Senate Bill 1114c1

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    Florida Senate - 1998                           CS for SB 1114

    By the Committee on Ways and Means and Senators McKay and
    Latvala




    301-2013B-98

  1                      A bill to be entitled

  2         An act relating to contaminated site

  3         rehabilitation tax credits; creating s.

  4         199.1055, F.S.; providing for a contaminated

  5         site rehabilitation tax credit against the

  6         intangible personal property tax; authorizing

  7         the Department of Revenue to adopt rules;

  8         amending s. 220.02, F.S.; providing for an

  9         additional cross-reference; creating s.

10         220.1845, F.S.; providing for a contaminated

11         site rehabilitation tax credit against the

12         corporate income tax; authorizing the

13         Department of Revenue to adopt rules; creating

14         s. 376.30781, F.S.; providing for a partial tax

15         credit for the rehabilitation of

16         drycleaning-solvent-contaminated sites and

17         brownfield sites; providing for the Department

18         of Environmental Protection to allocate such

19         partial credits; providing procedures for

20         application for tax credits; providing for a

21         nonrefundable review fee; providing

22         verification requirements; authorizing the

23         Department of Environmental Protection to adopt

24         rules; providing for revocation or modification

25         of eligibility for tax credit under certain

26         conditions; amending s. 213.053, F.S.;

27         providing for information-sharing; providing an

28         effective date.

29

30  Be It Enacted by the Legislature of the State of Florida:

31

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  1         Section 1.  Section 199.1055, Florida Statutes, is

  2  created to read:

  3         199.1055  Contaminated site rehabilitation tax

  4  credit.--

  5         (1)  AUTHORIZATION FOR TAX CREDIT; LIMITATIONS.--

  6         (a)  A credit in the amount of 25 percent of the costs

  7  of voluntary cleanup activity that is integral to site

  8  rehabilitation at the following sites is allowed against any

  9  tax due for a taxable year under s. 199.032, less any credit

10  allowed by s. 220.68 for that year:

11         1.  A drycleaning-solvent-contaminated site eligible

12  for state-funded site rehabilitation under s. 376.3078(3);

13         2.  A drycleaning-solvent-contaminated site at which

14  cleanup is undertaken by the real property owner pursuant to

15  s. 376.3078(10), if the real property owner is not also, and

16  has never been, the owner or operator of the drycleaning

17  facility where the contamination exists; or

18         3.  A brownfield site in a designated brownfield area

19  under s. 376.80.

20         (b)  A taxpayer, or multiple taxpayers working jointly

21  to clean up a single site, may not receive more than $125,000

22  per year in tax credits for each site voluntarily

23  rehabilitated. Multiple taxpayers shall receive tax credits in

24  the same proportion as their contribution to payment of

25  cleanup costs.

26         (c)  If the credit granted under this section is not

27  fully used in any one year because of insufficient tax

28  liability on the part of the taxpayer, the unused amount may

29  be carried forward for a period not to exceed 5 years.

30

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  1         (d)  A taxpayer that receives a credit under s.

  2  220.1845 is ineligible to receive credit under this section in

  3  a given tax year.

  4         (e)  A taxpayer that receives state-funded site

  5  rehabilitation pursuant to s. 376.3078(3) for rehabilitation

  6  of a drycleaning-solvent-contaminated site is ineligible to

  7  receive credit under this section for costs incurred by the

  8  taxpayer in conjunction with the rehabilitation of that site

  9  during the same time period that state-administered site

10  rehabilitation was underway.

11         (f)  The total amount of the tax credits which may be

12  granted under this section and s. 220.1845 is $5 million

13  annually.

14         (g)  Tax credits that may be available under this

15  section to an entity eligible under s. 376.30781 may be

16  transferred after a merger or acquisition to the surviving or

17  acquiring entity and used in the same manner and with the same

18  limitations.

19         (h)  In order to encourage completion of site

20  rehabilitation at contaminated sites being voluntarily cleaned

21  up and eligible for a tax credit under this section, the

22  taxpayer may claim an additional 10 percent of the total

23  cleanup costs, not to exceed $50,000, in the final year of

24  cleanup as evidenced by the Department of Environmental

25  Protection issuing a "No Further Action" order for that site.

26         (2)  FILING REQUIREMENTS.--Any taxpayer that wishes to

27  obtain credit under this section must submit with its return a

28  tax credit certificate approving partial tax credits issued by

29  the Department of Environmental Protection under s. 376.30781.

30         (3)  ADMINISTRATION; AUDIT AUTHORITY; TAX CREDIT

31  FORFEITURE.--

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  1         (a)  The Department of Revenue may adopt rules to

  2  prescribe any necessary forms required to claim a tax credit

  3  under this section and to provide the administrative

  4  guidelines and procedures required to administer this section.

  5         (b)  In addition to its existing audit and

  6  investigation authority in chapters 199 and 220, the

  7  Department of Revenue may perform any additional financial and

  8  technical audits and investigations, including examining the

  9  accounts, books, or records of the tax credit applicant, which

10  are necessary to verify the site-rehabilitation costs included

11  in a tax credit return and to ensure compliance with this

12  section. The Department of Environmental Protection shall

13  provide technical assistance, when requested by the Department

14  of Revenue, on any technical audits performed under this

15  section.

16         (c)  It is grounds for forfeiture of previously claimed

17  and received tax credits if the Department of Revenue

18  determines, as a result of either an audit or information

19  received from the Department of Environmental Protection, that

20  a taxpayer received tax credits under this section to which

21  the taxpayer was not entitled. In the case of fraud, the

22  taxpayer shall be prohibited from claiming any future tax

23  credits under this section or s. 220.1845.

24         1.  The taxpayer is responsible for returning forfeited

25  tax credits to the Department of Revenue and such funds shall

26  be paid into the General Revenue Fund of the state.

27         2.  The taxpayer shall file with the Department of

28  Revenue an amended tax return or such other report as the

29  Department of Revenue prescribes by rule and shall pay any

30  required tax within 60 days after the taxpayer receives

31  notification from the Department of Environmental Protection

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    Florida Senate - 1998                           CS for SB 1114
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  1  pursuant to s. 376.30781 that previously approved tax credits

  2  have been revoked or modified, if uncontested, or within 60

  3  days after a final order is issued following proceedings

  4  involving a contested revocation or modification order.

  5         3.  A notice of deficiency may be issued by the

  6  Department of Revenue at any time within 5 years after the

  7  date the taxpayer receives notification from the Department of

  8  Environmental Protection pursuant to s. 376.30781 that

  9  previously approved tax credits have been revoked or modified.

10  If a taxpayer fails to notify the Department of Revenue of any

11  change in its tax credit claimed, a notice of deficiency may

12  be issued at any time. In either case, the amount of any

13  proposed assessment set forth in such notice of deficiency

14  shall be limited to the amount of any deficiency resulting

15  under this section from the recomputation of the taxpayer's

16  tax for the taxable year.

17         4.  Any taxpayer that fails to report and timely pay

18  any tax due as a result of the forfeiture of its tax credit is

19  in violation of this section and is subject to applicable

20  penalty and interest.

21         Section 2.  Subsection (10) of section 220.02, Florida

22  Statutes, is amended to read:

23         220.02  Legislative intent.--

24         (10)  It is the intent of the Legislature that credits

25  against either the corporate income tax or the franchise tax

26  be applied in the following order: those enumerated in s.

27  220.68, those enumerated in s. 631.719(1), those enumerated in

28  s. 631.705, those enumerated in s. 220.18, those enumerated in

29  s. 631.828, those enumerated in s. 220.181, those enumerated

30  in s. 220.183, those enumerated in s. 220.182, those

31  enumerated in s. 220.1895, those enumerated in s. 221.02,

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  1  those enumerated in s. 220.184, those enumerated in s.

  2  220.186, and those enumerated in s. 220.188, and those

  3  enumerated in s. 220.1845.

  4         Section 3.  Section 220.1845, Florida Statutes, is

  5  created to read:

  6         220.1845  Contaminated site rehabilitation tax

  7  credit.--

  8         (1)  AUTHORIZATION FOR TAX CREDIT; LIMITATIONS.--

  9         (a)  A credit in the amount of 25 percent of the costs

10  of voluntary cleanup activity that is integral to site

11  rehabilitation at the following sites is allowed against any

12  tax due for a taxable year under this chapter:

13         1.  A drycleaning-solvent-contaminated site eligible

14  for state-funded site rehabilitation under s. 376.3078(3);

15         2.  A drycleaning-solvent-contaminated site at which

16  cleanup is undertaken by the real property owner pursuant to

17  s. 376.3078(10), if the real property owner is not also, and

18  has never been, the owner or operator of the drycleaning

19  facility where the contamination exists; or

20         3.  A brownfield site in a designated brownfield area

21  under s. 376.80.

22         (b)  A taxpayer, or multiple taxpayers working jointly

23  to clean up a single site, may not receive more than $125,000

24  per year in tax credits for each site voluntarily

25  rehabilitated. Multiple taxpayers shall receive tax credits in

26  the same proportion as their contribution to payment of

27  cleanup costs.

28         (c)  If the credit granted under this section is not

29  fully used in any one year because of insufficient tax

30  liability on the part of the corporation, the unused amount

31  may be carried forward for a period not to exceed 5 years. The

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  1  carryover credit may be used in a subsequent year when the tax

  2  imposed by this chapter for that year exceeds the credit for

  3  which the corporation is eligible in that year under this

  4  section after applying the other credits and unused carryovers

  5  in the order provided by s. 220.02(10).

  6         (d)  A taxpayer that files a consolidated return in

  7  this state as a member of an affiliated group under s.

  8  220.131(1) may be allowed the credit on a consolidated return

  9  basis up to the amount of tax imposed upon and paid by the

10  taxpayer that incurred the rehabilitation costs.

11         (e)  A taxpayer that receives credit under s. 199.1055

12  is ineligible to receive credit under this section in a given

13  tax year.

14         (f)  A taxpayer that receives state-funded site

15  rehabilitation under s. 376.3078(3) for rehabilitation of a

16  drycleaning-solvent-contaminated site is ineligible to receive

17  credit under this section for costs incurred by the taxpayer

18  in conjunction with the rehabilitation of that site during the

19  same time period that state-administered site rehabilitation

20  was underway.

21         (g)  The total amount of the tax credits which may be

22  granted under this section and s. 199.1055 is $5 million

23  annually.

24         (h)  Tax credits that may be available under this

25  section to an entity eligible under s. 376.30781 may be

26  transferred after a merger or acquisition to the surviving or

27  acquiring entity and used in the same manner and with the same

28  limitations.

29         (i)  In order to encourage completion of site

30  rehabilitation at contaminated sites being voluntarily cleaned

31  up and eligible for a tax credit under this section, the

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    Florida Senate - 1998                           CS for SB 1114
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  1  taxpayer may claim an additional 10 percent of the total

  2  cleanup costs, not to exceed $50,000, in the final year of

  3  cleanup as evidenced by the Department of Environmental

  4  Protection issuing a "No Further Action" order for that site.

  5         (2)  FILING REQUIREMENTS.--Any corporation that wishes

  6  to obtain credit under this section must submit with its

  7  return a tax credit certificate approving partial tax credits

  8  issued by the Department of Environmental Protection under s.

  9  376.30781.

10         (3)  ADMINISTRATION; AUDIT AUTHORITY; TAX CREDIT

11  FORFEITURE.--

12         (a)  The Department of Revenue may adopt rules to

13  prescribe any necessary forms required to claim a tax credit

14  under this section and to provide the administrative

15  guidelines and procedures required to administer this section.

16         (b)  In addition to its existing audit and

17  investigation authority in chapters 199 and 220, the

18  Department of Revenue may perform any additional financial and

19  technical audits and investigations, including examining the

20  accounts, books, or records of the tax credit applicant, which

21  are necessary to verify the site-rehabilitation costs included

22  in a tax credit return and to ensure compliance with this

23  section. The Department of Environmental Protection shall

24  provide technical assistance, when requested by the Department

25  of Revenue, on any technical audits performed pursuant to this

26  section.

27         (c)  It is grounds for forfeiture of previously claimed

28  and received tax credits if the Department of Revenue

29  determines, as a result of either an audit or information

30  received from the Department of Environmental Protection, that

31  a taxpayer received tax credits pursuant to this section to

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    Florida Senate - 1998                           CS for SB 1114
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  1  which the taxpayer was not entitled. In the case of fraud, the

  2  taxpayer shall be prohibited from claiming any future tax

  3  credits under this section or s. 199.1055.

  4         1.  The taxpayer is responsible for returning forfeited

  5  tax credits to the Department of Revenue and such funds shall

  6  be paid into the General Revenue Fund of the state.

  7         2.  The taxpayer shall file with the Department of

  8  Revenue an amended tax return or such other report as the

  9  Department of Revenue prescribes by rule and shall pay any

10  required tax within 60 days after the taxpayer receives

11  notification from the Department of Environmental Protection

12  pursuant to s. 376.30781 that previously approved tax credits

13  have been revoked or modified, if uncontested, or within 60

14  days after a final order is issued following proceedings

15  involving a contested revocation or modification order.

16         3.  A notice of deficiency may be issued by the

17  Department of Revenue at any time within 5 years after the

18  date the taxpayer receives notification from the Department of

19  Environmental Protection pursuant to s. 376.30781 that

20  previously approved tax credits have been revoked or modified.

21  If a taxpayer fails to notify the Department of Revenue of any

22  change in its tax credit claimed, a notice of deficiency may

23  be issued at any time. In either case, the amount of any

24  proposed assessment set forth in such notice of deficiency

25  shall be limited to the amount of any deficiency resulting

26  under this section from the recomputation of the taxpayer's

27  tax for the taxable year.

28         4.  Any taxpayer that fails to report and timely pay

29  any tax due as a result of the forfeiture of its tax credit is

30  in violation of this section and is subject to applicable

31  penalty and interest.

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  1         Section 4.  Section 376.30781, Florida Statutes, is

  2  created to read:

  3         376.30781  Partial tax credits for rehabilitation of

  4  drycleaning-solvent-contaminated sites and brownfield sites in

  5  designated brownfield areas; application process; rulemaking

  6  authority; revocation authority.--

  7         (1)  The Legislature finds that:

  8         (a)  To facilitate property transactions and economic

  9  growth and development, it is in the interest of the state to

10  encourage the cleanup, at the earliest possible time, of

11  drycleaning-solvent-contaminated sites and brownfield sites in

12  designated brownfield areas.

13         (b)  It is the intent of the Legislature to encourage

14  the voluntary cleanup of drycleaning-solvent-contaminated

15  sites and brownfield sites in designated brownfield areas by

16  providing a partial tax credit for the restoration of such

17  property in specified circumstances.

18         (2)(a)  A credit in the amount of 25 percent of the

19  costs of voluntary cleanup activity that is integral to site

20  rehabilitation at the following sites is allowed pursuant to

21  ss. 199.1055 and 220.1845:

22         1.  A drycleaning-solvent-contaminated site eligible

23  for state-funded site rehabilitation under s. 376.3078(3);

24         2.  A drycleaning-solvent-contaminated site at which

25  cleanup is undertaken by the real property owner pursuant to

26  s. 376.3078(10), if the real property owner is not also, and

27  has never been, the owner or operator of the drycleaning

28  facility where the contamination exists; or

29         3.  A brownfield site in a designated brownfield area

30  under s. 376.80.

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  1         (b)  A taxpayer, or multiple taxpayers working jointly

  2  to clean up a single site, may not receive more than $125,000

  3  per year in tax credits for each site voluntarily

  4  rehabilitated. Multiple taxpayers shall receive tax credits in

  5  the same proportion as their contribution to payment of

  6  cleanup costs. Tax credits are available only for site

  7  rehabilitation conducted during the tax year in which the tax

  8  credit application is submitted.

  9         (c)  In order to encourage completion of site

10  rehabilitation at contaminated sites that are being

11  voluntarily cleaned up and that are eligible for a tax credit

12  under this section, the tax credit applicant may claim an

13  additional 10 percent of the total cleanup costs, not to

14  exceed $50,000, in the final year of cleanup as evidenced by

15  the Department of Environmental Protection issuing a "No

16  Further Action" order for that site.

17         (3)  The Department of Environmental Protection shall

18  be responsible for allocating the tax credits provided for in

19  ss. 199.1055 and 220.1845, not to exceed a total of $5 million

20  in tax credits annually.

21         (4)  To claim the credit, each applicant must apply to

22  the Department of Environmental Protection for an allocation

23  of the $5 million annual credit by December 31 on a form

24  developed by the Department of Environmental Protection in

25  cooperation with the Department of Revenue. The form shall

26  include an affidavit from each applicant certifying that all

27  information contained in the application, including all

28  records of costs incurred and claimed in the tax credit

29  application, are true and correct. If the application is

30  submitted pursuant to subparagraph (2)(a)2., the form must

31  include an affidavit signed by the real property owner stating

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  1  that it is not, and has never been, the owner or operator of

  2  the drycleaning facility where the contamination exists.

  3  Approval of partial tax credits must be accomplished on a

  4  first-come, first-served basis based upon the date complete

  5  applications are received by the Division of Waste Management.

  6  An applicant shall submit only one application per site per

  7  year. To be eligible for a tax credit the applicant must:

  8         (a)  Have entered into a voluntary cleanup agreement

  9  with the Department of Environmental Protection for a

10  drycleaning-solvent-contaminated site or a Brownfield Site

11  Rehabilitation Agreement, as applicable; and

12         (b)  Have paid all deductibles pursuant to s.

13  376.3078(3)(d) for eligible drycleaning-solvent-cleanup

14  program sites.

15         (5)  To obtain the tax credit certificate, an applicant

16  must annually file an application for certification, which

17  must be received by the Department of Environmental Protection

18  by December 31. The applicant must provide all pertinent

19  information requested on the tax credit application form,

20  including, at a minimum, the name and address of the applicant

21  and the address and tracking identification number of the

22  eligible site. Along with the application form, the applicant

23  must submit the following:

24         (a)  A nonrefundable review fee of $250 made payable to

25  the Water Quality Assurance Trust Fund to cover the

26  administrative costs associated with the department's review

27  of the tax credit application;

28         (b)  Copies of contracts and documentation of contract

29  negotiations, accounts, invoices, sales tickets, or other

30  payment records from purchases, sales, leases, or other

31  transactions involving actual costs incurred for that tax year

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  1  related to site rehabilitation, as that term is defined in ss.

  2  376.301 and 376.79;

  3         (c)  Proof that the documentation submitted pursuant to

  4  paragraph (b) has been reviewed and verified by an independent

  5  certified public accountant in accordance with standards

  6  established by the American Institute of Certified Public

  7  Accountants. Specifically, the certified public accountant

  8  must attest to the accuracy and validity of the costs incurred

  9  and paid by conducting an independent review of the data

10  presented by the applicant, as well as reporting on whether

11  the applicant's accounting control procedures have ensured

12  that such costs are paid only once. A copy of the accountant's

13  report shall be submitted to the Department of Environmental

14  Protection with the tax credit application; and

15         (d)  A certification form stating that site

16  rehabilitation activities associated with the documentation

17  submitted pursuant to paragraph (b) have been conducted under

18  the observation of, and related technical documents have been

19  signed and sealed by, an appropriate professional registered

20  in this state in each contributing technical discipline. The

21  certification form shall be signed and sealed by the

22  appropriate registered professionals stating that the costs

23  incurred were integral, necessary, and required for site

24  rehabilitation, as that term is defined in ss. 376.301 and

25  376.79.

26         (6)  The certified public accountant and appropriate

27  registered professionals submitting forms as part of a tax

28  credit application must verify such forms. Verification must

29  be accomplished as provided in s. 92.525(1)(b) and subject to

30  the provisions of s. 92.525(3).

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  1         (7)  The Department of Environmental Protection shall

  2  review the tax credit application and any supplemental

  3  documentation submitted by each applicant, for the purpose of

  4  verifying that the applicant has met the qualifying criteria

  5  in subsections (2) and (4) and has submitted all required

  6  documentation listed in subsection (5). Upon verification that

  7  the applicant has met these requirements, the department shall

  8  issue a written decision granting eligibility for partial tax

  9  credits (a tax credit certificate) in the amount of 25 percent

10  of the total costs claimed, subject to the $125,000

11  limitation, for the tax year in which the tax credit

12  application is submitted based on the report of the certified

13  public accountant and the certifications from the appropriate

14  registered technical professionals.

15         (8)  On or before March 1, the Department of

16  Environmental Protection shall inform each eligible applicant

17  of the amount of its partial tax credit and provide each

18  eligible applicant with a tax credit certificate that must be

19  submitted with its tax return to the Department of Revenue to

20  claim the tax credit. Credits will not result in the payment

21  of refunds if total credits exceed the amount of tax owed.

22         (9)  If an applicant does not receive a tax credit

23  allocation due to an exhaustion of the $5-million annual tax

24  credit authorization, such application will then be included

25  in the same first-come, first-served order in the next year's

26  annual tax credit allocation, if any.

27         (10)  The Department of Environmental Protection may

28  adopt rules to prescribe the necessary forms required to claim

29  tax credits under this section and to provide the

30  administrative guidelines and procedures required to

31  administer this section. Prior to the adoption of rules

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  1  regulating the tax credit application, the department shall,

  2  by September 1, 1998, establish reasonable interim application

  3  requirements and forms.

  4         (11)  The Department of Environmental Protection may

  5  revoke or modify any written decision granting eligibility for

  6  partial tax credits under this section if it is discovered

  7  that the tax credit applicant submitted any false statement,

  8  representation, or certification in any application, record,

  9  report, plan, or other document filed in an attempt to receive

10  partial tax credits under this section. The Department of

11  Environmental Protection shall immediately notify the

12  Department of Revenue of any revoked or modified orders

13  affecting previously granted partial tax credits.

14  Additionally, the taxpayer must notify the Department of

15  Revenue of any change in its tax credit claimed.

16         (12)  An owner, operator, or real property owner who

17  receives state-funded site rehabilitation under s. 376.3078(3)

18  for rehabilitation of a drycleaning-solvent-contaminated site

19  is ineligible to receive a tax credit under s. 199.1055 or s.

20  220.1845 for costs incurred by the taxpayer in conjunction

21  with the rehabilitation of that site during the same time

22  period that state-administered site rehabilitation was

23  underway.

24         Section 5.  Paragraph (o) is added to subsection (7) of

25  section 213.053, Florida Statutes, to read:

26         213.053  Confidentiality and information sharing.--

27         (7)  Notwithstanding any other provision of this

28  section, the department may provide:

29         (o)  Information relative to ss. 199.1055, 220.1845,

30  and 376.30781 to the Department of Environmental Protection in

31  the conduct of its official business.

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  1

  2  Disclosure of information under this subsection shall be

  3  pursuant to a written agreement between the executive director

  4  and the agency.  Such agencies, governmental or

  5  nongovernmental, shall be bound by the same requirements of

  6  confidentiality as the Department of Revenue.  Breach of

  7  confidentiality is a misdemeanor of the first degree,

  8  punishable as provided by s. 775.082 or s. 775.083.

  9         Section 6.  This act shall take effect July 1, 1998.

10

11          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
12                             SB 1114

13

14  The committee substitute changes the number of the newly
    created section from s. 376.30714, F.S., to s. 376.30781, F.S.
15  This located the new tax credit provision within existing
    drycleaning program statute. The previous designation placed
16  this section among the sections of statute governing the
    petroleum cleanup program.
17
    Real property owners eligible to receive credit for cleanup of
18  contaminated drycleaning sites under this program are limited
    to those who are not, and never have been, the owner or
19  operator of the drycleaning facility where the contamination
    exists. Such applicants must sign an affidavit stating that
20  this is the case.

21  The requirement that an applicant for credit under this
    program must have obtained site eligibility under s.
22  376.3078(3), F.S., under the drycleaning solvent program or
    brownfield area designation under s. 376.80, F.S., was
23  removed. The types of sites eligible for the tax credit are
    clearly described in subsection (2) of s. 376.30781, F.S.
24

25

26

27

28

29

30

31

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