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       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.
   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,
   70  Be It Enacted by the Legislature of the State of Florida:
   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.

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