Bill Text: FL H0607 | 2010 | Regular Session | Introduced

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Bill Title: Tax Credits for Research and Development

Spectrum: Moderate Partisan Bill (Republican 18-2)

Status: (Failed) 2010-04-30 - Died in Finance & Tax Council [H0607 Detail]

Download: Florida-2010-H0607-Introduced.html

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HB 607

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 research
5	and development expenses; providing eligibility
6	requirements for research and development tax credits;
7	providing limitations regarding eligibility; providing an
8	amount for such credit; providing a maximum amount of
9	credit that may be taken during a single tax year;
10	providing that any unused credit may be carried forward
11	for a specified period; authorizing the sale or assignment
12	of unused credit to certain taxpayers under certain
13	conditions; requiring that a party to a sale or assignment
14	file certain information and documents with the Department
15	of Revenue; requiring that parties to a sale or assignment
16	obtain the department's approval before completing such
17	sale or assignment; prohibiting the department from
18	unreasonable withholding of such approval; providing
19	requirements for the use tax credits sold or assigned;
20	limiting the total amount of tax credits that may be
21	assigned in a calendar year; providing that applications
22	for credits may be filed on or after a specified date;
23	requiring that the credits be granted in the order in
24	which applications are received; authorizing the
25	department to adopt rules; amending s. 220.02, F.S.;
26	revising legislative intent to include the research and
27	development tax credit in the ordered list according to
28	which credits against corporate income tax or franchise
29	tax are applied; providing an effective date.
30
31	WHEREAS, research and development has become the underlying
32	source of wealth in the 21st century by generating ideas and
33	technologies that encourage productivity and economic growth,
34	and
35	WHEREAS, corporations generate the main body of growth-
36	stimulating innovations, and
37	WHEREAS, research and development tax credits provide
38	incentives for corporate research and development beyond
39	expected levels, and
40	WHEREAS, research shows that the federal research and
41	development tax credit is an effective tool for stimulating
42	additional research and development, which in turn leads to
43	faster economic growth, and
44	WHEREAS, state research and development tax credit programs
45	are nearly as important to corporate research and development as
46	the federal research and development tax credit program, and
47	WHEREAS, the typical state research and development tax
48	credit program increases general, corporate-funded research and
49	development within a state, often enhancing the state's
50	competitiveness by enabling a state to draw research and
51	development activity away from other states, and
52	WHEREAS, this state needs a state research and development
53	tax credit program to ensure economic competitiveness, and
54	WHEREAS, more than half of the states of this nation have a
55	research and development tax credit program, and
56	WHEREAS, Florida lags behind the rest of the nation in
57	important corporate research and development activities because
58	the state does not have a research and development tax credit,
59	and
60	WHEREAS, the Legislature must create a research and
61	development tax credit in order to encourage corporate research
62	and development activity within this state, level the playing
63	field with the state's regional and national economic
64	competitors, support the state's vibrant innovation economy, and
65	attract high-wage, professional research jobs to this state,
66	NOW, THEREFORE,
67
68	Be It Enacted by the Legislature of the State of Florida:
69
70	Section 1. Section 220.194, Florida Statutes, is created
71	to 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
75	enterprise's qualified research expenses in this state allowed
76	under 26 U.S.C. s. 41 for the 4 taxable years preceding the
77	taxable year for which the credit is being determined. The
78	qualified research expenses taken into account in computing the
79	base amount shall be determined on a basis consistent with the
80	determination of qualified research expenses for the credit
81	year.
82	(b) "Base period" means the 4 taxable years preceding the
83	taxable year for which the credit is being determined.
84	(c) "Business enterprise" means any corporation as defined
85	in s. 220.03(1)(e) that is also a target industry business as
86	defined in s. 288.106(1)(o).
87	(d) "Qualified research expenses" means research expenses
88	qualifying for the credit under 26 U.S.C. s. 41 for in-house
89	research expenses incurred in this state or contract research
90	expenses incurred in this state. The term does not include
91	research conducted outside this state, research that is excluded
92	under 26 U.S.C. s. 41, or research conducted by a business
93	enterprise that is not within its principal business activity.
94	(2) TAX CREDIT.-Subject to the limitations contained in
95	paragraph (e), a business enterprise is eligible for a credit
96	against the tax imposed by this chapter if the business
97	enterprise has qualified research expenses in this state in the
98	calendar year exceeding the base amount and, for the same
99	calendar year, claims and is allowed a research credit for such
100	qualified research expenses under 26 U.S.C. s. 41.
101	(a) The tax credit shall be 10 percent of the excess
102	qualified research expenses over the base amount. However, the
103	maximum tax credit for a business enterprise that has not been
104	in existence for the entire base period is reduced by 25 percent
105	for each taxable year for which the business enterprise, or a
106	predecessor corporation that was a business enterprise, did not
107	exist during the base period.
108	(b) The credit taken in any single tax year may not exceed
109	50 percent of the business enterprise's remaining net income tax
110	liability under this chapter after all other credits have been
111	applied under s. 220.02(8).
112	(c) Any unused credit authorized pursuant to this section
113	may be carried forward and claimed by the taxpayer for up to 5
114	years following the close of the taxable year in which the
115	qualified research expenses are incurred.
116	(d) Any unused credit authorized pursuant to this section
117	may be assigned or sold to another business enterprise if a
118	claim for the allowance has not been filed within 1 calendar
119	year following the date on which the department approved the
120	credit. The business enterprise selling the tax credit and the
121	purchaser or assignee must file an application, waivers of
122	confidentiality, and affidavits to transfer the credit on a form
123	provided by the department and obtain the prior approval of the
124	department for such transfer. The department may not
125	unreasonably withhold such approval. The purchaser or assignee
126	must use the tax credit in the taxable year in which the
127	purchase or assignment of the credit is made. The transfer or
128	purchase of any amount of the tax credit may not be exchanged
129	for less than 75 percent of the credit's value.
130	(e) The combined total amount of tax credits that may be
131	granted and approved to all business enterprises under this
132	section during any calendar year is $15 million. Applications
133	may be filed with the department on or after March 20 for
134	qualified research expenses incurred within the preceding
135	calendar year, and credits shall be granted in the order in
136	which completed applications are received.
137	(3) RULES.-The department may adopt rules to administer
138	this section, including, but not limited to, rules prescribing
139	forms, application procedures and dates, and notification or
140	other procedures for the sale or assignment of a credit, and may
141	establish guidelines for making an affirmative showing of
142	qualification for a credit and any evidence needed to
143	substantiate a claim for credit under this section.
144	Section 2. Subsection (8) of section 220.02, Florida
145	Statutes, is amended to read:
146	220.02 Legislative intent.-
147	(8) It is the intent of the Legislature that credits
148	against either the corporate income tax or the franchise tax be
149	applied in the following order: those enumerated in s. 631.828,
150	those enumerated in s. 220.191, those enumerated in s. 220.181,
151	those enumerated in s. 220.183, those enumerated in s. 220.182,
152	those enumerated in s. 220.1895, those enumerated in s. 221.02,
153	those enumerated in s. 220.184, those enumerated in s. 220.186,
154	those enumerated in s. 220.1845, those enumerated in s. 220.19,
155	those enumerated in s. 220.185, those enumerated in s. 220.187,
156	those enumerated in s. 220.192, those enumerated in s. 220.193,
157	and those enumerated in s. 288.9916, and those enumerated in s.
158	220.194.
159	Section 3. This act shall take effect July 1, 2010, and is
160	effective for tax years beginning on or after January 1, 2011.

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