Florida Senate - 2021                                    SB 1390
       
       
        
       By Senator Gruters
       
       
       
       
       
       23-00980C-21                                          20211390__
    1                        A bill to be entitled                      
    2         An act relating to the capital investment tax credit;
    3         amending s. 220.191, F.S.; redefining terms; defining
    4         the terms “intellectual property” and “strategic
    5         priority project”; providing a credit against the
    6         corporate income tax, the sales and use tax, or a
    7         stated combination of the two taxes to a qualifying
    8         business that establishes a qualifying project for the
    9         creation of intellectual property which meets certain
   10         capital investment criteria; specifying the
   11         calculation of the credit; authorizing the carryover
   12         or transfer of credits, subject to certain conditions;
   13         providing a credit against the corporate income tax,
   14         the sales and use tax, or a stated combination of the
   15         two taxes to a qualifying business that establishes a
   16         strategic priority project that meets certain capital
   17         investment criteria; specifying the calculation of the
   18         credit; authorizing the carryover or transfer of
   19         credits, subject to certain conditions; conforming
   20         provisions to changes made by the act; amending s.
   21         288.1089, F.S.; revising the definition of the term
   22         “cumulative investment” to conform to changes made by
   23         the act; providing an effective date.
   24          
   25  Be It Enacted by the Legislature of the State of Florida:
   26  
   27         Section 1. Section 220.191, Florida Statutes, is amended to
   28  read:
   29         220.191 Capital investment tax credit.—
   30         (1) DEFINITIONS.—As used in For purposes of this section,
   31  the term:
   32         (a) “Commencement of operations” means the beginning of
   33  active operations by a qualifying business of the principal
   34  function for which a qualifying project was constructed.
   35         (b) “Cumulative capital investment” means the total capital
   36  investment in land, buildings, and equipment made in connection
   37  with a qualifying project during the period from the beginning
   38  of construction of the project to the commencement of
   39  operations.
   40         (c)1. “Eligible capital costs” means all expenses incurred
   41  by a qualifying business in connection with:
   42         a. The acquisition, construction, installation, and
   43  equipping of a qualifying project during the period from the
   44  beginning of construction of the project to the commencement of
   45  operations; or
   46         b.A qualifying project for the development or creation of
   47  intellectual property during the period from the start date of
   48  the project to the completion of the project.
   49         2.The term includes, including, but is not limited to:
   50         a.1. The costs of acquiring, constructing, installing,
   51  equipping, and financing a qualifying project, including all
   52  obligations incurred for labor and obligations to contractors,
   53  subcontractors, builders, and materialmen.
   54         b.2. The costs of acquiring land or rights to land and any
   55  cost incidental thereto, including recording fees.
   56         c.3. The costs of architectural and engineering services,
   57  including test borings, surveys, estimates, plans and
   58  specifications, preliminary investigations, environmental
   59  mitigation, and supervision of construction, as well as the
   60  performance of all duties required by or consequent to the
   61  acquisition, construction, installation, and equipping of a
   62  qualifying project.
   63         d.4. The costs associated with the installation of fixtures
   64  and equipment; surveys, including archaeological and
   65  environmental surveys; site tests and inspections; subsurface
   66  site work and excavation; removal of structures, roadways, and
   67  other surface obstructions; filling, grading, paving, and
   68  provisions for drainage, storm water retention, and installation
   69  of utilities, including water, sewer, sewage treatment, gas,
   70  electricity, communications, and similar facilities; and offsite
   71  construction of utility extensions to the boundaries of the
   72  property.
   73         e.For the development or creation of intellectual
   74  property, the wages, salaries, or other compensation paid to
   75  legal residents of this state, including amounts paid through a
   76  loan-out company, an employee leasing company, or a payroll
   77  service company. The term also includes expenditures for the
   78  rental of tangible personal property or the provision of
   79  services directly related to the development or creation of
   80  intellectual property.
   81  
   82  Eligible capital costs do shall not include the cost of any
   83  property previously owned or leased by the qualifying business.
   84         (d) “Income generated by or arising out of the qualifying
   85  project” means the qualifying project’s annual taxable income as
   86  determined by generally accepted accounting principles and under
   87  s. 220.13.
   88         (e) “Intellectual property” means a copyrightable project
   89  for which the eligible capital costs are principally paid
   90  directly or indirectly for the development or creation of the
   91  project. As used in this paragraph, the term “copyrightable
   92  project” includes, but is not limited to, a copyrightable
   93  software or multimedia application and its expansion content
   94  made available to an end user, which includes, but is not
   95  limited to, technological activities relating to updating the
   96  project; internal development platforms that support the
   97  production of multiple applications; cloud-based services that
   98  support the functionality of multiple applications; and
   99  copyrightable projects that include, but are not limited to,
  100  digital visualization and sound synchronization technologies for
  101  digital media, or that are necessary for the production of
  102  scripted content intended for theatrical, streaming, or
  103  television distribution.
  104         (f) “Jobs” means full-time equivalent positions, as that
  105  term is consistent with terms used by the Department of Economic
  106  Opportunity and the United States Department of Labor for
  107  purposes of reemployment assistance tax administration and
  108  employment estimation, resulting directly from a project in this
  109  state. The term does not include temporary construction jobs
  110  involved in the construction of the project facility.
  111         (g)(f) “Qualifying business” means a business which
  112  establishes a qualifying project or strategic priority project
  113  in this state and which is certified by the Department of
  114  Economic Opportunity to receive tax credits pursuant to this
  115  section.
  116         (h)(g) “Qualifying project” means a facility or project in
  117  this state meeting one or more of the following criteria:
  118         1. A new or expanding facility in this state which creates
  119  at least 100 new jobs in this state and is in one of the high
  120  impact sectors identified by Enterprise Florida, Inc., and
  121  certified by the Department of Economic Opportunity pursuant to
  122  s. 288.108(6), including, but not limited to, aviation,
  123  aerospace, automotive, and silicon technology industries.
  124  However, between July 1, 2011, and June 30, 2014, the
  125  requirement that a facility be in a high-impact sector is waived
  126  for any otherwise eligible business from another state which
  127  locates all or a portion of its business to a Disproportionally
  128  Affected County. For purposes of this section, the term
  129  “Disproportionally Affected County” means Bay County, Escambia
  130  County, Franklin County, Gulf County, Okaloosa County, Santa
  131  Rosa County, Walton County, or Wakulla County.
  132         2. A new or expanded facility in this state which is
  133  engaged in a target industry designated pursuant to the
  134  procedure specified in s. 288.106(2) and which is induced by
  135  this credit to create or retain at least 1,000 jobs in this
  136  state, provided that at least 100 of those jobs are new, pay an
  137  annual average wage of at least 130 percent of the average
  138  private sector wage in the area as defined in s. 288.106(2), and
  139  make a cumulative capital investment of at least $100 million.
  140  Jobs may be considered retained only if there is significant
  141  evidence that the loss of jobs is imminent. Notwithstanding
  142  subsection (2), annual credits against the tax imposed by this
  143  chapter may not exceed 50 percent of the increased annual
  144  corporate income tax liability or the premium tax liability
  145  generated by or arising out of a project qualifying under this
  146  subparagraph. A facility that qualifies under this subparagraph
  147  for an annual credit against the tax imposed by this chapter may
  148  take the tax credit for a period not to exceed 5 years.
  149         3. A new or expanded headquarters facility in this state
  150  which locates in an enterprise zone and brownfield area and is
  151  induced by this credit to create at least 1,500 jobs which on
  152  average pay at least 200 percent of the statewide average annual
  153  private sector wage, as published by the Department of Economic
  154  Opportunity, and which new or expanded headquarters facility
  155  makes a cumulative capital investment in this state of at least
  156  $250 million.
  157         4.A project involving the creation of intellectual
  158  property, provided that the project’s jobs in this state pay an
  159  annual average wage of at least 150 percent of the average
  160  private sector wage in the area as defined in s. 288.106. A
  161  project that qualifies under this subparagraph may consist of
  162  one or more projects with different start and completion dates.
  163         (i)“Strategic priority project” means a qualifying project
  164  identified in subparagraph (h)4. which demonstrates the
  165  potential for measurable value to this state, including, but not
  166  limited to, marketing Florida as a visitor destination,
  167  improvements to infrastructure supporting future industry use,
  168  or measurable technology skills development for residents of
  169  this state.
  170         (2)(a) An annual credit against the tax imposed by this
  171  chapter shall be granted to any qualifying business in an amount
  172  equal to 5 percent of the eligible capital costs generated by a
  173  qualifying project, for a period not to exceed 20 years
  174  beginning with the commencement of operations of the project.
  175  Unless assigned as described in this subsection, the tax credit
  176  shall be granted against only the corporate income tax liability
  177  or the premium tax liability generated by or arising out of the
  178  qualifying project, and the sum of all tax credits provided
  179  pursuant to this section shall not exceed 100 percent of the
  180  eligible capital costs of the project. In no event may any
  181  credit granted under this section be carried forward or backward
  182  by any qualifying business with respect to a subsequent or prior
  183  year. The annual tax credit granted under this section shall not
  184  exceed the following percentages of the annual corporate income
  185  tax liability or the premium tax liability generated by or
  186  arising out of a qualifying project:
  187         1. One hundred percent for a qualifying project which
  188  results in a cumulative capital investment of at least $100
  189  million.
  190         2. Seventy-five percent for a qualifying project which
  191  results in a cumulative capital investment of at least $50
  192  million but less than $100 million.
  193         3. Fifty percent for a qualifying project which results in
  194  a cumulative capital investment of at least $25 million but less
  195  than $50 million.
  196         (b) A qualifying project which results in a cumulative
  197  capital investment of less than $25 million is not eligible for
  198  the capital investment tax credit. An insurance company claiming
  199  a credit against premium tax liability under this program shall
  200  not be required to pay any additional retaliatory tax levied
  201  pursuant to s. 624.5091 as a result of claiming such credit.
  202  Because credits under this section are available to an insurance
  203  company, s. 624.5091 does not limit such credit in any manner.
  204         (c) A qualifying business that establishes a qualifying
  205  project that includes locating a new solar panel manufacturing
  206  facility in this state that generates a minimum of 400 jobs
  207  within 6 months after commencement of operations with an average
  208  salary of at least $50,000 may assign or transfer the annual
  209  credit, or any portion thereof, granted under this section to
  210  any other business. However, the amount of the tax credit that
  211  may be transferred in any year shall be the lesser of the
  212  qualifying business’s state corporate income tax liability for
  213  that year, as limited by the percentages applicable under
  214  paragraph (a) and as calculated before prior to taking any
  215  credit pursuant to this section, or the credit amount granted
  216  for that year. A business receiving the transferred or assigned
  217  credits may use the credits only in the year received, and the
  218  credits may not be carried forward or backward. To perfect the
  219  transfer, the transferor shall provide the department with a
  220  written transfer statement notifying the department of the
  221  transferor’s intent to transfer the tax credits to the
  222  transferee; the date the transfer is effective; the transferee’s
  223  name, address, and federal taxpayer identification number; the
  224  tax period; and the amount of tax credits to be transferred. The
  225  department shall, upon receipt of a transfer statement
  226  conforming to the requirements of this paragraph, provide the
  227  transferee with a certificate reflecting the tax credit amounts
  228  transferred. A copy of the certificate must be attached to each
  229  tax return for which the transferee seeks to apply such tax
  230  credits.
  231         (d) If the credit granted under subparagraph (a)1. is not
  232  fully used in any one year because of insufficient tax liability
  233  on the part of the qualifying business, the unused amounts may
  234  be used in any one year or years beginning with the 21st year
  235  after the commencement of operations of the project and ending
  236  the 30th year after the commencement of operations of the
  237  project.
  238         (3)(a) Notwithstanding subsection (2), a credit against the
  239  tax imposed by this chapter, against state taxes collected or
  240  accrued under chapter 212, or against a stated combination of
  241  the two taxes must be granted to a qualifying business that
  242  establishes a qualifying project identified in subparagraph
  243  (1)(h)4. for which the eligible capital costs of one or more
  244  projects are an aggregate of at least $50 million per year for 3
  245  years. The tax credit must be granted in an amount equal to 20
  246  percent of the eligible capital costs generated by the
  247  qualifying project. The tax credit shall be granted against the
  248  tax liability of the qualifying business.
  249         (b)At the time a tax credit is granted under this
  250  subsection, a qualifying business granted the credit shall elect
  251  to either use or transfer the tax credit.
  252         1.A qualifying business that elects to transfer the tax
  253  credit shall transfer the tax credit within 1 year after the
  254  date the tax credit is granted. A business receiving the
  255  transferred tax credit may use the credit only in the year
  256  received, and the credit may not be carried forward or backward.
  257  To perfect the transfer, the transferor shall provide the
  258  department with a written transfer statement of the transferor’s
  259  intent to transfer the tax credits to the transferee; the date
  260  the transfer is effective; the transferee’s name, address, and
  261  federal taxpayer identification number; the tax period to which
  262  the transfer applies; and the amount of tax credits to be
  263  transferred. The department shall, upon receipt of a transfer
  264  statement conforming to the requirements of this subparagraph,
  265  provide the transferee with a certificate reflecting the tax
  266  credit amounts transferred. A copy of the certificate must be
  267  attached to each tax return for which the transferee seeks to
  268  apply such tax credits.
  269         2.A qualifying business that elects to use the tax credit
  270  may use the tax credit in any one year or years beginning with
  271  the commencement of the project and ending the second year after
  272  the completion of the project.
  273         (4)(a) Notwithstanding subsection (2), a credit against the
  274  tax imposed by this chapter, against state taxes collected or
  275  accrued under chapter 212, or against a stated combination of
  276  the two taxes must be granted to a qualifying business that
  277  establishes a strategic priority project as defined in paragraph
  278  (1)(i), for which the eligible capital costs are at least $75
  279  million. The tax credit must be granted in an amount equal to 20
  280  percent of the eligible capital costs generated by the
  281  qualifying project. The tax credit shall be granted against the
  282  tax liability of the qualifying business.
  283         (b)At the time a tax credit is granted under this
  284  subsection, a qualifying business granted the credit shall elect
  285  to either use or transfer the tax credit.
  286         1.A qualifying business that elects to transfer the tax
  287  credit shall transfer the tax credit within 1 year after the
  288  date the tax credit is granted. A business receiving the
  289  transferred tax credit may use the credit only in the year
  290  received, and the credit may not be carried forward or backward.
  291  To perfect the transfer, the transferor shall provide the
  292  department with a written transfer statement of the transferor’s
  293  intent to transfer the tax credits to the transferee; the
  294  effective date of the transfer; the transferee’s name, address,
  295  and federal taxpayer identification number; the tax period to
  296  which the transfer applies; and the amount of tax credits to be
  297  transferred. Upon receipt of a transfer statement conforming to
  298  the requirements of this subparagraph, the department shall
  299  provide the transferee with a certificate reflecting the tax
  300  credit amounts transferred. A copy of the certificate must be
  301  attached to each tax return for the period for which the
  302  transferee seeks to apply such tax credits.
  303         2.A qualifying business that elects to use the tax credit
  304  may use the tax credit in any one year or years beginning with
  305  the commencement of the project and ending the second year after
  306  the completion of the project.
  307         (5)(a) Notwithstanding subsection (2), an annual credit
  308  against the tax imposed by this chapter must shall be granted to
  309  a qualifying business which establishes a qualifying project
  310  pursuant to subparagraph (1)(h)3. (1)(g)3., in an amount equal
  311  to the lesser of $15 million or 5 percent of the eligible
  312  capital costs made in connection with a qualifying project, for
  313  a period not to exceed 20 years beginning with the commencement
  314  of operations of the project. The tax credit must shall be
  315  granted against the corporate income tax liability of the
  316  qualifying business and as further provided in paragraph (c).
  317  The total tax credit provided pursuant to this subsection must
  318  shall be equal to no more than 100 percent of the eligible
  319  capital costs of the qualifying project.
  320         (b) If the credit granted under this subsection is not
  321  fully used in any one year because of insufficient tax liability
  322  on the part of the qualifying business, the unused amount may be
  323  carried forward for a period not to exceed 20 years after the
  324  commencement of operations of the project. The carryover credit
  325  may be used in a subsequent year when the tax imposed by this
  326  chapter for that year exceeds the credit for which the
  327  qualifying business is eligible in that year under this
  328  subsection after applying the other credits and unused
  329  carryovers in the order provided by s. 220.02(8).
  330         (c) The credit granted under this subsection may be used in
  331  whole or in part by the qualifying business or any corporation
  332  that is either a member of that qualifying business’s affiliated
  333  group of corporations, is a related entity taxable as a
  334  cooperative under subchapter T of the Internal Revenue Code, or,
  335  if the qualifying business is an entity taxable as a cooperative
  336  under subchapter T of the Internal Revenue Code, is related to
  337  the qualifying business. Any entity related to the qualifying
  338  business may continue to file as a member of a Florida-nexus
  339  consolidated group pursuant to a prior election made under s.
  340  220.131(1), Florida Statutes (1985), even if the parent of the
  341  group changes due to a direct or indirect acquisition of the
  342  former common parent of the group. Any credit can be used by any
  343  of the affiliated companies or related entities referenced in
  344  this paragraph to the same extent as it could have been used by
  345  the qualifying business. However, any such use shall not operate
  346  to increase the amount of the credit or extend the period within
  347  which the credit must be used.
  348         (6)(4)Before Prior to receiving tax credits pursuant to
  349  this section, a qualifying business must achieve and maintain
  350  the minimum employment goals beginning with the commencement of
  351  operations or the completion date of at a qualifying project and
  352  continuing each year thereafter during which tax credits are
  353  available pursuant to this section.
  354         (7)(5) Applications must shall be reviewed and certified
  355  pursuant to s. 288.061. The Department of Economic Opportunity,
  356  upon a recommendation by Enterprise Florida, Inc., shall first
  357  certify a business as eligible to receive tax credits pursuant
  358  to this section before prior to the commencement of operations
  359  or the completion date of a qualifying project, and such
  360  certification must shall be transmitted to the Department of
  361  Revenue. Upon receipt of the certification, the Department of
  362  Revenue shall enter into a written agreement with the qualifying
  363  business specifying, at a minimum, the method by which income
  364  generated by or arising out of the qualifying project will be
  365  determined.
  366         (8)(6) The Department of Economic Opportunity, in
  367  consultation with Enterprise Florida, Inc., is authorized to
  368  develop the necessary guidelines and application materials for
  369  the certification process described in subsection (7)(5).
  370         (9)(7) It shall be the responsibility of the qualifying
  371  business to affirmatively demonstrate to the satisfaction of the
  372  Department of Revenue that such business meets the job creation
  373  and capital investment requirements of this section.
  374         (10)(8) The Department of Revenue may specify by rule the
  375  methods by which a project’s pro forma annual taxable income is
  376  determined.
  377         Section 2. Paragraph (d) of subsection (2) of section
  378  288.1089, Florida Statutes, is amended to read:
  379         288.1089 Innovation Incentive Program.—
  380         (2) As used in this section, the term:
  381         (d) “Cumulative investment” means cumulative capital
  382  investment and all eligible capital costs, as defined in s.
  383  220.191, Florida Statutes (2020).
  384         Section 3. This act shall take effect July 1, 2021.