
  355  consultation with Enterprise Florida, Inc., is authorized to
  356  develop the necessary guidelines and application materials for
  357  the certification process described in subsection (6) (5).
  358         (8)(7) It shall be the responsibility of the qualifying
  359  business to affirmatively demonstrate to the satisfaction of the
  360  Department of Revenue that such business meets the job creation
  361  and capital investment requirements of this section.
  362         (9)(8) The Department of Revenue may specify by rule the
  363  methods by which a project’s pro forma annual taxable income is
  364  determined.
  365         Section 2. Paragraph (d) of subsection (2) of section
  366  288.1089, Florida Statutes, is amended to read:
  367         288.1089 Innovation Incentive Program.—
  368         (2) As used in this section, the term:
  369         (d) “Cumulative investment” means cumulative capital
  370  investment and all eligible capital costs, as defined in s.
  371  220.191, Florida Statutes (2021).
  372         Section 3. The amendments made by this act to s. 220.191,
  373  Florida Statutes, do not apply to any qualifying project
  374  application certified before December 31, 2021.
  375         Section 4. This act shall take effect July 1, 2022.