Florida Senate - 2008 CS for SB 1398
By the Committee on Commerce; and Senator Oelrich
577-05715-08 20081398c1
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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; requiring that the credits be granted in
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the order in which applications are received; authorizing
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the department to adopt rules; amending s. 220.02, F.S.;
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revising legislative intent to include the research and
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development tax credit in the ordered list according to
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which credits against corporate income tax or franchise
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tax are applied; providing an effective date.
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Be It Enacted by the Legislature of the State of Florida:
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Section 1. Section 220.194, Florida Statutes, is created to
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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 by
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generating ideas and technologies that encourage productivity and
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economic growth. Furthermore, companies generate the main body of
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growth-stimulating innovations, making current ideas and
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technologies more market-sensitive than other sources of research
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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 research
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and development beyond expected levels. Research demonstrates
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that the federal research and development tax credit is an
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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 this
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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 corporate
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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 economic
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competitors, supporting the state's vibrant innovation economy,
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and attracting high-wage, professional research jobs to this
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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 s. 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, as defined
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in s. 220.03(1)(e), which is engaged in the manufacturing,
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transportation and warehousing, telecommunications, tourism, or
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research and development industries in this state, including
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retail businesses.
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(c) "Qualified research expenses" means research expenses
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qualifying for the credit under s. 41 of the Internal Revenue
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Code and allocated for in-house research expenses incurred in
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this state or contract research expenses incurred in this state.
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The term does not include research conducted outside this state,
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research that is excluded under s. 41 of the Internal Revenue
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Code, or research conducted by a business enterprise that is not
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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 period
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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, list
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the principal business activity codes for transportation and
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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 business
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activity codes for telecommunications on their federal income tax
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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 in
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the retail business which, during all years of the base period
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reports, list the principal business activity codes for retail
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trade on their federal income tax returns.
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(i) "Research and development industry" means a corporation
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clearly engaged in the research and development business which,
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during all years of the base period reports, list the principal
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business activity codes for scientific research and development
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services on their federal income tax 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 period,
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then the credit shall be reduced by 25 percent for each of those
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years unless the corporation establishes that its predecessor was
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a corporation meeting the requirements of paragraph (b) during
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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 s. 41 of the Internal Revenue
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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(1)(e), in this state which is otherwise qualified under
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paragraph (2)(i), if a claim for the allowance has not been filed
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within 1 calendar year following the date on which the department
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approved the credit. The business enterprise and the purchaser or
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assignee must file an application, waivers of confidentiality,
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and affidavits to transfer the credit on a form provided by the
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department and obtain the prior approval of the department for
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such transfer. The department may not unreasonably withhold such
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approval. The purchaser or assignee must use the tax credit in
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the taxable year in which the purchase or assignment of the
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credit is made. The transfer or purchase of any amount of the tax
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credit may not be exchanged for less than 75 percent of the
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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 may
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be filed with the department on or after March 20 for qualified
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research expenses incurred within the preceding calendar year,
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and credits shall be granted in the order in which completed
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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. 220.192, and those enumerated in s.
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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.
CODING: Words stricken are deletions; words underlined are additions.