Florida Senate - 2009 SB 1644
By Senator Ring
32-00250D-09 20091644__
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
5 the commercialization of certain technologies by
6 startup and early stage companies in this state;
7 amending s. 220.13, F.S.; redefining the term
8 “adjusted federal income” to prohibit a seller from
9 deducting from his or her taxable income any net
10 operating loss transferred pursuant to the act;
11 amending s. 220.16, F.S.; providing for allocation of
12 specified nonbusiness income to the state; creating s.
13 220.194, F.S.; creating the Micro-Targeted Technology
14 Commercialization Credit Transfer Program; providing
15 intent, goals, and objectives; providing definitions;
16 requiring that the Institute for the Commercialization
17 of Public Research identify examples of micro-targeted
18 technology and compile a list of the technology for
19 the Office of Tourism, Trade, and Economic
20 Development; requiring the office to certify eligible
21 companies for the transfer of corporate income tax net
22 operating loss amounts; providing qualifications and
23 an application process and requirements; requiring an
24 application fee; providing for an application
25 deadline; requiring the office to grant or deny an
26 application within a specified time after receiving a
27 completed application; providing for calculating the
28 certified credit amount; providing a maximum amount
29 that may be transferred; providing a penalty;
30 requiring each certified company to file an annual
31 report with the office; requiring the office and the
32 Department of Revenue to adopt rules; creating s.
33 220.195, F.S.; creating the Micro-Targeted Technology
34 Commercialization Assistance Grant Program; providing
35 intent, goals, and objectives of the grant program;
36 directing the Office of Tourism, Trade, and Economic
37 Development to manage the grant program; directing the
38 Florida Institute for the Commercialization of Public
39 Research to review grant applications and submit
40 recommendations to the Office of Tourism, Trade, and
41 Economic Development; specifying eligibility
42 requirements for grants; specifying the grant amount;
43 detailing the permissible uses of the grant funds;
44 requiring the Office of Tourism, Trade, and Economic
45 Development to prepare an annual report; providing
46 rulemaking authority; directing the Office of Program
47 Policy Analysis and Government Accountability to
48 review the program and prepare a report; amending s.
49 213.053, F.S.; authorizing the Department of Revenue
50 to share confidential taxpayer information with the
51 Office of Tourism, Trade, and Economic Development;
52 providing an appropriation; providing for an
53 allocation of the funds; providing for future repeal
54 of the credit transfer program and the grant program;
55 providing an effective date.
56
57 Be It Enacted by the Legislature of the State of Florida:
58
59 Section 1. Short title.—This act may be cited as the
60 “Micro-Targeted Technology Commercialization Act.”
61 Section 2. Legislative purpose.—The purpose of this act is
62 to promote the commercialization of certain technologies by
63 startup and early stage Florida companies, and to create high
64 wage jobs in these industry sectors. The act creates two
65 financial mechanisms to promote commercialization efforts: a net
66 operating loss credit transfer program and a commercialization
67 grant program.
68 Section 3. Paragraph (b) of subsection (1) of section
69 220.13, Florida Statutes, is amended to read:
70 220.13 “Adjusted federal income” defined.—
71 (1) The term “adjusted federal income” means an amount
72 equal to the taxpayer's taxable income as defined in subsection
73 (2), or such taxable income of more than one taxpayer as
74 provided in s. 220.131, for the taxable year, adjusted as
75 follows:
76 (b) Subtractions.—
77 1. There shall be subtracted from such taxable income:
78 a. The net operating loss deduction allowable for federal
79 income tax purposes under s. 172 of the Internal Revenue Code
80 for the taxable year,
81 b. The net capital loss allowable for federal income tax
82 purposes under s. 1212 of the Internal Revenue Code for the
83 taxable year,
84 c. The excess charitable contribution deduction allowable
85 for federal income tax purposes under s. 170(d)(2) of the
86 Internal Revenue Code for the taxable year, and
87 d. The excess contributions deductions allowable for
88 federal income tax purposes under s. 404 of the Internal Revenue
89 Code for the taxable year, except that any net operating loss
90 transferred pursuant to s. 220.194 may not be deducted by the
91 seller.
92 However, a net operating loss and a capital loss shall never be
93 carried back as a deduction to a prior taxable year, but all
94 deductions attributable to such losses shall be deemed net
95 operating loss carryovers and capital loss carryovers,
96 respectively, and treated in the same manner, to the same
97 extent, and for the same time periods as are prescribed for such
98 carryovers in ss. 172 and 1212, respectively, of the Internal
99 Revenue Code.
100 2. There shall be subtracted from such taxable income any
101 amount to the extent included therein the following:
102 a. Dividends treated as received from sources without the
103 United States, as determined under s. 862 of the Internal
104 Revenue Code.
105 b. All amounts included in taxable income under s. 78 or s.
106 951 of the Internal Revenue Code.
107 However, as to any amount subtracted under this subparagraph,
108 there shall be added to such taxable income all expenses
109 deducted on the taxpayer's return for the taxable year which are
110 attributable, directly or indirectly, to such subtracted amount.
111 Further, no amount shall be subtracted with respect to dividends
112 paid or deemed paid by a Domestic International Sales
113 Corporation.
114 3. In computing “adjusted federal income” for taxable years
115 beginning after December 31, 1976, there shall be allowed as a
116 deduction the amount of wages and salaries paid or incurred
117 within this state for the taxable year for which no deduction is
118 allowed pursuant to s. 280C(a) of the Internal Revenue Code
119 (relating to credit for employment of certain new employees).
120 4. There shall be subtracted from such taxable income any
121 amount of nonbusiness income included therein, including
122 payments received for a certified tax credit amount pursuant to
123 s. 220.194.
124 5. There shall be subtracted any amount of taxes of foreign
125 countries allowable as credits for taxable years beginning on or
126 after September 1, 1985, under s. 901 of the Internal Revenue
127 Code to any corporation which derived less than 20 percent of
128 its gross income or loss for its taxable year ended in 1984 from
129 sources within the United States, as described in s.
130 861(a)(2)(A) of the Internal Revenue Code, not including credits
131 allowed under ss. 902 and 960 of the Internal Revenue Code,
132 withholding taxes on dividends within the meaning of sub
133 subparagraph 2.a., and withholding taxes on royalties, interest,
134 technical service fees, and capital gains.
135 6. Notwithstanding any other provision of this code, except
136 with respect to amounts subtracted pursuant to subparagraphs 1.
137 and 3., any increment of any apportionment factor which is
138 directly related to an increment of gross receipts or income
139 which is deducted, subtracted, or otherwise excluded in
140 determining adjusted federal income shall be excluded from both
141 the numerator and denominator of such apportionment factor.
142 Further, all valuations made for apportionment factor purposes
143 shall be made on a basis consistent with the taxpayer's method
144 of accounting for federal income tax purposes.
145 Section 4. Subsection (5) is added to section 220.16,
146 Florida Statutes, to read:
147 220.16 Allocation of nonbusiness income.—Nonbusiness income
148 shall be allocated as follows:
149 (5) The amount of financial assistance received in exchange
150 for transferring a net operating loss as authorized by s.
151 220.194 is allocable to this state.
152 Section 5. Section 220.194, Florida Statutes, is created to
153 read:
154 220.194 Micro-Targeted Technology Commercialization Credit
155 Transfer Program; transfer of net loss carryforward as a
156 certified credit.—
157 (1) PURPOSE; GOALS AND OBJECTIVES.—It is the intent of the
158 Legislature that the Micro-Targeted Technology Commercialization
159 Credit Transfer Program act as a catalyst for eligible companies
160 to accelerate their revenue and job growth and their market
161 penetration by monetizing their net operating losses into
162 transferable credits. The program’s objectives include:
163 (a) Accelerating the entry of new technology-based products
164 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; and
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 to
198 transfer a net operating loss shall be certified as a qualified
199 micro-targeted technology company by the office if it timely
200 files a completed application and meets the requirements of this
201 subsection. For purposes of this subsection, all conditions in
202 paragraphs (a) through (g) must be met no later than the date
203 the application is filed with the office. All other requirements
204 in this subsection must be satisfied before any allowed benefits
205 may be transferred to the company. In order to be certified, a
206 micro-targeted technology company shall demonstrate that:
207 (a) It is registered with the Secretary of State to operate
208 in this state.
209 (b) It is primarily engaged in developing, manufacturing,
210 producing, or providing micro-targeted technology for commercial
211 or public purposes.
212 (c) It has fewer than 100 full-time, worldwide employees,
213 including full-time employees leased to the applicant, of which
214 at least 75 percent work full time in this state at the time the
215 net operating loss credit transfer is first allowed.
216 (d) It has been audited by an independent certified public
217 accountant and:
218 1. The company has not had positive net income in any of
219 the 2 previous years of ongoing operations;
220 2. The company has reported a net operating loss in any of
221 the 2 previous years of operation; and
222 3. The company is not at least 50 percent owned or
223 controlled, directly or indirectly, by another corporation that
224 has demonstrated positive net income in any of the 2 previous
225 years of ongoing operations, or is not part of a consolidated
226 group of affiliated corporations, as filed for federal income
227 tax purposes, which in the aggregate demonstrated positive net
228 income in any of the 2 previous years of ongoing operations.
229 (e) The company has at least one active application for a
230 patent under 35 U.S.C. s. 111(a) on file with the United States
231 Patent and Trademark Office.
232 (f) The company has received research grants or other
233 financial assistance from governmental entities, foundations,
234 and other private entities or investors.
235 (g) The company has an established business plan that
236 describes its commercialization strategy, a business-development
237 plan that includes revenue projections and a strategy for
238 becoming profitable, and a timeline for development which
239 addresses revenue growth and job creation in this state.
240 (h) The company can certify that:
241 1. It will not transfer a net operating loss in exchange
242 for private financial assistance in an amount that is less than
243 75 percent of the certified credit amount;
244 2. All proceeds from the transfer will be expended to
245 support the operation or expansion of the company's business
246 activity in this state; and
247 3. Upon transfer of a credit, it shall notify the office of
248 the amount within 30 days after each certified credit is
249 transferred, the amount of the financial assistance received,
250 and the identity of the purchaser of the certified credit.
251 (5) APPLICATION FOR CERTIFICATION.—
252 (a) A completed application must be filed with the office
253 on or after 2 p.m., on the first business day of July commencing
254 in 2009. The office may investigate the qualifications of each
255 company applicant and may require by rule the applicant to
256 provide such evidence of its qualification as is necessary to
257 assure compliance with the requirements of this section,
258 including, but not limited to, the state corporate income tax
259 return supporting the request for certification of a credit
260 transfer, audited financial statements, federal tax returns, and
261 state and federal employment filings.
262 (b) The office shall require a nonrefundable application
263 fee of $100 per application submitted. The department shall
264 cooperate with the office in its review of the applications.
265 (c) The office shall grant or deny an application in full
266 or in part within 90 days after receiving a completed
267 application containing the necessary information, including
268 payment of the application fee. If the office denies any part of
269 the application, it shall inform the applicant of the grounds
270 for the denial.
271 (d) This section does not create a presumption that a
272 company applicant will be approved by the office to transfer its
273 certified credits. However, the office may issue a nonbinding
274 opinion letter, upon the request of a prospective applicant, as
275 to its eligibility and the potential amount of certified tax
276 credits available.
277 (6) CALCULATION OF CERTIFIED CREDIT TRANSFER AMOUNT AND
278 LIMITATIONS.—When submitting an application for certification, a
279 company shall state the amount of the net operating loss
280 deduction, including any net operating loss carryover, it
281 requests to be transferred as a certified credit. To the extent
282 allowed as a deduction in this state, a reported net operating
283 loss deduction not otherwise taken may be certified by the
284 office for transfer by a certified micro-targeted technology
285 company in exchange for private financial assistance from a
286 purchaser as follows:
287 (a) The net operating loss shall be transferred as a
288 certified credit amount.
289 (b) The maximum lifetime net operating loss credits that a
290 micro-targeted technology company may be certified to transfer
291 may not exceed $1 million.
292 (c) Once the office has certified the transfer of total net
293 operating loss credits that may be claimed during a state fiscal
294 year in a cumulative amount of $3 million, the office may not
295 approve the transfer of any additional credits that may be taken
296 in that state fiscal year.
297 (d) The certified micro-targeted technology company is
298 liable for a penalty if, after a transfer, the net operating
299 loss is disallowed pursuant to an audit by the department. The
300 penalty equals the amount of the credit transferred, reduced in
301 proportion to the amount of the net operating loss certified for
302 transfer over the amount of the certified net operating loss
303 disallowed.
304 (e) The applicant and its successors shall maintain all
305 records necessary to support the reported net operating loss.
306 (7) PURCHASE OF TRANSFERRED CERTIFIED CREDITS.—
307 (a) The certified credit amount must be reported as a
308 credit against tax due by the unaffiliated corporate purchaser
309 on the next tax return due to be filed by the purchaser, but in
310 no case may it be reported later than 1 year after the date of
311 transfer.
312 (b) The purchaser of a certified credit amount may not
313 further sell, or otherwise transfer, the certified credit.
314 (c) It is the responsibility of the certified micro
315 targeted technology company that transferred the certified
316 credit to notify the office within 30 days after transfer of the
317 amount of each certified credit transferred, the amount of the
318 financial assistance received, and the identity of the purchaser
319 of the certified credit. The office shall certify to the
320 department the same information within 14 working days.
321 (8) REPORTING REQUIREMENT.—Each company that is certified
322 to transfer its net operating loss credits must provide the
323 office with an annual report on its development covering the
324 year after it has received funds from transferring its credits.
325 The report must include the company’s commercialization
326 strategy; business development plan; timeline for development;
327 actual revenue and revenue projections, both total and within
328 Florida only; and actual employment and employment projections,
329 both total and within Florida only. The report is due January 3
330 each applicable year.
331 (9) RULEMAKING AUTHORITY.—
332 (a) The office shall adopt rules pursuant to ss. 120.536(1)
333 and 120.54 to administer this section. The rules must establish
334 the criteria for qualified technology research and experimental
335 development, production, or provision of technology for
336 commercial or public purposes; the format of application forms;
337 and the procedures to implement the program.
338 (b) The department may adopt rules pursuant to ss.
339 120.536(1) and 120.54 to administer this section.
340 Section 6. Section 220.195, Florida Statutes, is created to
341 read:
342 220.195 Micro-Targeted Technology Commercialization
343 Assistance Grant Program.—
344 (1) INTENT; GOALS AND OBJECTIVES; CREATION OF PROGRAM.—
345 (a) It is the intent of the Legislature that the Micro
346 Targeted Technology Commercialization Assistance Grant Program
347 act as a catalyst for eligible startup companies to accelerate
348 their growth and market penetration using state grant funds to
349 help pay certain operating expenditures.
350 (b) The grant program’s objectives include:
351 1. Accelerating the entry of new technology-based products
352 into the marketplace;
353 2. Producing additional technology-based jobs for this
354 state;
355 3. Providing leveraged resources to increase the
356 effectiveness and success of applicants' projects;
357 4. Accelerating commercialization of micro-targeted
358 technologies in the biomedical and technical fields; and
359 5. Encouraging the establishment and growth of high
360 quality, high-wage advanced biomedical and technology firms in
361 this state.
362 (2) ELIGIBILITY GUIDELINES.—A qualified applicant must:
363 (a) Be a company specializing in micro-targeted technology
364 which is registered with the Secretary of State to operate in
365 this state;
366 (b) Conduct its business activities in this state;
367 (c) Have fewer than 25 full-time, worldwide employees,
368 including full-time employees leased to the applicant, of which
369 at least 75 percent are domiciled in this state;
370 (d) Have at least one active application for a patent under
371 35 U.S.C. s. 111(a) filed with the United States Patent and
372 Trademark Office;
373 (e) Have received research grants or other financial
374 assistance from governmental entities, foundations, and other
375 private entities or investors, which in total at least equals
376 the amount of the grant being requested through this program;
377 (f) Have been selected to receive state university research
378 commercialization assistance grant funding, pursuant to s.
379 1004.226, which will be considered for the list of qualified
380 technologies;
381 (g) Have an executed agreement with the licensing
382 institution; and
383 (h) Have an established business plan that describes its
384 commercialization strategy, a business development plan that
385 includes revenue projections and a strategy for becoming
386 profitable, and a timeline for development that addresses
387 revenue growth and job creation in this state.
388 Each company receiving funding must provide the institute and
389 the office an annual report on its development since being
390 awarded the grant. The report must include the company’s
391 commercialization strategy; business development plan; timeline
392 for development; actual revenue and revenue projections, both
393 total and within Florida only; and actual employment and
394 employment projections, both total and within Florida only. The
395 report is due on the anniversary date of when the company
396 received its grant.
397 (3) GRANT SELECTION PROCESS AND ADMINISTRATION.—
398 (a) The office shall provide administrative support to the
399 institute, as needed, for the twice-yearly issuance of an open
400 call for grant applications, for providing blank application
401 forms, and for receiving and processing the applications for
402 review.
403 (b) The office shall collect and provide to the institute
404 all grant applications within 15 days after the posted submittal
405 deadline date.
406 (c) The board of directors of the institute shall review
407 all grant applications received and, based on the eligibility
408 guidelines in subsection (3), submit a list of recommended grant
409 recipients to the office for its final approval. An application
410 must be recommended for approval or be denied by the institute’s
411 board within 45 days after receiving the application. The total
412 amount of grants recommended for disbursal to eligible companies
413 may not exceed $4.5 million in any one year.
414 (d) The executive director of the office shall review the
415 institute’s list of recommended grant recipients, and must
416 approve or deny the individual recommendations. The executive
417 director’s decisions must be made within 30 days after receiving
418 the list of recommendations from the institute.
419 (e) This section does not create a presumption that an
420 applicant will be approved by the office to receive a grant.
421 However, the office may issue a nonbinding opinion letter, upon
422 the request of a prospective applicant, as to its eligibility
423 for a grant and the potential amount of the grant.
424 (f) Grant awards shall be disbursed twice yearly to
425 recipient companies.
426 (4) AWARDS.—The office may make a one-time award of up to
427 $500,000 to a qualified applicant. Disbursal of grant awards
428 shall be within 45 days after the office’s final approval of
429 grant applications.
430 (5) USE OF GRANT FUNDS.—Grant funds shall be used by a
431 recipient to pay only wages, rent, and other operating expenses,
432 and to purchase equipment and supplies necessary to its
433 business. Grant funds may not be used to retire company debt.
434 (6) ANNUAL REPORT.—The office, with assistance from the
435 institute, shall submit an annual report of the grant program’s
436 activities to the Governor, the President of the Senate, and the
437 Speaker of the House of Representatives by July 15 of each year,
438 beginning in 2010.
439 (7) RULES.—The office may adopt rules pursuant to ss.
440 120.536(1) and 120.54 to administer this section, including the
441 format and content of grant application forms, and the criteria
442 for qualifying companies engaged in technology research and
443 experimental development, production, or provision of technology
444 for commercial or public purposes.
445 (8) MONITORING.—Before the 2011 Regular Session of the
446 Legislature, the Office of Program Policy Analysis and
447 Government Accountability shall conduct a review and evaluation
448 of the grant program. The office shall specifically evaluate the
449 grant program’s effectiveness in using state funds to sustain
450 and nurture companies developing micro-targeted technologies, to
451 create high-wage jobs, and to attract outside investment in
452 these companies.
453 Section 7. Subsection (19) is added to section 213.053,
454 Florida Statutes, to read:
455 213.053 Confidentiality and information sharing.—
456 (19) Information relative to transfer of net operating
457 losses under s. 220.194 may be disclosed to the Office of
458 Tourism, Trade, and Economic Development or its employees or
459 agents that have been identified in writing by the office to the
460 department for use in the performance of official duties. All
461 information so obtained is subject to the same confidentiality
462 as imposed on the department.
463 Section 8. (1) The sum of $29 million is transferred from
464 the Florida Opportunity Fund to the Economic Development Trust
465 Fund for the purpose of funding the credit transfer program and
466 grant program created by this act. Notwithstanding s. 216.301,
467 Florida Statutes, and pursuant to s. 216.351, Florida Statutes,
468 the unexpended balance of this appropriation at the end of the
469 fiscal year shall remain in the trust fund and shall be
470 available for carrying out the purposes of the grant program in
471 future years.
472 (2) Of that amount:
473 (a) The sum of $2 million is appropriated to the Institute
474 for the Commercialization of Public Research for the 2009-2010
475 fiscal year to support its operations, including its management,
476 operations, tracking, and measurement of outcomes relative to
477 the grant program.
478 (b) The sum of $18 million shall be retained in the
479 Economic Development Trust Fund and earmarked for the Micro
480 Targeted Technology Commercialization Assistance Grant Program,
481 to be used consistent with the purposes of s. 220.195, Florida
482 Statutes.
483 (c) The sum of $9 million shall be retained in the Economic
484 Development Trust Fund to be used to reimburse the General
485 Revenue Fund so as to defray the cost to the state of the net
486 operating loss tax credits created in s. 220.195, Florida
487 Statutes.
488 Section 9. Sections 220.194 and 220.195, Florida Statutes,
489 are repealed effective June 30, 20l3, unless reviewed and saved
490 from repeal through reenactment by the Legislature.
491 Section 10. This act shall take effect upon becoming a law.