Section 15 of Chapter 2011-76, Laws of Florida (L.O.F.), created a new tax credit for spaceflight projects to become effective October 1, 2015. The purpose of new Rule 12C-1.0194, F.A.C. (Corporate Income Tax Credit for Spaceflight Projects), is to ...

 

DEPARTMENT OF REVENUE

Corporate, Estate and Intangible Tax

RULE NOS.:RULE TITLES:

12C-1.0194Corporate Income Tax Credit for Spaceflight Projects

12C-1.0196Research and Development Tax Credit

12C-1.051Forms

PURPOSE AND EFFECT: Section 15 of Chapter 2011-76, Laws of Florida (L.O.F.), created a new tax credit for spaceflight projects to become effective October 1, 2015. The purpose of new Rule 12C-1.0194, F.A.C. (Corporate Income Tax Credit for Spaceflight Projects), is to provide guidance to taxpayers on how they can apply for, transfer, and use the credit once it becomes effective.

Section 21 of Chapter 2015-221, Laws of Florida, amended Section 220.196, F.S., relating to the research and development tax credit. The statutory amendments changed the types of businesses that may qualify for the credit; increased the total amount of credits that may be awarded in 2016; changed the period during which applications for the credit may be submitted; and changed the method by which credits may be awarded to qualifying businesses. The purpose of the proposed amendment to Rule 12C-1.0196, F.A.C. (Research and Development Tax Credit), is to bring the rule into compliance with the statutory changes.

The purpose of the proposed amendments to Rule 12C-1.051, F.A.C. (Forms), is to adopt, by reference, changes to forms used by the Department in the administration of the corporate income tax.

SUMMARY: New Rule 12C-1.0194, F.A.C., addresses the administration of the spaceflight projects tax credit found in s. 220.194, F.S.; the amendments to Rule 12C-1.0196, F.A.C., bring the rule into compliance with the amendments made to s. 220.196, F.S., by the 2015 Legislature; and the proposed amendments to Rule 12C-1.051, F.A.C., adopt, by reference, changes to forms used by the Department in the administration of the corporate income tax.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION: The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: 1) no requirement for the Statement of Economic Regulatory Costs (SERC) was triggered under Section 120.541(1), F.S.; and 2) based on past experiences regarding the procedures for processing written protests of assessments and rules of this nature, the adverse impact or regulatory cost, if any, do not exceed nor would exceed any one of the economic analysis criteria in a SERC, as set forth in Section 120.541(2)(a), F.S.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 213.06(1), 220.192(7), 220.193(4), 220.194(8), 220.196(4), 220.51, 1002.395(13) FS.

LAW IMPLEMENTED: 119.071(5), 212.08(5)(p), 213.755(1), 220.11, 220.12, 220.13(1), (2), 220.15, 220.16, 220.181, 220.182, 220.183, 220.184, 220.1845, 220.185, 220.186, 220.1875, 220.1895, 220.1896, 220.1899, 220.191, 220.192, 220.193, 220.194, 220.195, 220.196, 220.21, 220.211, 220.22, 220.221, 220.222, 220.23, 220.24, 220.241, 220.31, 220.32, 220.33, 220.34, 220.41, 220.42, 220.43, 220.44, 220.51, 220.721, 220.723, 220.725, 220.737, 220.801, 220.803, 220.805, 220.807, 220.809, 221.04, 624.5105, 624.51055, 1002.395 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: November 19, 2015, 9:00 a.m.

PLACE: 2450 Shumard Oak Boulevard, Building One, Room 1220, Tallahassee, Florida

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Tonya Fulford at [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Kimberly Bevis, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone: [phone]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

12C-1.0194 Corporate Income Tax Credits for Spaceflight Projects.

(1) Taxpayers seeking to obtain a corporate income tax credit for spaceflight projects must apply to the Department of Economic Opportunity, as provided in Section 220.194, F.S.

(2)(a) For tax years beginning on or after October 1, 2015, a spaceflight business that has been approved and certified by the Department of Economic Opportunity may take a nontransferable corporate income tax credit of up to fifty percent (50%) of its Florida corporate income/franchise tax liability after all other credits are applied in the order provided in Section 220.02(8), F.S.

(b) A letter of certification issued by the Department of Economic Opportunity upon approval of an Application for Certification must be attached to the certified spaceflight business's Florida corporate income/franchise tax return on which the nontransferable credit for spaceflight projects is taken.

(c) A certified spaceflight business may not file a consolidated Florida corporate income/franchise tax return when claiming the nontransferable corporate income tax credit.

(3)(a) For tax years beginning on or after October 1, 2015, a spaceflight business may be approved and certified by the Department of Economic Opportunity to transfer, in whole or in part, its Florida net operating loss that would otherwise be available to be taken on a Florida corporate income/franchise tax return, provided that the activity giving rise to the net operating loss occurred after July 1, 2011.

(b)1. To perfect the transfer, a certified spaceflight business (transferor) must provide the Department with a written Transfer Statement approved by the Department of Economic Opportunity to [e-mail]. For assistance, call the Department at [phone] during regular business hours, Monday through Friday. Persons with hearing or speech impairments may call the Florida Relay Service at [phone] (Voice) and [phone] (TTY).

2. The Transfer Statement must include: the date the transfer is effective; the transferee’s name, address, federal employer identification number (FEIN) and/or business partner number; the tax year that the transferee intends to use the tax credit; and the amount of tax credit transferred to the transferee.

3. Upon receipt of a Transfer Statement approved by the Department of Economic Opportunity, the Department will provide the transferee and the Department of Economic Opportunity with a certificate reflecting the tax credit amount transferred. The transferee must attach the certificate to its Florida corporate income/franchise tax return on which the credit is taken. Any unused credit is forfeited and not available for use in a subsequent tax year.

(c) Net operating losses that are transferred may not be subtracted from the income of the transferor.

(d) Payments received for net operating losses that are transferred are to be treated as nonbusiness income allocable to Florida on the transferor's Florida corporate income/franchise tax return.

(4) The amount taken as a corporate income tax credit for spaceflight projects must be added to federal taxable income prior to computing the Florida corporate income/franchise tax due.

(5) An amended Florida Corporate Income/Franchise Tax Return (Form F-1120X, incorporated by reference in Rule 12C-1.051, F.A.C.) is required if the corporate income tax credit for spaceflight project is disallowed or modified by the Department or if the Department of Economic Opportunity issues a Notice of Revocation or Modification to revoke or modify a letter of certification previously issued. The taxpayer must pay additional tax and interest as may be due, computed as the difference between the tax that would have been due had the credit been computed correctly and the tax actually paid. In addition the spaceflight business is liable for a penalty equal to 100 percent of the additional tax due.

(6) Every taxpayer claiming a corporate income tax credit for spaceflight projects must retain documentation that substantiates and supports the credit until tax imposed by Chapter 220, F.S., may no longer be determined and assessed under Section 95.091(3), F.S., or under Section 220.23, F.S. Documentation to substantiate and support the credit includes copies of: the completed tax credit application submitted to the Department of Economic Opportunity; the letter of certification issued by the Department of Economic Opportunity; and the Transfer Certificate reflecting the credit amount transferred issued by the Department.

Rulemaking Authority 213.06(1), 220.194(8), 220.51 FS. Law Implemented 220.194 FS. History–New          .

 

12C-1.0196 Research and Development Tax Credit.

(1)(a)1. A research and development tax credit against Florida corporate income/franchise tax is provided in Section 220.196, F.S., to a business enterprise target industry business that claims a valid research credit against federal corporate income tax for qualified research expenses as provided in section 41 of the Internal Revenue Code (26 U.S.C. s. 41). The target business enterprise must be a corporation, as defined in Section 220.03, F.S., and a qualified target industry business, as defined in Section 288.106, F.S. However, only qualified target industry businesses in the manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology industries may qualify for a research and development tax credit.

2. If the related federal corporate income tax credit for increasing research activities is not extended for a tax year, a qualified target industry business will not be permitted to take the Florida research and development tax credit.

(1)(b) through (1)(c) No change.

(2)(a) To receive an annual allocation of the annual funds available for granting tax credits to qualified target industry businesses, an Allocation for Research and Development Tax Credit for Florida Corporate Income/Franchise Tax (Form F-1196, incorporated by reference in Rule 12C-1.051, F.A.C.) must be filed with the Department between 12:00 a.m., E.T., on or after March 20 of each year and 11:59 p.m., ET, March 26 on or before December 31 of that same year. The application is available on the Department’s website at www.myflorida.com/dor/. Taxpayers required to file returns and remit payments by electronic means pursuant to Section 213.755, F.S. and Rule Chapter 12-24, F.A.C., must apply online using the Department’s website. When the completed application is submitted online, a confirmation number will be provided to confirm receipt of the application.

(b) A business enterprise must attach a letter from the Department of Economic Opportunity, certifying that the business is an eligible target industry business, to its Allocation for Research and Development Tax Credit for Florida Corporate Income/Franchise Tax application. The Department of Economic Opportunity will provide a letter upon receiving a request.

(c)(b) Businesses needing assistance with the Allocation for Research and Development Tax Credit for Florida Corporate Income/Franchise Tax may call the Department at 1(800) 352-3671, Monday through Friday, 8:00 a.m. to 7:00 p.m. (Eastern Time). Persons with hearing or speech impairments may call the Florida Relay Service at 1(800) 955-8770 (Voice) and 1(800) 955-8771 (TTY).

(d) If the total credits requested (computed as the sum of the credit allocations requested from Form F-1196 for all qualified applicants) exceed the annual credit cap, each qualified applicant will be allocated credit on a prorated basis.

(e)(c) Within 10 working days of March 27 Applications filed with the Department on or after March 20 of each year will be accepted by the Department until December 31 of that year, or until the annual appropriation has been completely allocated, whichever occurs first. Credits will be allocated by the Department in the order in which completed applications are received. Beginning April 1 of each year, the Department will notify eligible taxpayers by letter of the amount of credit that is allocated to them and the tax year in which the qualified target industry business may claim the credit on its Florida corporate income/franchise tax return.

(3) No change.

(4) A federal research credit must be taken on the federal return filed by the qualified target industry business for the same tax year in which the Florida research and development credit is taken. The amount taken as a Florida research and development credit must be added to taxable income prior to computing the Florida corporate income/franchise tax due. The Florida research and development credit is limited to fifty percent (50%) of the Florida corporate income/franchise tax liability after all other credits are applied in the order provided in Section 220.02(8), F.S. A copy of federal Form 6765 (Credit for Increasing Research Activities) and a copy of federal Form 3800 (General Business Credit) must be attached to the Florida corporate income/franchise tax return on which the Florida research and development credit is taken. In the case of a corporate partner of a partnership that has earned a federal credit for increasing research activities, a copy of federal Form 1065, Schedule K-1 (Partner’s Share of Income, Deductions, Credits, etc.), and a copy of federal Form 3800 must be attached to the Florida corporate income/franchise tax return on which the Florida research and development credit is taken.

(5) through (6)(a) No change.

(6)(b)1. Taxpayers Target industry businesses that have not been in existence for at least four tax years prior to the tax year in which the Florida research and development credit is claimed must reduce the amount of the credit by twenty-five percent (25%) for each year of the past four tax years that the corporation did not exist.

(6)(b)2. No change.

(7) Every taxpayer claiming a Florida research and development credit must retain documentation that substantiates and supports the credit, a copy of the letter received from the Department of Economic Opportunity certifying that the taxpayer meets the requirements of Section 220.196(2)(a)3., F.S. (i.e., is an eligible qualified target industry business), a copy of the letter received from the Department granting the credit, and a schedule reconciling all credit carryovers until tax imposed by Chapter 220, F.S., may no longer be determined and assessed under Section 95.091(3) or under 220.23, F.S. Documentation to substantiate and support the credit includes records or other evidence of the amount of qualified Florida research expenses incurred for in-house research or for contract research expenses, that those expenses qualified under 26 U.S.C. s. 41, and that the federal credit was claimed.

Rulemaking Authority 213.06(1), 220.196(4), 220.51 FS. Law Implemented 220.196 FS. History‒New 3-12-14, Amended____________.

 

12C-1.051 Forms.

(1)(a) through (b) No change.

Form NumberTitleEffective Date

(2) F-851Corporate Income/Franchise Tax Affiliations Schedule___01/13

(R. ___01/13)

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___02100)

(3)(a) F-1065Florida Partnership Information Return (R. ___01/15)___01/15

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___04876)

(b) F-1065NInstructions for Preparing Form F-1065 Florida___01/15

Partnership Information Return (R. ___01/15)

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___04877)

(4) F-1120AFlorida Corporate Short Form Income Tax Return ___01/15

(R. ___01/15)

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___04879)

(5)(a) F-1120Florida Corporate Income/Franchise Tax Return___01/15

(R. ___01/15)

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___04878)

(b) F-1120NF-1120 Instructions – Corporate Income/Franchise Tax ___01/15

Return for taxable years beginning on or after January 1, 2014

(R. ___01/15)

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___04880)

(6) No Change.

(7)(a) F-1120XAmended Florida Corporate Income/Franchise Tax___01/13

Return (R. ___01/13)

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___02107)

(b) F-1120XNInstructions for Preparing Form F-1120X Amended ___01/13

Florida Corporate Income/Franchise Tax Return (R. ___01/13)

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___02108)

(8) through (11) No change.

(12) F-1196Allocation for Research and Development Tax Credit for___01/15

Florida Corporate Income/Franchise Tax (R. ___01/15)

(http://www.flrules.org/Gateway/reference.asp?No=Ref-___04883)

(13) through (14) No change.

Rulemaking Authority 213.06(1), 220.192(7), 220.193(4), 220.196(4), 220.51, 1002.395(13) FS. Law Implemented 119.071(5), 212.08(5)(p), 213.755(1), 220.11, 220.12, 220.13(1), (2), 220.15, 220.16, 220.181, 220.182, 220.183, 220.184, 220.1845, 220.185, 220.186, 220.1875, 220.1895, 220.1896, 220.1899, 220.191, 220.192, 220.193, 220.194, 220.195, 220.196, 220.21, 220.211, 220.22, 220.221, 220.222, 220.23, 220.24, 220.241, 220.31, 220.32, 220.33, 220.34, 220.41, 220.42, 220.43, 220.44, 220.51, 220.721, 220.723, 220.725, 220.737, 220.801, 220.803, 220.805, 220.807, 220.809, 221.04, 624.5105, 624.51055, 1002.395 FS. History–New 9-26-77, Amended 12-18-83, Formerly 12C-1.51, Amended 12-21-88, 12-31-89, 1-31-91, 4-8-92, 12-7-92, 1-3-96, 3-18-96, 3-13-00, 6-19-01, 8-1-02, 6-19-03, 3-15-04, 9-24-04, 6-28-05, 5-1-06, 4-5-07, 1-1-08, 1-27-09, 1-11-10, 4-26-10(12)(a), (b), 4-26-10(13)(a), (b), 6-28-10, 1-12-11, 6-6-11, 1-25-12, 1-17-13, 3-12-14, 1-19-15,          .

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Kimberly Bevis

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Governor and Cabinet

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: October 27, 2015

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: September 22, 2015.