August 18, 2019
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_h0607__
HB 607

1
A bill to be entitled
2An act relating to tax credits for research and
3development; creating s. 220.194, F.S.; providing
4definitions; providing a tax credit for certain research
5and development expenses; providing eligibility
6requirements for research and development tax credits;
7providing limitations regarding eligibility; providing an
8amount for such credit; providing a maximum amount of
9credit that may be taken during a single tax year;
10providing that any unused credit may be carried forward
11for a specified period; authorizing the sale or assignment
12of unused credit to certain taxpayers under certain
13conditions; requiring that a party to a sale or assignment
14file certain information and documents with the Department
15of Revenue; requiring that parties to a sale or assignment
16obtain the department's approval before completing such
17sale or assignment; prohibiting the department from
18unreasonable withholding of such approval; providing
19requirements for the use tax credits sold or assigned;
20limiting the total amount of tax credits that may be
21assigned in a calendar year; providing that applications
22for credits may be filed on or after a specified date;
23requiring that the credits be granted in the order in
24which applications are received; authorizing the
25department to adopt rules; amending s. 220.02, F.S.;
26revising legislative intent to include the research and
27development tax credit in the ordered list according to
28which credits against corporate income tax or franchise
29tax are applied; providing an effective date.
30
31     WHEREAS, research and development has become the underlying
32source of wealth in the 21st century by generating ideas and
33technologies that encourage productivity and economic growth,
34and
35     WHEREAS, corporations generate the main body of growth-
36stimulating innovations, and
37     WHEREAS, research and development tax credits provide
38incentives for corporate research and development beyond
39expected levels, and
40     WHEREAS, research shows that the federal research and
41development tax credit is an effective tool for stimulating
42additional research and development, which in turn leads to
43faster economic growth, and
44     WHEREAS, state research and development tax credit programs
45are nearly as important to corporate research and development as
46the federal research and development tax credit program, and
47     WHEREAS, the typical state research and development tax
48credit program increases general, corporate-funded research and
49development within a state, often enhancing the state's
50competitiveness by enabling a state to draw research and
51development activity away from other states, and
52     WHEREAS, this state needs a state research and development
53tax credit program to ensure economic competitiveness, and
54     WHEREAS, more than half of the states of this nation have a
55research and development tax credit program, and
56     WHEREAS, Florida lags behind the rest of the nation in
57important corporate research and development activities because
58the state does not have a research and development tax credit,
59and
60     WHEREAS, the Legislature must create a research and
61development tax credit in order to encourage corporate research
62and development activity within this state, level the playing
63field with the state's regional and national economic
64competitors, support the state's vibrant innovation economy, and
65attract high-wage, professional research jobs to this state,
66NOW, THEREFORE,
67
68Be It Enacted by the Legislature of the State of Florida:
69
70     Section 1.  Section 220.194, Florida Statutes, is created
71to read:
72     220.194  Research and development tax credit.-
73     (1)  DEFINITIONS.-As used in this section, the term:
74     (a)  "Base amount" means the average of the business
75enterprise's qualified research expenses in this state allowed
76under 26 U.S.C. s. 41 for the 4 taxable years preceding the
77taxable year for which the credit is being determined. The
78qualified research expenses taken into account in computing the
79base amount shall be determined on a basis consistent with the
80determination of qualified research expenses for the credit
81year.
82     (b)  "Base period" means the 4 taxable years preceding the
83taxable year for which the credit is being determined.
84     (c)  "Business enterprise" means any corporation as defined
85in s. 220.03(1)(e) that is also a target industry business as
86defined in s. 288.106(1)(o).
87     (d)  "Qualified research expenses" means research expenses
88qualifying for the credit under 26 U.S.C. s. 41 for in-house
89research expenses incurred in this state or contract research
90expenses incurred in this state. The term does not include
91research conducted outside this state, research that is excluded
92under 26 U.S.C. s. 41, or research conducted by a business
93enterprise that is not within its principal business activity.
94     (2)  TAX CREDIT.-Subject to the limitations contained in
95paragraph (e), a business enterprise is eligible for a credit
96against the tax imposed by this chapter if the business
97enterprise has qualified research expenses in this state in the
98calendar year exceeding the base amount and, for the same
99calendar year, claims and is allowed a research credit for such
100qualified research expenses under 26 U.S.C. s. 41.
101     (a)  The tax credit shall be 10 percent of the excess
102qualified research expenses over the base amount. However, the
103maximum tax credit for a business enterprise that has not been
104in existence for the entire base period is reduced by 25 percent
105for each taxable year for which the business enterprise, or a
106predecessor corporation that was a business enterprise, did not
107exist during the base period.
108     (b)  The credit taken in any single tax year may not exceed
10950 percent of the business enterprise's remaining net income tax
110liability under this chapter after all other credits have been
111applied under s. 220.02(8).
112     (c)  Any unused credit authorized pursuant to this section
113may be carried forward and claimed by the taxpayer for up to 5
114years following the close of the taxable year in which the
115qualified research expenses are incurred.
116     (d)  Any unused credit authorized pursuant to this section
117may be assigned or sold to another business enterprise if a
118claim for the allowance has not been filed within 1 calendar
119year following the date on which the department approved the
120credit. The business enterprise selling the tax credit and the
121purchaser or assignee must file an application, waivers of
122confidentiality, and affidavits to transfer the credit on a form
123provided by the department and obtain the prior approval of the
124department for such transfer. The department may not
125unreasonably withhold such approval. The purchaser or assignee
126must use the tax credit in the taxable year in which the
127purchase or assignment of the credit is made. The transfer or
128purchase of any amount of the tax credit may not be exchanged
129for less than 75 percent of the credit's value.
130     (e)  The combined total amount of tax credits that may be
131granted and approved to all business enterprises under this
132section during any calendar year is $15 million. Applications
133may be filed with the department on or after March 20 for
134qualified research expenses incurred within the preceding
135calendar year, and credits shall be granted in the order in
136which completed applications are received.
137     (3)  RULES.-The department may adopt rules to administer
138this section, including, but not limited to, rules prescribing
139forms, application procedures and dates, and notification or
140other procedures for the sale or assignment of a credit, and may
141establish guidelines for making an affirmative showing of
142qualification for a credit and any evidence needed to
143substantiate a claim for credit under this section.
144     Section 2.  Subsection (8) of section 220.02, Florida
145Statutes, is amended to read:
146     220.02  Legislative intent.-
147     (8)  It is the intent of the Legislature that credits
148against either the corporate income tax or the franchise tax be
149applied in the following order: those enumerated in s. 631.828,
150those enumerated in s. 220.191, those enumerated in s. 220.181,
151those enumerated in s. 220.183, those enumerated in s. 220.182,
152those enumerated in s. 220.1895, those enumerated in s. 221.02,
153those enumerated in s. 220.184, those enumerated in s. 220.186,
154those enumerated in s. 220.1845, those enumerated in s. 220.19,
155those enumerated in s. 220.185, those enumerated in s. 220.187,
156those enumerated in s. 220.192, those enumerated in s. 220.193,
157and those enumerated in s. 288.9916, and those enumerated in s.
158220.194.
159     Section 3.  This act shall take effect July 1, 2010, and is
160effective for tax years beginning on or after January 1, 2011.


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