Section 17, Chapter 2014-184, Laws of Florida, provides that for purposes of determining if a penalty or interest should be imposed for underpayment of estimated corporate income tax pursuant to Section 220.34(2)(d)1., F.S., a taxpayer may reduce ...

 

DEPARTMENT OF REVENUE

Corporate, Estate and Intangible Tax

RULE NO.:RULE TITLE:

12C-1.034Special Rules Relating to Estimated Tax

PURPOSE AND EFFECT: Section 17, Chapter 2014-184, Laws of Florida, provides that for purposes of determining if a penalty or interest should be imposed for underpayment of estimated corporate income tax pursuant to Section 220.34(2)(d)1., F.S., a taxpayer may reduce the estimated payment amount required to meet the prior year exception in that taxable year by the amount of the credit earned under Section 220.1875, F.S. (Credit for contributions to eligible nonprofit scholarship-funding organizations). The amount required to meet the prior year exception may only be reduced with respect to contributions made on or after July 1, 2014.

The purpose of the proposed amendments to Rule 12C-1.034, F.A.C. (Special Rules Relating to Estimated Tax), is to provide clarification regarding the computation of the amount of estimated tax required to meet the prior year exception when a taxpayer has made one or more qualifying contributions to eligible nonprofit scholarship-funding organizations.

SUMMARY: The proposed amendments to Rule 12C-1.034, F.A.C. (Special Rules Relating to Estimated Tax), address the computation of the amount of estimated tax required to meet the prior year exception pursuant to Section 220.34(2)(d)1., F.S., when a taxpayer has made one or more qualifying contributions to eligible nonprofit scholarship-funding organizations.

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.

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), 220.24, 220.33(7), 220.34(2)(f), 220.51, 1002.395(13) FS.

LAW IMPLEMENTED: 213.21, 220.131, 220.24, 220.241, 220.33, 220.34, 221.02, 221.04, 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: May 27, 2015, 1:00 p.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-1.034 Special Rules Relating to Estimated Tax.

(1) through (8) No change.

(9)(a) No change.

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

c.(I) Contributions to eligible nonprofit scholarship-funding organizations (SFOs) made on or after July 1, 2014, for corporate income tax reduce the amount required to meet the prior year exception referenced in sub-subparagraph a. The specific prior year exception amount reduced by a contribution to an SFO is determined by the date of contribution on the certificate of contribution issued by the SFO. Cross reference: Rule Chapter 12-29, F.A.C.

(II) Example: A calendar year taxpayer remitted four estimated payments of $16,000 each on April 30, 2014; June 30, 2014; September 30, 2014; and December 31, 2014. The taxpayer also made a $15,000 contribution to an SFO and was issued a certificate of contribution on July 15, 2014, which generated a credit for the taxpayer. For the prior tax year ending December 31, 2013, corporate income tax of $80,000 was due. Taxpayer's prior year exception computation is as follows:

 

 

Due dates of installments	(1st) 4/30/2014	(2nd) 6/30/2014	(3rd) 9/30/2014	(4th) 12/31/2014
Current year: Total cumulative amount paid (or credited) from the beginning of the taxable year through the installment date indicated	16,000.00	32,000.00	48,000.00	64,000.00
(a) Prior year exception: Tax on prior year's income using current year's rates	25% of tax 20,000.00	50% of tax 40,000.00	75% of tax 60,000.00	100% of tax 80,000.00
(b) Cumulative donations made on or after July 1, 2014, to SFOs from the beginning of the taxable year through the installment date indicated. Certificate of contribution must be issued on or before installment due date.	0.00	0.00	15,000.00	15,000.00
(c) The prior year exception adjusted for the credit for contributions to SFOs per s. 1002.395(5)(f), F.S., equals (a) less (b)	20,000.00	40,000.00	45,000.00	65,000.00
Installment meets prior year exception? To answer Yes, Current year must equal or exceed Prior year (c).	No	No	Yes	No

 

Taxpayer has met the prior year exception for the third installment through a combination of estimated payments and SFO credit so that estimated tax penalty and interest will not apply for the third installment.

(III) Example: A calendar year taxpayer remitted four estimated payments of $10,000 each on April 30, 2015; June 30, 2015; September 30, 2015; and December 31, 2015. The taxpayer also made four $10,000 contributions to an SFO and was issued certificates of contribution on April 30, 2015; June 30, 2015; September 30, 2015; and December 31, 2015. For the prior tax year ending December 31, 2014, corporate income tax of $80,000 was due. Taxpayer's prior year exception computation is as follows:

Due dates of installments	(1st) 4/30/2015	(2nd) 6/30/2015	(3rd) 9/30/2015	(4th) 12/31/2015
Current year: Total cumulative amount paid (or credited) from the beginning of the taxable year through the installment date indicated	10,000.00	20,000.00	30,000.00	40,000.00
(a) Prior year exception: Tax on prior year's income using current year's rates	25% of tax 20,000.00	50% of tax 40,000.00	75% of tax 60,000.00	100% of tax 80,000.00
(b) Cumulative donations made on or after July 1, 2014, to SFOs from the beginning of the taxable year through the installment date indicated. Certificate of contribution must be issued on or before installment due date.	10,000.00	20,000.00	30,000.00	40,000.00
(c) The prior year exception adjusted for the credit for contributions to SFOs per s. 1002.395(5)(f), F.S., equals (a) less (b)	10,000.00	20,000.00	30,000.00	40,000.00
Installment meets prior year exception? To answer Yes, Current year must equal or exceed Prior year (c).	Yes	Yes	Yes	Yes

 

Taxpayer has met the prior year exception for all four installments through a combination of estimated payments and SFO credit so that estimated tax penalty and interest will not apply to any of the four installments.

2. through 3. No change.

(c) through (j) No change.

(10) through (13) No change.

Rulemaking Authority 213.06(1), 220.24, 220.33(7), 220.34(2)(f), 220.51, 1002.395(13) FS. Law Implemented 213.21, 220.131, 220.24, 220.241, 220.33, 220.34, 221.02, 221.04, 1002.395 FS. History–New 10-20-72, Amended 10-20-73, 7-27-80, 12-18-83, Formerly 12C-1.34, Amended 12-21-88, 4-8-92, 5-17-94, 3-18-96, 3-13-00, 9-28-04,_____.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Kimberly Bevis, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone].

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

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: May 05, 2015

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: February 23, 2015