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The Committee on Commerce (Oelrich) recommended the following

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amendment:

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     Senate Amendment (with title amendment)

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     Delete everything after the enacting clause

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and insert:

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     Section 1.  Section 220.194, Florida Statutes, is created

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to read:

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     220.194 Research and development tax credit.--

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     (1)(a) The Legislature finds that research and development

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has become the underlying source of wealth in the 21st century

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by generating ideas and technologies that encourage productivity

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and economic growth. Furthermore, companies generate the main

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body of growth-stimulating innovations, making current ideas and

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technologies more market-sensitive than other sources of

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research and development.

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     (b) The Legislature further finds that research and

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development tax credits provide incentives for corporate

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research and development beyond expected levels. Research

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demonstrates that the federal research and development tax

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credit an effective tool for stimulating additional research and

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development, which in turn leads to faster economic growth, and

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state research and development tax credit programs are nearly as

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important to corporate research and development as the federal

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research and development tax credit program. Also, the typical

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state research and development tax credit program increases

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general, company-funded research and development within a state,

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often enhancing the state's competitiveness by enabling it to

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draw research and development activity away from other states.

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     (c) Additionally, the Legislature finds that this state

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needs a state research and development tax credit program to

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ensure economic competition. More than half of the states of

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this nation have a research and development tax credit program.

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Without a state research and development tax credit program,

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Florida lags behind the rest of the nation in important

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corporate research and development.

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     (d) There is created within the Department of Revenue the

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research and development tax credit program for the purposes of

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encouraging corporate research and development activity within

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the state, sharpening the state's competitive edge by leveling

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the playing field with the state's regional and national

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economic competitors, supporting the state's vibrant innovation

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economy, and attracting high-wage, professional research jobs to

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this state.

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     (2) DEFINITIONS.--As used in this section, the term:

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     (a) "Base amount" means the amount resulting from the

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following calculation:

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     1. The average of the business enterprise's qualified

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research expenses in this state allowed under section 41 of the

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Internal Revenue Code for the 4 taxable years preceding the

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taxable year for which the credit is being determined.

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     2. The qualified research expenses taken into account in

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computing the base amount shall be determined on a basis

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consistent with the determination of qualified research expenses

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for the credit year.

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     (b) "Business enterprise" means any corporation that is

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engaged in the manufacturing, transportation and warehousing,

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telecommunications, tourism, or research and development

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industries in this state, including retail businesses.

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     (c) "Qualified research expenses" means research expenses

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qualifying for the credit under section 41 of the Internal

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Revenue Code and allocated for in-house research expenses

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incurred in this state or contract research expenses incurred in

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this state. The term does not include research conducted outside

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this state, research that is excluded under section 41 of the

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Internal Revenue Code, or research conducted by a business

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enterprise that is not within its principal business activity.

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     (d) "Manufacturing industry" means corporations clearly

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engaged in manufacture which, during all years of the base

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period reports, list the principal business activity codes for

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manufacturing on their federal income tax returns.

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     (e) "Transportation and warehousing industry" means

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corporations clearly engaged in transportation or warehousing

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business which, during all years of the base period reports,

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list the principal business activity codes for transportation

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and warehousing on their federal income tax returns.

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     (f) "Telecommunications industry" means corporations

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clearly engaged in the telecommunications business which, during

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all years of the base period reports, list the principal

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business activity codes for telecommunications on their federal

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income tax returns.

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     (g) "Tourism industry" means corporations clearly engaged

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in the tourism business which, during all years of the base

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period reports, list the principal business activity codes for

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arts, entertainment, and recreation or accommodations on their

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federal income tax returns.

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     (h) "Retail industry" means corporations clearly engaged

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in the retail business which, during all years of the base

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period reports, list the principal business activity codes for

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retail trade on their federal income tax returns.

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     (i) "Research and development industry" means a

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corporation clearly engaged in the research and development

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business which, during all years of the base period reports,

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list the principal business activity codes for scientific

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research and development services on their federal income tax

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returns.

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     (j) "Base period" means the 4 taxable years preceding the

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taxable year for which the credit is being determined. If a

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corporation has not been in existence for the entire base

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period, then the credit shall be reduced by 25 percent for each

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of those years unless the corporation establishes that its

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predecessor was a corporation meeting the requirements of

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paragraph (b) during that part of the base period.

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     (3) TAX CREDIT.--Subject to the limitations contained in

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paragraph (e), a business enterprise is eligible for a credit

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against the tax imposed by this chapter if such business

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enterprise has qualified research expenses in this state in the

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calendar year exceeding the base amount and, for the same

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calendar year, claims and is allowed a research credit for such

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qualified research expenses under section 41 of the Internal

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Revenue Code.

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     (a) The tax credit shall be 10 percent of the excess

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qualified research expenses over the base amount.

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     (b) The credit taken in any single tax year may not exceed

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50 percent of the business enterprise's remaining net income tax

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liability under this chapter after all other credits have been

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applied under s. 220.02(8).

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     (c) Any unused credit authorized pursuant to this section

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may be carried forward and claimed by the taxpayer for up to 5

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years following the close of the taxable year in which the

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qualified research expenses are incurred.

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     (d) Any unused credit authorized pursuant to this section

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may be assigned or sold to another taxpayer as defined in s.

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220.03 in this state if a claim for the allowance has not been

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filed within 1 calendar year following the date on which the

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department approved the credit. The business enterprise and the

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purchaser or assignee must file an application, waivers of

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confidentiality, and affidavits to transfer the credit on a form

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provided by the department and obtain the prior approval of the

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department for such transfer. The department may not

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unreasonably withhold such approval. The purchaser or assignee

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must use the tax credit in the taxable year in which the

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purchase or assignment of the credit is made. The transfer or

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purchase of any amount of the tax credit may not be exchanged

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for less than 75 percent of the credit's value.

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     (e) The combined total amount of tax credits that may be

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granted and approved to all business enterprises under this

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section during any calendar year is $15 million. Applications

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may be filed with the department on or after March 20 for

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qualified research expenses incurred within the preceding

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calendar year, and credits shall be granted in the order in

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which completed applications are received.

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     (4) RULES.--The department may adopt rules to administer

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this section, including, but not limited to, rules prescribing

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forms, application procedures and dates, and notification or

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other procedures for the sale or assignment of a credit, and may

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establish guidelines for making an affirmative showing of

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qualification for a credit and any evidence needed to

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substantiate a claim for credit under this section.

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     Section 2. Subsection (8) of section 220.02, Florida

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Statutes, is amended to read:

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220.02 Legislative Intent.--

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(8)  It is the intent of the Legislature that credits

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against either the corporate income tax or the franchise tax be

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applied in the following order: those enumerated in s. 631.828,

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those enumerated in s. 220.191, those enumerated in s. 220.181,

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

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

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those enumerated in s. 220.184, those enumerated in s. 220.186,

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those enumerated in s. 220.1845, those enumerated in s. 220.19,

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those enumerated in s. 220.185, those enumerated in s. 220.187,

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those enumerated in s. 220.192, and those enumerated in s.

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220.193, and those enumerated in s. 220.194.

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     Section 3.  This act shall take effect July 1, 2008, and is

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effective for tax years beginning on or after January 1, 2009.

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================ T I T L E  A M E N D M E N T ================

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And the title is amended as follows:

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     Delete everything before the enacting clause

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and insert:

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A bill to be entitled

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An act relating to tax credits for research and

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development; creating s. 220.194, F.S.; providing

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legislative findings; creating the research and

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development tax credit program; providing purposes for the

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program; defining the terms "base amount," "business

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enterprise," "qualified research expenses," "manufacturing

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industry," "transportation and warehousing industry,"

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"telecommunications industry," "tourism industry," "retail

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industry," "research and development industry," and "base

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period"; providing eligibility requirements for research

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and development tax credits; providing limitations

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regarding eligibility; providing an amount for such

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credit; providing a maximum amount of credit that may be

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taken during a single tax year; providing that any unused

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credit may be carried forward for a specified period;

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authorizing the sale or assignment of unused credit to

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certain taxpayers under certain conditions; requiring that

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a party to a sale or assignment file certain information

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and documents with the department; requiring that parties

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to a sale or assignment obtain the department's approval

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before completing such sale or assignment; prohibiting the

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department from unreasonable withholding such approval;

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providing requirements for the use tax credits sold or

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assigned; limiting the total amount of tax credits that

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may be assigned in a calendar year; providing that

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applications for credits may be filed on or after a

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specified date; providing that such credits shall be

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granted in the order in which applications are received;

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authorizing the department to adopt rules; amending s.

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220.02, F.S.; revising legislative intent to include the

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research and development tax credit in the ordered list

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according to which credits against corporate income tax or

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franchise tax are applied; providing an effective date.

3/14/2008  2:21:00 PM     577-04987-08