HB 1197

1	A bill to be entitled
2	An act relating to economic development; creating the
3	"Micro-Targeted Technology Commercialization Act";
4	providing that the purpose of the act is to promote the
5	commercialization of certain technologies by startup and
6	early stage companies in this state; amending s. 220.13,
7	F.S.; redefining the term "adjusted federal income" to
8	prohibit a seller from deducting from his or her taxable
9	income any net operating loss transferred pursuant to the
10	act; amending s. 220.16, F.S.; providing for allocation of
11	specified nonbusiness income to the state; creating s.
12	220.194, F.S.; creating the Micro-Targeted Technology
13	Commercialization Credit Transfer Program; providing
14	intent, goals, and objectives; providing definitions;
15	requiring that the Institute for the Commercialization of
16	Public Research identify examples of micro-targeted
17	technology and compile a list of the technology for the
18	Office of Tourism, Trade, and Economic Development;
19	requiring the office to certify eligible companies for the
20	transfer of corporate income tax net operating loss
21	amounts; providing qualifications and an application
22	process and requirements; requiring an application fee;
23	providing for an application deadline; requiring the
24	office to grant or deny an application within a specified
25	time after receiving a completed application; providing
26	for calculating the certified credit amount; providing a
27	maximum amount that may be transferred; providing a
28	penalty; requiring each certified company to file an
29	annual report with the office; requiring the office and
30	the Department of Revenue to adopt rules; creating s.
31	220.195, F.S.; creating the Micro-Targeted Technology
32	Commercialization Assistance Grant Program; providing
33	intent, goals, and objectives of the grant program;
34	directing the Office of Tourism, Trade, and Economic
35	Development to manage the grant program; directing the
36	Institute for the Commercialization of Public Research to
37	review grant applications and submit recommendations to
38	the Office of Tourism, Trade, and Economic Development;
39	specifying eligibility requirements for grants; specifying
40	the grant amount; detailing the permissible uses of the
41	grant funds; requiring the Office of Tourism, Trade, and
42	Economic Development to prepare an annual report;
43	providing rulemaking authority; directing the Office of
44	Program Policy Analysis and Government Accountability to
45	review the program and prepare a report; amending s.
46	213.053, F.S.; authorizing the Department of Revenue to
47	share confidential taxpayer information with the Office of
48	Tourism, Trade, and Economic Development; providing an
49	appropriation; providing for an allocation of the funds;
50	providing for future repeal of the credit transfer program
51	and the grant program; providing an effective date.
52
53	Be It Enacted by the Legislature of the State of Florida:
54
55	Section 1.  Short title.--This act may be cited as the
56	"Micro-Targeted Technology Commercialization Act."
57	Section 2.  Legislative purpose.--The purpose of this act
58	is to promote the commercialization of certain technologies by
59	startup and early stage Florida companies and to create high-
60	wage jobs in these industry sectors. The act creates two
61	financial mechanisms to promote commercialization efforts: a net
62	operating loss credit transfer program and a commercialization
63	grant program.
64	Section 3.  Paragraph (b) of subsection (1) of section
65	220.13, Florida Statutes, is amended to read:
66	220.13  "Adjusted federal income" defined.--
67	(1)  The term "adjusted federal income" means an amount
68	equal to the taxpayer's taxable income as defined in subsection
69	(2), or such taxable income of more than one taxpayer as
70	provided in s. 220.131, for the taxable year, adjusted as
71	follows:
72	(b)  Subtractions.--
73	1.  There shall be subtracted from such taxable income:
74	a.  The net operating loss deduction allowable for federal
75	income tax purposes under s. 172 of the Internal Revenue Code
76	for the taxable year,
77	b.  The net capital loss allowable for federal income tax
78	purposes under s. 1212 of the Internal Revenue Code for the
79	taxable year,
80	c.  The excess charitable contribution deduction allowable
81	for federal income tax purposes under s. 170(d)(2) of the
82	Internal Revenue Code for the taxable year, and
83	d.  The excess contributions deductions allowable for
84	federal income tax purposes under s. 404 of the Internal Revenue
85	Code for the taxable year, except that any net operating loss
86	transferred pursuant to s. 220.194 may not be deducted by the
87	seller.
88
89	However, a net operating loss and a capital loss shall never be
90	carried back as a deduction to a prior taxable year, but all
91	deductions attributable to such losses shall be deemed net
92	operating loss carryovers and capital loss carryovers,
93	respectively, and treated in the same manner, to the same
94	extent, and for the same time periods as are prescribed for such
95	carryovers in ss. 172 and 1212, respectively, of the Internal
96	Revenue Code.
97	2.  There shall be subtracted from such taxable income any
98	amount to the extent included therein the following:
99	a.  Dividends treated as received from sources without the
100	United States, as determined under s. 862 of the Internal
101	Revenue Code.
102	b.  All amounts included in taxable income under s. 78 or
103	s. 951 of the Internal Revenue Code.
104
105	However, as to any amount subtracted under this subparagraph,
106	there shall be added to such taxable income all expenses
107	deducted on the taxpayer's return for the taxable year which are
108	attributable, directly or indirectly, to such subtracted amount.
109	Further, no amount shall be subtracted with respect to dividends
110	paid or deemed paid by a Domestic International Sales
111	Corporation.
112	3.  In computing "adjusted federal income" for taxable
113	years beginning after December 31, 1976, there shall be allowed
114	as a deduction the amount of wages and salaries paid or incurred
115	within this state for the taxable year for which no deduction is
116	allowed pursuant to s. 280C(a) of the Internal Revenue Code
117	(relating to credit for employment of certain new employees).
118	4.  There shall be subtracted from such taxable income any
119	amount of nonbusiness income included therein, including
120	payments received for a certified tax credit amount pursuant to
121	s. 220.194.
122	5.  There shall be subtracted any amount of taxes of
123	foreign countries allowable as credits for taxable years
124	beginning on or after September 1, 1985, under s. 901 of the
125	Internal Revenue Code to any corporation which derived less than
126	20 percent of its gross income or loss for its taxable year
127	ended in 1984 from sources within the United States, as
128	described in s. 861(a)(2)(A) of the Internal Revenue Code, not
129	including credits allowed under ss. 902 and 960 of the Internal
130	Revenue Code, withholding taxes on dividends within the meaning
131	of sub-subparagraph 2.a., and withholding taxes on royalties,
132	interest, technical service fees, and capital gains.
133	6.  Notwithstanding any other provision of this code,
134	except with respect to amounts subtracted pursuant to
135	subparagraphs 1. and 3., any increment of any apportionment
136	factor which is directly related to an increment of gross
137	receipts or income which is deducted, subtracted, or otherwise
138	excluded in determining adjusted federal income shall be
139	excluded from both the numerator and denominator of such
140	apportionment factor. Further, all valuations made for
141	apportionment factor purposes shall be made on a basis
142	consistent with the taxpayer's method of accounting for federal
143	income tax purposes.
144	Section 4.  Subsection (5) is added to section 220.16,
145	Florida Statutes, to read:
146	220.16  Allocation of nonbusiness income.--Nonbusiness
147	income shall be allocated as follows:
148	(5)  The amount of financial assistance received in
149	exchange for transferring a net operating loss as authorized by
150	s. 220.194 is allocable to this state.
151	Section 5.  Section 220.194, Florida Statutes, is created
152	to read:
153	220.194  Micro-Targeted Technology Commercialization Credit
154	Transfer Program; transfer of net loss carryforward as a
155	certified credit.--
156	(1)  PURPOSE; GOALS AND OBJECTIVES.--It is the intent of
157	the Legislature that the Micro-Targeted Technology
158	Commercialization Credit Transfer Program act as a catalyst for
159	eligible companies to accelerate their revenue and job growth
160	and their market penetration by monetizing their net operating
161	losses into transferable credits. The program's objectives
162	include:
163	(a)  Accelerating the entry of new technology-based
164	products into the marketplace.
165	(b)  Producing additional technology-based jobs for this
166	state.
167	(c)  Accelerating commercialization of micro-targeted
168	technologies in the biomedical and technical fields.
169	(d)  Encouraging the growth of high-quality, high-wage
170	biomedical and technology firms in this state.
171	(2)  DEFINITIONS.--As used in ss. 220.194 and 220.195, the
172	term:
173	(a)  "Certified credit amount" means the product of the net
174	operating loss in this state multiplied by the corporate income
175	tax rate imposed during the year it was sought.
176	(b)  "Certified micro-targeted technology company" means a
177	business entity that is registered with the Secretary of State,
178	is currently operating in this state, and is certified by the
179	office to trade net operating loss deduction credits pursuant to
180	this section.
181	(c)  "Department" means the Department of Revenue.
182	(d)  "Institute" means the Institute for the
183	Commercialization of Public Research.
184	(e)  "Micro-targeted technology" means individual
185	components, technology, or processes that are crucial to the
186	development of larger or more complex biomedical or
187	technological devices, processes, or information systems.
188	(f)  "Office" means the Office of Tourism, Trade, and
189	Economic Development.
190	(3)  THE INSTITUTE FOR THE COMMERCIALIZATION OF PUBLIC
191	RESEARCH.--The Institute for the Commercialization of Public
192	Research or other Florida research-based consortium shall
193	identify examples of micro-targeted technology and compile a
194	list that is updated annually to add new technologies or delete
195	those technologies that are no longer applicable. The office
196	shall adopt this list as a rule.
197	(4)  QUALIFICATIONS FOR CERTIFICATION.--A company seeking
198	to transfer a net operating loss shall be certified as a
199	qualified micro-targeted technology company by the office if it
200	timely files a completed application and meets the requirements
201	of this subsection. For purposes of this subsection, all
202	conditions in paragraphs (a) through (g) must be met no later
203	than the date the application is filed with the office. All
204	other requirements in this subsection must be satisfied before
205	any allowed benefits may be transferred to the company. In order
206	to be certified, a micro-targeted technology company shall
207	demonstrate that:
208	(a)  It is registered with the Secretary of State to
209	operate in this state.
210	(b)  It is primarily engaged in developing, manufacturing,
211	producing, or providing micro-targeted technology for commercial
212	or public purposes.
213	(c)  It has fewer than 100 full-time, worldwide employees,
214	including full-time employees leased to the applicant, of which
215	at least 75 percent work full time in this state at the time the
216	net operating loss credit transfer is first allowed.
217	(d)  It has been audited by an independent certified public
218	accountant and:
219	1.  The company has not had positive net income in any of
220	the 2 previous years of ongoing operations.
221	2.  The company has reported a net operating loss in any of
222	the 2 previous years of operation.
223	3.  The company is not at least 50 percent owned or
224	controlled, directly or indirectly, by another corporation that
225	has demonstrated positive net income in any of the 2 previous
226	years of ongoing operations, or is not part of a consolidated
227	group of affiliated corporations, as filed for federal income
228	tax purposes, which in the aggregate demonstrated positive net
229	income in any of the 2 previous years of ongoing operations.
230	(e)  The company has at least one active application for a
231	patent under 35 U.S.C. s. 111(a) on file with the United States
232	Patent and Trademark Office.
233	(f)  The company has received research grants or other
234	financial assistance from governmental entities, foundations,
235	and other private entities or investors.
236	(g)  The company has an established business plan that
237	describes its commercialization strategy, a business-development
238	plan that includes revenue projections and a strategy for
239	becoming profitable, and a timeline for development which
240	addresses revenue growth and job creation in this state.
241	(h)  The company can certify that:
242	1.  It will not transfer a net operating loss in exchange
243	for private financial assistance in an amount that is less than
244	75 percent of the certified credit amount.
245	2.  All proceeds from the transfer will be expended to
246	support the operation or expansion of the company's business
247	activity in this state.
248	3.  Upon transfer of a credit, it shall notify the office
249	of the amount within 30 days after each certified credit is
250	transferred, the amount of the financial assistance received,
251	and the identity of the purchaser of the certified credit.
252	(5)  APPLICATION FOR CERTIFICATION.--
253	(a)  A completed application must be filed with the office
254	on or after 2 p.m., on the first business day of July commencing
255	in 2009. The office may investigate the qualifications of each
256	company applicant and may require by rule the applicant to
257	provide such evidence of its qualification as is necessary to
258	assure compliance with the requirements of this section,
259	including, but not limited to, the state corporate income tax
260	return supporting the request for certification of a credit
261	transfer, audited financial statements, federal tax returns, and
262	state and federal employment filings.
263	(b)  The office shall require a nonrefundable application
264	fee of $100 per application submitted. The department shall
265	cooperate with the office in its review of the applications.
266	(c)  The office shall grant or deny an application in full
267	or in part within 90 days after receiving a completed
268	application containing the necessary information, including
269	payment of the application fee. If the office denies any part of
270	the application, it shall inform the applicant of the grounds
271	for the denial.
272	(d)  This section does not create a presumption that a
273	company applicant will be approved by the office to transfer its
274	certified credits. However, the office may issue a nonbinding
275	opinion letter, upon the request of a prospective applicant, as
276	to its eligibility and the potential amount of certified tax
277	credits available.
278	(6)  CALCULATION OF CERTIFIED CREDIT TRANSFER AMOUNT AND
279	LIMITATIONS.--When submitting an application for certification,
280	a company shall state the amount of the net operating loss
281	deduction, including any net operating loss carryover, it
282	requests to be transferred as a certified credit. To the extent
283	allowed as a deduction in this state, a reported net operating
284	loss deduction not otherwise taken may be certified by the
285	office for transfer by a certified micro-targeted technology
286	company in exchange for private financial assistance from a
287	purchaser as follows:
288	(a)  The net operating loss shall be transferred as a
289	certified credit amount.
290	(b)  The maximum lifetime net operating loss credits that a
291	micro-targeted technology company may be certified to transfer
292	may not exceed $1 million.
293	(c)  Once the office has certified the transfer of total
294	net operating loss credits that may be claimed during a state
295	fiscal year in a cumulative amount of $3 million, the office may
296	not approve the transfer of any additional credits that may be
297	taken in that state fiscal year.
298	(d)  The certified micro-targeted technology company is
299	liable for a penalty if, after a transfer, the net operating
300	loss is disallowed pursuant to an audit by the department. The
301	penalty equals the amount of the credit transferred, reduced in
302	proportion to the amount of the net operating loss certified for
303	transfer over the amount of the certified net operating loss
304	disallowed.
305	(e)  The applicant and its successors shall maintain all
306	records necessary to support the reported net operating loss.
307	(7)  PURCHASE OF TRANSFERRED CERTIFIED CREDITS.--
308	(a)  The certified credit amount must be reported as a
309	credit against tax due by the unaffiliated corporate purchaser
310	on the next tax return due to be filed by the purchaser, but in
311	no case may it be reported later than 1 year after the date of
312	transfer.
313	(b)  The purchaser of a certified credit amount may not
314	further sell, or otherwise transfer, the certified credit.
315	(c)  It is the responsibility of the certified micro-
316	targeted technology company that transferred the certified
317	credit to notify the office within 30 days after transfer of the
318	amount of each certified credit transferred, the amount of the
319	financial assistance received, and the identity of the purchaser
320	of the certified credit. The office shall certify to the
321	department the same information within 14 working days.
322	(8)  REPORTING REQUIREMENT.--Each company that is certified
323	to transfer its net operating loss credits must provide the
324	office with an annual report on its development covering the
325	year after it has received funds from transferring its credits.
326	The report must include the company's commercialization
327	strategy; business development plan; timeline for development;
328	actual revenue and revenue projections, both total and within
329	Florida only; and actual employment and employment projections,
330	both total and within Florida only. The report is due January 3
331	each applicable year.
332	(9)  RULEMAKING AUTHORITY.--
333	(a)  The office shall adopt rules pursuant to ss.
334	120.536(1) and 120.54 to administer this section. The rules must
335	establish the criteria for qualified technology research and
336	experimental development, production, or provision of technology
337	for commercial or public purposes; the format of application
338	forms; and the procedures to implement the program.
339	(b)  The department may adopt rules pursuant to ss.
340	120.536(1) and 120.54 to administer this section.
341	Section 6.  Section 220.195, Florida Statutes, is created
342	to read:
343	220.195  Micro-Targeted Technology Commercialization
344	Assistance Grant Program.--
345	(1)  INTENT; GOALS AND OBJECTIVES; CREATION OF PROGRAM.--
346	(a)  It is the intent of the Legislature that the Micro-
347	Targeted Technology Commercialization Assistance Grant Program
348	act as a catalyst for eligible startup companies to accelerate
349	their growth and market penetration using state grant funds to
350	help pay certain operating expenditures.
351	(b)  The grant program's objectives include:
352	1.  Accelerating the entry of new technology-based products
353	into the marketplace.
354	2.  Producing additional technology-based jobs for this
355	state.
356	3.  Providing leveraged resources to increase the
357	effectiveness and success of applicants' projects.
358	4.  Accelerating commercialization of micro-targeted
359	technologies in the biomedical and technical fields.
360	5.  Encouraging the establishment and growth of high-
361	quality, high-wage advanced biomedical and technology firms in
362	this state.
363	(2)  ELIGIBILITY GUIDELINES.--A qualified applicant must:
364	(a)  Be a company specializing in micro-targeted technology
365	which is registered with the Secretary of State to operate in
366	this state.
367	(b)  Conduct its business activities in this state.
368	(c)  Have fewer than 25 full-time, worldwide employees,
369	including full-time employees leased to the applicant, of which
370	at least 75 percent are domiciled in this state.
371	(d)  Have at least one active application for a patent
372	under 35 U.S.C. s. 111(a) filed with the United States Patent
373	and Trademark Office.
374	(e)  Have received research grants or other financial
375	assistance from governmental entities, foundations, and other
376	private entities or investors, which in total at least equals
377	the amount of the grant being requested through this program.
378	(f)  Have been selected to receive state university
379	research commercialization assistance grant funding, pursuant to
380	s. 1004.226, which will be considered for the list of qualified
381	technologies.
382	(g)  Have an executed agreement with the licensing
383	institution.
384	(h)  Have an established business plan that describes its
385	commercialization strategy, a business development plan that
386	includes revenue projections and a strategy for becoming
387	profitable, and a timeline for development that addresses
388	revenue growth and job creation in this state.
389
390	Each company receiving funding must provide the institute and
391	the office an annual report on its development since being
392	awarded the grant. The report must include the company's
393	commercialization strategy; business development plan; timeline
394	for development; actual revenue and revenue projections, both
395	total and within Florida only; and actual employment and
396	employment projections, both total and within Florida only. The
397	report is due on the anniversary date of when the company
398	received its grant.
399	(3)  GRANT SELECTION PROCESS AND ADMINISTRATION.--
400	(a)  The office shall provide administrative support to the
401	institute, as needed, for the twice-yearly issuance of an open-
402	call for grant applications, for providing blank application
403	forms, and for receiving and processing the applications for
404	review.
405	(b)  The office shall collect and provide to the institute
406	all grant applications within 15 days after the posted submittal
407	deadline date.
408	(c)  The board of directors of the institute shall review
409	all grant applications received and, based on the eligibility
410	guidelines in subsection (2), submit a list of recommended grant
411	recipients to the office for its final approval. An application
412	must be recommended for approval or be denied by the institute's
413	board within 45 days after receiving the application. The total
414	amount of grants recommended for disbursal to eligible companies
415	may not exceed $4.5 million in any one year.
416	(d)  The executive director of the office shall review the
417	institute's list of recommended grant recipients, and must
418	approve or deny the individual recommendations. The executive
419	director's decisions must be made within 30 days after receiving
420	the list of recommendations from the institute.
421	(e)  This section does not create a presumption that an
422	applicant will be approved by the office to receive a grant.
423	However, the office may issue a nonbinding opinion letter, upon
424	the request of a prospective applicant, as to its eligibility
425	for a grant and the potential amount of the grant.
426	(f)  Grant awards shall be disbursed twice yearly to
427	recipient companies.
428	(4)  AWARDS.--The office may make a one-time award of up to
429	$500,000 to a qualified applicant. Disbursal of grant awards
430	shall be within 45 days after the office's final approval of
431	grant applications.
432	(5)  USE OF GRANT FUNDS.--Grant funds shall be used by a
433	recipient to pay only wages, rent, and other operating expenses,
434	and to purchase equipment and supplies necessary to its
435	business. Grant funds may not be used to retire company debt.
436	(6)  ANNUAL REPORT.--The office, with assistance from the
437	institute, shall submit an annual report of the grant program's
438	activities to the Governor, the President of the Senate, and the
439	Speaker of the House of Representatives by July 15 of each year,
440	beginning in 2010.
441	(7)  RULES.--The office may adopt rules pursuant to ss.
442	120.536(1) and 120.54 to administer this section, including the
443	format and content of grant application forms, and the criteria
444	for qualifying companies engaged in technology research and
445	experimental development, production, or provision of technology
446	for commercial or public purposes.
447	(8)  MONITORING.--Before the 2011 Regular Session of the
448	Legislature, the Office of Program Policy Analysis and
449	Government Accountability shall conduct a review and evaluation
450	of the grant program. The office shall specifically evaluate the
451	grant program's effectiveness in using state funds to sustain
452	and nurture companies developing micro-targeted technologies, to
453	create high-wage jobs, and to attract outside investment in
454	these companies.
455	Section 7.  Subsection (19) is added to section 213.053,
456	Florida Statutes, to read:
457	213.053  Confidentiality and information sharing.--
458	(19)  Information relative to transfer of net operating
459	losses under s. 220.194 may be disclosed to the Office of
460	Tourism, Trade, and Economic Development or its employees or
461	agents that have been identified in writing by the office to the
462	department for use in the performance of official duties. All
463	information so obtained is subject to the same confidentiality
464	as imposed on the department.
465	Section 8.  (1)  The sum of $29 million is transferred from
466	the Florida Opportunity Fund to the Economic Development Trust
467	Fund for the purpose of funding the credit transfer program and
468	grant program created by this act. Notwithstanding s. 216.301,
469	Florida Statutes, and pursuant to s. 216.351, Florida Statutes,
470	the unexpended balance of this appropriation at the end of the
471	fiscal year shall remain in the trust fund and shall be
472	available for carrying out the purposes of the grant program in
473	future years.
474	(2)  Of that amount:
475	(a)  The sum of $2 million is appropriated to the Institute
476	for the Commercialization of Public Research for the 2009-2010
477	fiscal year to support its operations, including its management,
478	operations, tracking, and measurement of outcomes relative to
479	the grant program.
480	(b)  The sum of $18 million shall be retained in the
481	Economic Development Trust Fund and earmarked for the Micro-
482	Targeted Technology Commercialization Assistance Grant Program,
483	to be used consistent with the purposes of s. 220.195, Florida
484	Statutes.
485	(c)  The sum of $9 million shall be retained in the
486	Economic Development Trust Fund to be used to reimburse the
487	General Revenue Fund so as to defray the cost to the state of
488	the net operating loss tax credits created in s. 220.195,
489	Florida Statutes.
490	Section 9.  Sections 220.194 and 220.195, Florida Statutes,
491	are repealed effective June 30, 20l3, unless reviewed and saved
492	from repeal through reenactment by the Legislature.
493	Section 10.  This act shall take effect upon becoming a
494	law.

CODING: Words stricken are deletions; words underlined are additions.