Florida Senate - 2009 COMMITTEE AMENDMENT
Bill No. SB 2546
Barcode 346858
LEGISLATIVE ACTION
Senate . House
Comm: RCS .
04/01/2009 .
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The Committee on Finance and Tax (Altman) recommended the
following:
1 Senate Amendment (with title amendment)
2
3 Delete everything after the enacting clause
4 and insert:
5 Section 1. This act may be cited as the “Florida Fair
6 Business Competition Act.”
7 Section 2. Paragraph (a) of subsection (15) and paragraph
8 (a) of subsection (16) of section 196.012, Florida Statutes, are
9 amended to read:
10 196.012 Definitions.—For the purpose of this chapter, the
11 following terms are defined as follows, except where the context
12 clearly indicates otherwise:
13 (15) “New business” means:
14 (a)1. A business establishing 10 or more jobs to employ 10
15 or more full-time employees in this state, which manufactures,
16 processes, compounds, fabricates, or produces for sale items of
17 tangible personal property at a fixed location and which
18 comprises an industrial or manufacturing plant;
19 2. A business establishing 25 or more jobs to employ 25 or
20 more full-time employees in this state, the sales factor of
21 which, as defined by s. 220.15(4) s. 220.15(5), for the facility
22 with respect to which it requests an economic development ad
23 valorem tax exemption is less than 0.50 for each year the
24 exemption is claimed; or
25 3. An office space in this state owned and used by a
26 corporation newly domiciled in this state; provided such office
27 space houses 50 or more full-time employees of such corporation;
28 provided that such business or office first begins operation on
29 a site clearly separate from any other commercial or industrial
30 operation owned by the same business.
31 (16) “Expansion of an existing business” means:
32 (a)1. A business establishing 10 or more jobs to employ 10
33 or more full-time employees in this state, which manufactures,
34 processes, compounds, fabricates, or produces for sale items of
35 tangible personal property at a fixed location and which
36 comprises an industrial or manufacturing plant; or
37 2. A business establishing 25 or more jobs to employ 25 or
38 more full-time employees in this state, the sales factor of
39 which, as defined by s. 220.15(4) s. 220.15(5), for the facility
40 with respect to which it requests an economic development ad
41 valorem tax exemption is less than 0.50 for each year the
42 exemption is claimed; provided that such business increases
43 operations on a site colocated with a commercial or industrial
44 operation owned by the same business, resulting in a net
45 increase in employment of not less than 10 percent or an
46 increase in productive output of not less than 10 percent.
47 Section 3. Paragraph (b) of subsection (5) of section
48 213.053, Florida Statutes, is amended to read:
49 213.053 Confidentiality and information sharing.—
50 (5) Nothing contained in this section shall prevent the
51 department from:
52 (b) Disclosing to the Chief Financial Officer the names and
53 addresses of those taxpayers who have claimed an exemption
54 pursuant to former s. 199.185(1)(i) or a deduction pursuant to
55 former s. 220.63(5).
56 Section 4. Section 213.054, Florida Statutes, is amended to
57 read:
58 213.054 Persons claiming tax exemptions or deductions;
59 annual report.—The Department of Revenue shall be responsible
60 for monitoring the utilization of tax deductions authorized
61 pursuant to chapter 81-179, Laws of Florida. On or before
62 September 1 of each year, the department shall report to the
63 Chief Financial Officer the names and addresses of all persons
64 who have claimed a deduction pursuant to former s. 220.63(5).
65 Section 5. Subsection (1) of section 220.02, Florida
66 Statutes, is amended to read:
67 220.02 Legislative intent.—
68 (1) It is the intent of the Legislature in enacting this
69 code to impose a tax upon all corporations, organizations,
70 associations, and other artificial entities which derive from
71 this state or from any other jurisdiction permanent and inherent
72 attributes not inherent in or available to natural persons, such
73 as perpetual life, transferable ownership represented by shares
74 or certificates, and limited liability for all owners. It is
75 intended that any limited liability company that is classified
76 as a partnership for federal income tax purposes and formed
77 under chapter 608 or qualified to do business in this state as a
78 foreign limited liability company not be subject to the tax
79 imposed by this code. It is the intent of the Legislature to
80 subject such corporations and other entities to taxation
81 hereunder for the privilege of conducting business, deriving
82 income, or existing within this state. This code is not intended
83 to tax, and shall not be construed so as to tax, any natural
84 person who engages in a trade, business, or profession in this
85 state under his or her own or any fictitious name, whether
86 individually as a proprietorship, or in partnership with others
87 when classified as a partnership for federal income tax
88 purposes, or as a member or a manager of a limited liability
89 company classified as a partnership for federal income tax
90 purposes; any estate of a decedent or incompetent; or any
91 testamentary trust. However, a corporation or other taxable
92 entity which is or which becomes partners with one or more
93 natural persons shall not, merely by reason of being a partner,
94 exclude from its net income subject to tax its respective share
95 of partnership net income. It is the intent of the Legislature
96 to follow the classification of organizations under the Internal
97 Revenue Code to the greatest extent possible when not in
98 conflict with the express provisions of this code. This
99 statement of intent shall be given preeminent consideration in
100 any construction or interpretation of this code in order to
101 avoid any conflict between this code and the mandate in s. 5,
102 Art. VII of the State Constitution that no income tax be levied
103 upon natural persons who are residents and citizens of this
104 state.
105 Section 6. Paragraphs (e) and (r) of subsection (1) of
106 section 220.03, Florida Statutes, are amended, and subsection
107 (6) is added to that section, to read:
108 220.03 Definitions.—
109 (1) SPECIFIC TERMS.—When used in this code, and when not
110 otherwise distinctly expressed or manifestly incompatible with
111 the intent thereof, the following terms shall have the following
112 meanings:
113 (e) “Corporation” includes all domestic corporations;
114 foreign corporations qualified to do business in this state or
115 actually doing business in this state; joint-stock companies;
116 limited liability companies, partnerships, and other entities of
117 any type which are taxable as corporations for federal income
118 tax purposes under chapter 608; common-law declarations of
119 trust, under chapter 609; corporations not for profit, under
120 chapter 617; agricultural cooperative marketing associations,
121 under chapter 618; professional service corporations, under
122 chapter 621; foreign unincorporated associations, under chapter
123 622; private school corporations, under chapter 623; foreign
124 corporations not for profit which are carrying on their
125 activities in this state; and all other organizations,
126 associations, legal entities, and artificial persons which are
127 created by or pursuant to the statutes of this state, the United
128 States, or any other state, territory, possession, or
129 jurisdiction. The term “corporation” does not include
130 proprietorships, even if using a fictitious name; partnerships
131 of any type, as such, except as otherwise described in this
132 paragraph; limited liability companies that are taxable as
133 partnerships for federal income tax purposes; state or public
134 fairs or expositions, under chapter 616; estates of decedents or
135 incompetents; testamentary trusts; or private trusts.
136 (r) “Nonbusiness income” means an amount that cannot be
137 included in apportionable income rents and royalties from real
138 or tangible personal property, capital gains, interest,
139 dividends, and patent and copyright royalties, to the extent
140 that they do not arise from transactions and activities in the
141 regular course of the taxpayer’s trade or business. The term
142 “nonbusiness income” does not include income from tangible and
143 intangible property if the acquisition, management, and
144 disposition of the property constitute integral parts of the
145 taxpayer’s regular trade or business operations, or any amounts
146 which could be included in apportionable income without
147 violating the due process clause of the United States
148 Constitution. For purposes of this definition, the term “income”
149 means gross receipts less all items of loss, expense, or
150 deduction, whether directly or indirectly attributable thereto,
151 which were used to reduce adjusted federal income in the current
152 taxable year or in a previous taxable year. For purposes of this
153 definition, “income” means gross receipts less all expenses
154 directly or indirectly attributable thereto. Functionally
155 related dividends are presumed to be business income.
156 (6) PARTNERSHIPS.—A corporation that is a general or
157 limited partner in a partnership, as such, that conducts
158 business in this state, that earns or receives income in this
159 state, or that exists in this state is subject to taxation under
160 this chapter when the partnership activities, if conducted
161 directly by the corporation, would subject the corporation to
162 taxation under this chapter. In the case of a tiered partnership
163 arrangement, the activities of any partnership occupying a lower
164 tier of a tiered partnership arrangement are imputed,
165 proportionally, to all partners holding interests in the
166 partnership occupying higher tiers. A “tiered partnership
167 arrangement” is one in which some or all of the interests in one
168 partnership, or lower-tier partnership, are held by a second
169 partnership, or upper-tier partnership. A tiered partnership
170 arrangement may have two or more tiers. For purposes of this
171 subsection, the term “partnership” includes a limited liability
172 company that has made a federal election to be taxed as a
173 partnership or as a disregarded entity.
174 Section 7. Paragraph (a) of subsection (1) of section
175 220.13, Florida Statutes, is amended, paragraph (m) is added to
176 subsection (2) of that section, and subsection (3) is added to
177 that section, read:
178 220.13 “Adjusted federal income” defined.—
179 (1) The term “adjusted federal income” means an amount
180 equal to the taxpayer’s taxable income as defined in subsection
181 (2), or such taxable income of more than one taxpayer as
182 provided in s. 220.131, for the taxable year, adjusted as
183 follows:
184 (a) Additions.—There shall be added to such taxable income:
185 1. The amount of any tax upon or measured by income,
186 excluding taxes based on gross receipts or revenues, paid or
187 accrued as a liability to the District of Columbia or any state
188 of the United States which is deductible from gross income in
189 the computation of taxable income for the taxable year.
190 2. The amount of interest which is excluded from taxable
191 income under s. 103(a) of the Internal Revenue Code or any other
192 federal law, less the associated expenses disallowed in the
193 computation of taxable income under s. 265 of the Internal
194 Revenue Code or any other law, excluding 60 percent of any
195 amounts included in alternative minimum taxable income, as
196 defined in s. 55(b)(2) of the Internal Revenue Code, if the
197 taxpayer pays tax under s. 220.11(3).
198 3. In the case of a regulated investment company or real
199 estate investment trust, an amount equal to the excess of the
200 net long-term capital gain for the taxable year over the amount
201 of the capital gain dividends attributable to the taxable year.
202 4. That portion of the wages or salaries paid or incurred
203 for the taxable year which is equal to the amount of the credit
204 allowable for the taxable year under s. 220.181. This
205 subparagraph shall expire on the date specified in s. 290.016
206 for the expiration of the Florida Enterprise Zone Act.
207 5. That portion of the ad valorem school taxes paid or
208 incurred for the taxable year which is equal to the amount of
209 the credit allowable for the taxable year under s. 220.182. This
210 subparagraph shall expire on the date specified in s. 290.016
211 for the expiration of the Florida Enterprise Zone Act.
212 6. The amount of emergency excise tax paid or accrued as a
213 liability to this state under chapter 221 which tax is
214 deductible from gross income in the computation of taxable
215 income for the taxable year.
216 7. That portion of assessments to fund a guaranty
217 association incurred for the taxable year which is equal to the
218 amount of the credit allowable for the taxable year.
219 8. In the case of a nonprofit corporation which holds a
220 pari-mutuel permit and which is exempt from federal income tax
221 as a farmers’ cooperative, an amount equal to the excess of the
222 gross income attributable to the pari-mutuel operations over the
223 attributable expenses for the taxable year.
224 9. The amount taken as a credit for the taxable year under
225 s. 220.1895.
226 10. Up to nine percent of the eligible basis of any
227 designated project which is equal to the credit allowable for
228 the taxable year under s. 220.185.
229 11. The amount taken as a credit for the taxable year under
230 s. 220.187.
231 12. The amount taken as a credit for the taxable year under
232 s. 220.192.
233 13. The amount taken as a credit for the taxable year under
234 s. 220.193.
235 14. Any amount in excess of $25,000 allowable as a
236 deduction for federal income tax purposes under s. 179 of the
237 Internal Revenue Code of 1986, as amended, for the taxable year.
238 15. Any amount allowable as a deduction for federal income
239 tax purposes under s. 167 or s. 168 of the Internal Revenue Code
240 of 1986, as amended, for the taxable year to the extent that
241 such amount includes bonus depreciation allowable as deduction
242 under s. 168(k).
243 16. All expenses directly or indirectly related to a
244 business asset which were treated as nonbusiness income that
245 were deducted in the year of sale and the 2 previous years. Such
246 recapture of expenses shall be made in the year the income is
247 determined to be nonbusiness income and shall recapture those
248 expenses deducted in the current and in the previous 2 years.
249 (2) For purposes of this section, a taxpayer’s taxable
250 income for the taxable year means taxable income as defined in
251 s. 63 of the Internal Revenue Code and properly reportable for
252 federal income tax purposes for the taxable year, but subject to
253 the limitations set forth in paragraph (1)(b) with respect to
254 the deductions provided by ss. 172 (relating to net operating
255 losses), 170(d)(2) (relating to excess charitable
256 contributions), 404(a)(1)(D) (relating to excess pension trust
257 contributions), 404(a)(3)(A) and (B) (to the extent relating to
258 excess stock bonus and profit-sharing trust contributions), and
259 1212 (relating to capital losses) of the Internal Revenue Code,
260 except that, subject to the same limitations, the term:
261 (m) “Taxable income,” in the case of any partnership,
262 organization, association, legal entity, or artificial person
263 taxable as a corporation for federal income tax purposes, means
264 taxable income determined as if such partnership, organization,
265 association, legal entity, or artificial person were required to
266 file or had filed a federal corporate income tax return under
267 the Internal Revenue Code.
268 (3) The restrictions in this subsection apply with respect
269 to the deductibility of certain intangible expenses, interest
270 expenses, and management fees involving a related entity.
271 (a) As used in this subsection, the term:
272 1. “Related entity” means any artificial entity that would
273 be a member of the taxpayer’s affiliated group under s. 1504 of
274 the Internal Revenue Code during all or any portion of the
275 taxable year, except using an ownership percentage of 50 percent
276 rather than 80 percent. A related entity includes any entity,
277 other than a natural person, which would be included in the
278 affiliated group based upon a 50 percent ownership percentage if
279 it were organized as a corporation.
280 2. “Intangible expenses” means the following described
281 amounts to the extent these amounts are allowed as deductions in
282 determining federal taxable income under the Internal Revenue
283 Code before the application of any net operating loss deduction
284 and special deductions for the taxable year:
285 a. Expenses, losses, and costs directly or indirectly for,
286 related to, or in association with the acquisition, use,
287 maintenance, management, ownership, sale, exchange, or any other
288 disposition of intangible property.
289 b. Royalty, patent, technical, trademark, and copyright
290 fees;
291 c. Licensing fees; or
292 d. Other substantially similar expenses and costs,
293 including, but not limited to, interest and losses from
294 factoring transactions.
295 3. “Intangible property” means patents, patent
296 applications, trade names, trademarks, service marks,
297 copyrights, trade secrets, and substantially similar types of
298 intangible assets.
299 4. “Interest expenses” means amounts that are allowed as
300 deductions under s. 163 of the Internal Revenue Code in
301 determining federal taxable income before the application of any
302 net operating loss deductions and special deductions for the
303 taxable year.
304 5. “Management fees” means expenses and costs paid for
305 services, including, but not limited to, management overhead,
306 management supervision, accounts receivable and payable,
307 employee benefit plans, insurance, legal, payroll, data
308 processing, purchasing, tax, financial and securities, billing,
309 accounting, reporting and compliance services, or similar
310 services, only to the extent that the amounts are allowed as a
311 deduction or cost in determining taxable net income under the
312 Internal Revenue Code before the application of any net
313 operating loss deduction and special deductions for the taxable
314 year.
315 6. “Recipient” means a related entity that is paid an item
316 of income that corresponds to an intangible expense, interest
317 expense, or management fee.
318 (b) Except as provided in paragraph (c), in determining its
319 adjusted federal income under this section and s. 220.131, a
320 corporation subject to tax shall add to its taxable income
321 intangible expenses, interest expenses, and management fees that
322 are paid, accrued, or incurred directly or indirectly with one
323 or more related entities. For income received from a pass
324 through entity or a disregarded entity, the corporation is
325 deemed to have received its share of both the income and
326 expenses of the pass-through entity or disregarded entity for
327 purposes of this subsection.
328 (c) Except as provided in paragraph (d), the addition of
329 intangible expenses, interest expenses, and management fees
330 otherwise required in a taxable year under this subsection for a
331 specific related entity transaction is not required if:
332 1. The taxpayer and the recipient are both included in the
333 same Florida consolidated tax return filed under s. 220.131 for
334 the taxable year;
335 2. The taxpayer and the executive director or his or her
336 designee agree in writing to alternative computations or
337 adjustments. The executive director or his or her designee may
338 approve such agreement only if the taxpayer has clearly
339 established to the satisfaction of the executive director or his
340 or her designee that the disallowance of the deduction is
341 unreasonable and that the proposed alternative method of
342 determining the measure of the tax accurately reflects the
343 activity, business, income, and capital of the taxpayers within
344 this state. The agreement must be signed by the executive
345 director or his or her designee and may not exceed 4 years;
346 3. The taxpayer makes a disclosure on its return and
347 establishes by clear and convincing evidence that:
348 a. The recipient was subject to an income tax or franchise
349 tax measured in whole or part by net income in its state or
350 country of commercial domicile. If the recipient is a foreign
351 corporation, the foreign nation must have in force a
352 comprehensive income tax treaty with the United States;
353 b. The tax base for such tax included the intangible
354 expense, management fee, or interest expense paid, accrued, or
355 incurred by the taxpayer;
356 c. The aggregate effective tax rate applied is no less than
357 5.5 percent;
358 d. The transaction did not have Florida tax avoidance as a
359 principle purpose;
360 e. The recipient regularly engages in the same business
361 with third parties; and
362 f. The transaction was made at a commercially reasonable
363 rate and at arm’s length terms similar to those with third
364 parties; or
365 4. The taxpayer makes a disclosure on its return and
366 establishes by clear and convincing evidence that:
367 a. The related entity, during the same taxable year,
368 directly or indirectly paid, received, or incurred the amount of
369 the obligation to or from a person or entity that is not a
370 related entity;
371 b. The transaction was done for a valid business purpose;
372 c. The payments are limited to a reimbursement of the
373 amounts paid to a person or entity that is not a related party;
374 and
375 d. The unrelated entity regularly engages in the same
376 business with third parties on a substantial basis.
377 (d) The exceptions described in subparagraphs (c)3. and 4.
378 do not apply:
379 1. To interest paid by a taxpayer in connection with a debt
380 incurred to acquire the taxpayer’s or a related entity’s assets
381 or stock in a transaction referenced in s. 368 of the Internal
382 Revenue Code. For purposes of this paragraph, acquisition
383 interest paid by a taxpayer to a person or entity that is not a
384 related entity shall be treated as if made to a related entity;
385 2. To intangible property acquired directly or indirectly
386 from the taxpayer or from a related entity;
387 3. If the related entity is primarily engaged in managing,
388 acquiring, or maintaining intangible property or related party
389 financing and a primary purpose of the transaction was the
390 avoidance of Florida tax; or
391 4. In those instances where the taxpayer files with the
392 related entity or the related entity files with another related
393 entity an income tax return or report where such return or
394 report is due because of the imposition of a tax on or measured
395 by income, and where such income tax return or report results in
396 the elimination of the tax effects from transactions directly or
397 indirectly between the taxpayer and the related member.
398 (e) To the extent that a taxpayer is required to make an
399 adjustment under paragraphs (b) and (c) for a specific related
400 entity transaction, the corresponding related entity shall make
401 a corresponding subtraction to its taxable income, if subject to
402 tax in Florida.
403 (f) The amount of a taxpayer’s net operating loss carryover
404 from tax years ending prior to December 31, 2009, to a tax year
405 ending on or after December 31, 2009, shall be adjusted to
406 account for the add back of intangible expenses, interest
407 expenses, and management fees under this subsection. Under no
408 circumstances may this recalculation increase the amount of a
409 net operating loss carryover or deduction.
410 (g) This subsection does not require a taxpayer to add to
411 its Florida net income more than once any amount of interest
412 expenses, intangible expenses, and management fees that the
413 taxpayer pays, accrues, or incurs to a related entity.
414 (h) This subsection does not allow any item to be deducted
415 more than once, does not allow a deduction for any item that is
416 excluded from income, and does not allow any item to be included
417 in the Florida taxable income of more than one taxpayer.
418 (i) This subsection does not limit or negate the executive
419 director’s authority to make adjustments under s. 220.131(2), s.
420 220.44, or s. 220.152.
421 (j) Each taxpayer shall provide the following information
422 to the department along with its tax return regarding each
423 related entity transaction:
424 a. The name of the recipient;
425 b. The state or country of domicile of the recipient;
426 c. The amount paid to the recipient; and
427 d. A complete description of the payment made to the
428 recipient.
429 (k) Failure to add back an amount paid directly or
430 indirectly to a related party or failure to provide complete
431 information with the tax return is evidence of negligence within
432 the meaning of s. 220.803(1).
433 Section 8. Subsections (3), (4), and (5) of section
434 220.131, Florida Statutes, are amended, and subsections (6) and
435 (7) are added to that section, to read:
436 220.131 Adjusted federal income; affiliated groups.—
437 (3) The filing of a consolidated return for any taxable
438 year shall require the filing of consolidated returns for all
439 subsequent taxable years so long as the filing taxpayers remain
440 members of the affiliated group or, in the case of a group
441 having component members not subject to tax under this code, so
442 long as a consolidated return is filed by such group for federal
443 income tax purposes, unless the director consents to the filing
444 of separate returns.
445 (4) The computation of consolidated taxable income for the
446 members of an affiliated group of corporations subject to tax
447 hereunder shall be made in the same manner and under the same
448 procedures, including all intercompany adjustments and
449 eliminations, as are required for consolidating the incomes of
450 affiliated corporations for the taxable year for federal income
451 tax purposes in accordance with s. 1502 of the Internal Revenue
452 Code, and the amount shown as consolidated taxable income shall
453 be the amount subject to tax under this code. Notwithstanding
454 the foregoing, a net operating loss that was incurred by a
455 taxpayer before filing as a member of a consolidated group of
456 corporations pursuant to this section is limited to that
457 member’s taxable income included in the consolidated taxable
458 income for the year in which a net operating loss carryover is
459 sought to be used. If all members of the affiliated group filed
460 separate Florida corporate income tax returns for all years from
461 which a net operating loss carryover is available, this
462 limitation does not apply.
463 (5) Each taxpayer shall apportion adjusted federal income
464 under s. 220.15 or s. 220.1505 as a member of an affiliated
465 group which files a consolidated return under this section on
466 the basis of apportionment factors described in s. 220.15 or s.
467 220.1505. For the purposes of this subsection, each special
468 industry member included in an affiliated group filing a
469 consolidated return hereunder, which member would otherwise be
470 permitted to use a special method of apportionment under s.
471 220.151, shall construct the numerator of its sales, property,
472 and payroll factors, respectively, by multiplying the
473 denominator of each such factor by the premiums or revenue miles
474 factor ratio otherwise applicable pursuant to s. 220.151 in the
475 manner prescribed by the department by rule.
476 (6) For taxable years ending on or after July 1, 2009,
477 those members of an affiliated group of corporations that filed
478 Florida consolidated corporate income tax returns pursuant to
479 the election provided in s. 220.131(1), Florida Statutes (1985),
480 which allowed such members to make an election within 90 days
481 after December 20, 1984, or upon filing the member’s first
482 return after December 20, 1984, whichever occurred later, are no
483 longer eligible to file and shall cease filing a Florida
484 consolidated corporate income tax return pursuant to that
485 election.
486 (7) The sales factor, as determined by s. 220.15(4), shall
487 not include gross receipts from sales between affiliated
488 corporations that file a consolidated return under this section.
489 Such amounts shall be excluded from the sales factor even though
490 income from such sales is included in the computation of taxable
491 income described in subsection (4) and s. 1502 of the Internal
492 Revenue Code and the regulations thereunder.
493 Section 9. Section 220.15, Florida Statutes, is amended to
494 read:
495 220.15 Apportionment of adjusted federal income.—
496 (1) Except as provided in ss. 220.1505, 220.151, and
497 220.152, adjusted federal income as defined in s. 220.13 shall
498 be apportioned to this state by taxpayers doing business within
499 and without this state by multiplying it by an apportionment
500 fraction composed of a sales factor representing 50 percent of
501 the fraction, a property factor representing 25 percent of the
502 fraction, and a payroll factor representing 25 percent of the
503 fraction. If any factor described in subsection (2), subsection
504 (4), or subsection (5) has a denominator that is zero or is
505 determined by the department to be insignificant, the relative
506 weights of the other factors in the denominator of the
507 apportionment fraction shall be as follows:
508 (a) If the denominators for any two factors are zero or are
509 insignificant, the weighted percentage for the remaining factor
510 shall be 100 percent.
511 (b) If the denominator for the sales factor is zero or is
512 insignificant, the weighted percentage for the property and
513 payroll factors shall change from 25 percent to 50 percent,
514 respectively.
515 (c) If the denominator for either the property or payroll
516 factor is zero or is insignificant, the weighted percentage for
517 the other shall be 33 1/3 percent, and the weighted percentage
518 for the sales factor shall be 66 2/3 percent.
519 (2) The property factor is a fraction the numerator of
520 which is the average value of the taxpayer’s real and tangible
521 personal property owned or rented and used in this state during
522 the taxable year or period and the denominator of which is the
523 average value of such property owned or rented and used
524 everywhere.
525 (a) Real and tangible personal property owned by the
526 taxpayer shall be valued at original cost. Real and tangible
527 personal property rented by the taxpayer shall be valued at 8
528 times the net annual rental rate paid by the taxpayer less any
529 annual rental rate received from subrentals.
530 (b) The average value of real and tangible personal
531 property shall be determined by averaging the value at the
532 beginning and the end of the taxable year or period, unless the
533 department determines that an averaging of monthly values during
534 the taxable year or period is reasonably required to reflect
535 properly the average value of the taxpayer’s real and tangible
536 personal property.
537 (c) The property factor fraction shall not include any real
538 or tangible personal property located in this state with respect
539 to which it is certified to the Department of Revenue that such
540 property is dedicated exclusively to research and development
541 activities performed pursuant to sponsored research contracts
542 conducted in conjunction with and through a university that is a
543 member of the State University System or a nonpublic university
544 that is chartered in Florida and conducts graduate programs at
545 the professional or doctoral level. The Board of Governors of
546 the State University System must certify the contracts for
547 members of the State University System, and the president of the
548 university must certify the contracts for a nonpublic
549 university. As used in this paragraph, “sponsored research
550 contract” means an agreement executed by parties that include at
551 least the university and the taxpayer. Funding for sponsored
552 research contracts may be provided from public or private
553 sources.
554 (3) The property factor used by a financial organization
555 shall also include intangible personal property, except
556 goodwill, which is owned and used in the business, valued at its
557 tax basis for federal income tax purposes. Intangible personal
558 property shall be in this state if it consists of any of the
559 following:
560 (a) Coin or currency located in this state;
561 (b) Assets in the nature of loans, including balances due
562 from depository institutions, repurchase agreements, federal
563 funds sold, and bankers acceptances, which assets are located in
564 this state; installment obligations on loans for which the
565 customer initially applied at an office located in this state;
566 or loans secured by mortgages, deeds of trust, or other liens
567 upon real or tangible personal property located in this state;
568 (c) A portion of a participation loan if the office that
569 enters into the participation is located in this state;
570 (d) Credit card receivables from customers who reside or
571 who are commercially domiciled in this state;
572 (e) Investments in securities that generate business income
573 if the taxpayer’s commercial domicile is in the state, unless
574 such securities have acquired a discrete business situs
575 elsewhere;
576 (f) Securities used to maintain reserves against deposits
577 to meet federal or state deposit requirements, based on the
578 ratio that total deposits in this state bear to total deposits
579 everywhere;
580 (g) Securities held by a state treasurer or other public
581 official or pledged to secure public funds or trust funds
582 deposited with the taxpayer if the office at which the secured
583 deposits are maintained is in this state;
584 (h) Leases of tangible personal property to another if the
585 taxpayer’s commercial domicile is in the state, unless the
586 taxpayer establishes that the location of the leased tangible
587 personal property is in another state or states for the entire
588 taxable year and the taxpayer is taxable in such other state or
589 states;
590 (i) Installment sale agreements originally executed by a
591 taxpayer or its agent to sell real or tangible personal property
592 located in this state; or
593 (j) Any other intangible personal property located in this
594 state which is used to generate business income.
595 (3)(4) The payroll factor is a fraction the numerator of
596 which is the total amount paid in this state during the taxable
597 year or period by the taxpayer for compensation and the
598 denominator of which is the total compensation paid everywhere
599 during the taxable year or period.
600 (a) As used in this subsection, the term “compensation”
601 means wages, salaries, commissions, and any other form of
602 remuneration paid to employees for personal services.
603 (b) Compensation is paid in this state if:
604 1. The employee’s service is performed entirely within the
605 state; or
606 2. The employee’s service is performed both within and
607 without the state, but the service performed without the state
608 is incidental to the employee’s service within the state; or
609 3. Some of the employee’s service is performed in the
610 state, and
611 a. The base of operations or, if there is no base of
612 operations, the place from which the service is directed or
613 controlled is in the state, or
614 b. The base of operations or the place from which the
615 service is directed or controlled is not in any state in which
616 some part of the service is performed and the employee’s
617 residence is in this state.
618 (c) The payroll factor fraction shall not include any
619 compensation paid to any employee located in this state when it
620 is certified to the Department of Revenue that such compensation
621 was paid to employees dedicated exclusively to research and
622 development activities performed pursuant to sponsored research
623 contracts conducted in conjunction with and through a university
624 that is a member of the State University System or a nonpublic
625 university that is chartered in Florida and conducts graduate
626 programs at the professional or doctoral level. The Board of
627 Governors of the State University System must certify the
628 contracts for members of the State University System, and the
629 president of the university must certify the contracts for a
630 nonpublic university. As used in this paragraph, “sponsored
631 research contract” means an agreement executed by parties that
632 include at least the university and the taxpayer. Funding for
633 sponsored research contracts may be provided from public or
634 private sources.
635 (4)(5) The sales factor is a fraction the numerator of
636 which is the total sales of the taxpayer in this state during
637 the taxable year or period and the denominator of which is the
638 total sales of the taxpayer everywhere during the taxable year
639 or period.
640 (a) As used in this subsection, the term “sales” means all
641 gross receipts of the taxpayer except interest, dividends,
642 rents, royalties, and gross receipts from the sale, exchange,
643 maturity, redemption, or other disposition of securities.
644 However:
645 1. Rental income is included in the term if a significant
646 portion of the taxpayer’s business consists of leasing or
647 renting real or tangible personal property; and
648 2. Royalty income is included in the term if a significant
649 portion of the taxpayer’s business consists of dealing in or
650 with the production, exploration, or development of minerals.
651 Income from the sale, assignment, or licensing of intangible
652 property is also included in the term.
653 (b)1. Sales of tangible personal property occur in this
654 state if the property is delivered or shipped to a purchaser
655 within this state, regardless of the f.o.b. point, other
656 conditions of the sale, or ultimate destination of the property,
657 unless shipment is made via a common or contract carrier.
658 However, for industries in SIC Industry Number 2037, if the
659 ultimate destination of the product is to a location outside
660 this state, regardless of the method of shipment or f.o.b.
661 point, the sale shall not be deemed to occur in this state.
662 2. When citrus fruit is delivered by a cooperative for a
663 grower-member, by a grower-member to a cooperative, or by a
664 grower-participant to a Florida processor, the sales factor for
665 the growers for such citrus fruit delivered to such processor
666 shall be the same as the sales factor for the most recent
667 taxable year of that processor. That sales factor, expressed
668 only as a percentage and not in terms of the dollar volume of
669 sales, so as to protect the confidentiality of the sales of the
670 processor, shall be furnished on the request of such a grower
671 promptly after it has been determined for that taxable year.
672 3. Reimbursement of expenses under an agency contract
673 between a cooperative, a grower-member of a cooperative, or a
674 grower and a processor is not a sale within this state.
675 (c) Sales of services are in this state if the buyers
676 receive the benefit of the services in this state. A buyer
677 receives the benefit of services in this state if any one of the
678 following applies:
679 1. The service relates to real property located in this
680 state;
681 2. The service relates to tangible personal property
682 located in this state at the time the service is received;
683 3. The service relates to tangible personal property
684 delivered directly or indirectly to customers in this state;
685 4. The service is provided to an individual physically
686 present in this state at the time the service is received; or
687 5. The services is provided to a buyer engaged in a trade
688 or business in this state and relates to that trade or business.
689 (d) If the purchaser of a service receives the benefit of a
690 service in more than one state, the gross receipts from the
691 performance of the service are included in the numerator of the
692 sales factor according to the portion of the service received in
693 this state.
694 (e) If the taxpayer is not subject to income tax in the
695 state in which the benefit of the service is received, the
696 benefit of the service is received in this state to the extent
697 that the taxpayer’s employees or representatives performed
698 services from a location in this state. Fifty percent of the
699 taxpayer’s receipts that are considered received in this state
700 under this paragraph shall be included in the numerator of the
701 sales factor.
702 (f) Sales that are not attributable or assignable to any
703 taxing jurisdiction and sales that are attributable or
704 assignable to jurisdictions where the taxpayer is not subject to
705 an income tax, or where the jurisdiction does not impose an
706 income tax, are eliminated from both the numerator and
707 denominator of the sales factor.
708 (c) Sales of a financial organization, including, but not
709 limited to, banking and savings institutions, investment
710 companies, real estate investment trusts, and brokerage
711 companies, occur in this state if derived from:
712 1. Fees, commissions, or other compensation for financial
713 services rendered within this state;
714 2. Gross profits from trading in stocks, bonds, or other
715 securities managed within this state;
716 3. Interest received within this state, other than interest
717 from loans secured by mortgages, deeds of trust, or other liens
718 upon real or tangible personal property located without this
719 state, and dividends received within this state;
720 4. Interest charged to customers at places of business
721 maintained within this state for carrying debit balances of
722 margin accounts, without deduction of any costs incurred in
723 carrying such accounts;
724 5. Interest, fees, commissions, or other charges or gains
725 from loans secured by mortgages, deeds of trust, or other liens
726 upon real or tangible personal property located in this state or
727 from installment sale agreements originally executed by a
728 taxpayer or the taxpayer’s agent to sell real or tangible
729 personal property located in this state;
730 6. Rents from real or tangible personal property located in
731 this state; or
732 7. Any other gross income, including other interest,
733 resulting from the operation as a financial organization within
734 this state.
735
736 In computing the amounts under this paragraph, any amount
737 received by a member of an affiliated group (determined under s.
738 1504(a) of the Internal Revenue Code, but without reference to
739 whether any such corporation is an “includable corporation”
740 under s. 1504(b) of the Internal Revenue Code) from another
741 member of such group shall be included only to the extent such
742 amount exceeds expenses of the recipient directly related
743 thereto.
744 (6) The term “financial organization,” as used in this
745 section, includes any bank, trust company, savings bank,
746 industrial bank, land bank, safe-deposit company, private
747 banker, savings and loan association, credit union, cooperative
748 bank, small loan company, sales finance company, or investment
749 company.
750 (5)(7) The term “everywhere,” as used in the computation of
751 apportionment factor denominators under this section, means “in
752 all states of the United States, the District of Columbia, the
753 Commonwealth of Puerto Rico, any territory or possession of the
754 United States, and any foreign country, or any political
755 subdivision of the foregoing.”
756 (6)(8) No research and development activities certified as
757 being conducted within this state in conjunction with and
758 through a university that is a member of the State University
759 System or a nonpublic university that is chartered in Florida
760 and conducts graduate programs at the professional or doctoral
761 level shall cause any corporation to become subject to the taxes
762 imposed by this chapter if the corporation would otherwise not
763 be subject to the tax levied under this chapter. The property
764 and payroll eliminated from the apportionment formula pursuant
765 to the provisions of paragraphs (2)(c) and (3)(c) (4)(c) shall
766 be eliminated only for the duration of the contractual period
767 specified in the contracts for the conduct of the sponsored
768 research. The reduction in tax due as a result of the property
769 and payroll eliminated from the apportionment formula pursuant
770 to the provisions of paragraphs (2)(c) and (3)(c) (4)(c) shall
771 not exceed the amount paid to the university for the conduct of
772 the sponsored research. No sponsored research contracts in
773 existence prior to July 1, 1998, shall be eligible to
774 participate in the provisions of paragraphs (2)(c) and (3)(c)
775 (4)(c).
776 Section 10. Section 220.1501, Florida Statutes, is amended
777 to read:
778 220.1501 Rulemaking authority to implement s. 220.15(2)(c),
779 (3)(c) (4)(c), and (8).—The Department of Revenue has authority
780 to adopt rules pursuant to the Administrative Procedure Act to
781 implement s. 220.15(2)(c), (3)(c) (4)(c), and (8), as created by
782 chapter 98-325, Laws of Florida.
783 Section 11. Section 220.1505, Florida Statutes, is created
784 to read:
785 220.1505 Apportionment; financial institutions.—
786 (1) APPORTIONMENT AND ALLOCATION.—
787 (a) Except as otherwise specifically provided by law, a
788 financial institution whose business activity is taxable both
789 within and without this state shall allocate and apportion its
790 adjusted federal income as provided in this section. A financial
791 institution organized under the laws of a foreign country, the
792 Commonwealth of Puerto Rico, or a territory or possession of the
793 United States whose effectively connected income, as defined
794 under the Internal Revenue Code, is taxable both within this
795 state and within another state, other than the state in which it
796 is organized, shall apportion its adjusted federal income as
797 provided in this section.
798 (b) Adjusted federal income shall be apportioned to this
799 state by multiplying it by an apportionment fraction composed of
800 a receipts factor representing 50 percent of the fraction, a
801 property factor representing 25 percent of the fraction, and a
802 payroll factor representing 25 percent of the fraction. If any
803 factor described in subsection (3), subsection (4), or
804 subsection (5) has a denominator that is zero or is determined
805 by the department to be insignificant, the relative weights of
806 the other factors in the denominator of the apportionment
807 fraction shall be as follows:
808 1. If the denominators for any two factors are zero or are
809 insignificant, the weighted percentage for the remaining factor
810 shall be 100 percent.
811 2. If the denominator for the receipts factor is zero or
812 insignificant, the weighted percentage for the property and
813 payroll factors shall change from 25 percent to 50 percent,
814 respectively.
815 3. If the denominator for either the property or payroll
816 factor is zero or insignificant, the weighted percentage for the
817 other shall be 33 1/3 percent and the weighted percentage for
818 the receipts factor shall be 66 2/3 percent.
819 (c) Each factor shall be computed according to the method
820 of accounting used by the taxpayer for the taxable year.
821 (2) DEFINITIONS.—As used in this section, the term:
822 (a) “Billing address” means the location indicated in the
823 books and records of the taxpayer on the first day of the
824 taxable year, or on such later date in the taxable year when the
825 customer relationship began, as the address where any notice,
826 statement, or bill relating to a customer’s account is mailed.
827 (b) “Borrower or credit card holder located in this state”
828 means:
829 1. A borrower, other than a credit card holder, which is
830 engaged in a trade or business and which maintains its
831 commercial domicile in this state; or
832 2. A borrower that is not engaged in a trade or business or
833 a credit card holder whose billing address is in this state.
834 (c) “Commercial domicile” means:
835 1. The headquarters of the trade or business which is the
836 place from which the trade or business is principally managed
837 and directed; or
838 2. If a taxpayer is organized under the laws of a foreign
839 country, the Commonwealth of Puerto Rico, or any territory or
840 possession of the United States, such taxpayer’s commercial
841 domicile shall be deemed for the purposes of this section to be
842 the state of the United States or the District of Columbia from
843 which such taxpayer’s trade or business in the United States is
844 principally managed and directed. It shall be presumed, subject
845 to rebuttal, that the location from which the taxpayer’s trade
846 or business is principally managed and directed is the state of
847 the United States or the District of Columbia to which the
848 greatest number of employees are regularly connected or out of
849 which they are working, irrespective of where the services of
850 such employees are performed, as of the last day of the taxable
851 year.
852 (d) “Compensation” means wages, salaries, commissions, and
853 any other form of remuneration paid to employees for personal
854 services that are included in such employee’s gross income under
855 the Internal Revenue Code. In the case of employees not subject
856 to the Internal Revenue Code, such as those employed in foreign
857 countries, the determination of whether such payments would
858 constitute gross income to such employees under the Internal
859 Revenue Code shall be made as though such employees were subject
860 to the Internal Revenue Code.
861 (e) “Credit card” means credit, travel, or entertainment
862 card.
863 (f) “Credit card issuer’s reimbursement fee” means the fee
864 a taxpayer receives from a merchant’s bank because one of the
865 persons to whom the taxpayer has issued a credit card has
866 charged merchandise or services to the credit card.
867 (g) “Employee” means, with respect to a particular
868 taxpayer, any individual who, under the usual common law rules
869 applicable in determining the employer-employee relationship,
870 has the status of an employee of that taxpayer.
871 (h) “Financial institution” means:
872 1. Any corporation or other business entity registered
873 under state law as a bank holding company or registered under
874 the Federal Bank Holding Company Act of 1956, as amended, or
875 registered as a savings and loan holding company under the
876 Federal National Housing Act, as amended.
877 2. A national bank organized and existing as a national
878 bank association pursuant to the provisions of the National Bank
879 Act, 12 U.S.C. ss. 21 et seq.
880 3. A savings association or federal savings bank as defined
881 in the Federal Deposit Insurance Act, 12 U.S.C. s. 1813(b)(1).
882 4. Any bank or thrift institution incorporated or organized
883 under the laws of any state.
884 5. Any corporation organized under the provisions of 12
885 U.S.C. ss. 611-631.
886 6. Any agency or branch of a foreign depository as defined
887 in 12 U.S.C. s. 3101.
888 7. A state credit union the loan assets of which exceed $50
889 million as of the first day of its taxable year.
890 8. A production credit association organized under the
891 Federal Farm Credit Act of 1933, all of whose stock held by the
892 Federal Production Credit Corporation has been retired.
893 9. Any investment company.
894 10. Any corporation whose voting stock is more than 50
895 percent owned, directly or indirectly, by any person or business
896 entity described in subparagraphs 1.-9.
897 11. A corporation or other business entity that derives
898 more than 50 percent of its total gross income for financial
899 accounting purposes from finance leases. For purposes of this
900 subsection, a “finance lease” means any lease transaction that
901 is the functional equivalent of an extension of credit and that
902 transfers substantially all of the benefits and risks incident
903 to the ownership of property. The phrase includes any “direct
904 financing lease” or “leverage lease” that meets the criteria of
905 Financial Accounting Standards Board Statement No. 13,
906 “Accounting for Leases” or any other lease that is accounted for
907 as a financing lease by a lessor under generally accepted
908 accounting principles. For this classification to apply:
909 a. The average of the gross income in the current tax year
910 and immediately preceding 2 tax years must satisfy the more than
911 50 percent requirement; and
912 b. Gross income from incidental or occasional transactions
913 shall be disregarded; or
914 12. Any other person or business entity that derives more
915 than 50 percent of its gross income from activities that a
916 person described in subparagraphs 2.-9. and 11. is authorized to
917 transact. For the purpose of this subparagraph, the computation
918 of gross income shall not include income from nonrecurring,
919 extraordinary items. The department may exclude any person from
920 the application of this subparagraph upon such person proving,
921 by clear and convincing evidence, that the income-producing
922 activity of such person is not in substantial competition with
923 those persons described in subparagraphs 2.-9. and 11.
924 (i) “Gross rents” means the actual sum of money or other
925 consideration payable for the use or possession of property.
926 “Gross rents” includes, but is not limited to:
927 1. Any amount payable for the use or possession of real
928 property or tangible property whether designated as a fixed sum
929 of money or as a percentage of receipts, profits, or otherwise;
930 2. Any amount payable as additional rent or in lieu of
931 rent, such as interest, taxes, insurance, repairs, or any other
932 amount required to be paid by the terms of a lease or other
933 arrangement; and
934 3. A proportionate part of the cost of any improvement to
935 real property made by or on behalf of the taxpayer which reverts
936 to the owner or lessor upon termination of a lease or other
937 arrangement. The amount to be included in gross rents is the
938 amount of amortization or depreciation allowed in computing the
939 taxable income base for the taxable year. However, if a building
940 is erected on leased land by or on behalf of the taxpayer, the
941 value of the land is determined by multiplying the gross rent by
942 eight and the value of the building is determined in the same
943 manner as if owned by the taxpayer.
944 4. The following are not included in the term “gross
945 rents”:
946 a. Reasonable amounts payable as separate charges for water
947 and electric service furnished by the lessor;
948 b. Reasonable amounts payable as service charges for
949 janitorial services furnished by the lessor;
950 c. Reasonable amounts payable for storage, if such amounts
951 are payable for space not designated and not under the control
952 of the taxpayer; and
953 d. That portion of any rental payment which is applicable
954 to the space subleased from the taxpayer and not used by it.
955 (j) “Loan” means any extension of credit resulting from
956 direct negotiations between the taxpayer and its customer, or
957 the purchase, in whole or in part, of such extension of credit
958 from another. Loans include participations, syndications, and
959 leases treated as loans for federal income tax purposes. Loans
960 shall not include: properties treated as loans under s. 595 of
961 the Internal Revenue Code; futures or forward contracts;
962 options; notional principal contracts such as swaps; credit card
963 receivables, including purchased credit card relationships;
964 noninterest bearing balances due from depository institutions;
965 cash items in the process of collection; federal funds sold;
966 securities purchased under agreements to resell; assets held in
967 a trading account; securities; interests in a REMIC, or other
968 mortgage-backed or asset-backed security; and other similar
969 items.
970 (k) “Loan secured by real property” means that 50 percent
971 or more of the aggregate value of the collateral used to secure
972 a loan or other obligation, when valued at fair market value as
973 of the time the original loan or obligation was incurred, was
974 real property.
975 (l) “Merchant discount” means the fee, or negotiated
976 discount, charged to a merchant by the taxpayer for the
977 privilege of participating in a program whereby a credit card is
978 accepted in payment for merchandise or services sold to the card
979 holder.
980 (m) “Participation” means an extension of credit in which
981 an undivided ownership interest is held on a pro rata basis in a
982 single loan or pool of loans and related collateral. In a loan
983 participation, the credit originator initially makes the loan
984 and then subsequently resells all or a portion of it to other
985 lenders. The participation may or may not be known to the
986 borrower.
987 (n) “Person” means an individual, estate, trust,
988 partnership, corporation, and any other business entity.
989 (o) “Principal base of operations” with respect to
990 transportation property means the place of more or less
991 permanent nature from which the property is regularly directed
992 or controlled. With respect to an employee, the “principal base
993 of operations” means the place of more or less permanent nature
994 from which the employee regularly:
995 1. Starts his or her work and to which he or she
996 customarily returns in order to receive instructions from his or
997 her employer;
998 2. Communicates with his or her customers or other persons;
999 or
1000 3. Performs any other functions necessary to the exercise
1001 of his or her trade or profession at some other point or points.
1002 (p) “Real property owned” and “tangible personal property
1003 owned” mean real and tangible personal property, respectively:
1004 1. On which the taxpayer may claim depreciation for federal
1005 income tax purposes; or
1006 2. To which the taxpayer holds legal title and on which no
1007 other person may claim depreciation for federal income tax
1008 purposes, or could claim depreciation if subject to federal
1009 income tax. Real and tangible personal property do not include
1010 coin, currency, or property acquired in lieu of or pursuant to a
1011 foreclosure.
1012 (q) “Regular place of business” means an office at which
1013 the taxpayer carries on its business in a regular and systematic
1014 manner and which is continuously maintained, occupied, and used
1015 by employees of the taxpayer.
1016 (r) “State” means a state of the United States, the
1017 District of Columbia, the Commonwealth of Puerto Rico, any
1018 territory or possession of the United States, or any foreign
1019 country.
1020 (s) “Syndication” means an extension of credit in which two
1021 or more persons fund and each person is at risk only up to a
1022 specified percentage of the total extension of credit or up to a
1023 specified dollar amount.
1024 (t) “Taxable” means:
1025 1. That a taxpayer is subject in another state to a net
1026 income tax, a franchise tax measured by net income, a franchise
1027 tax for the privilege of doing business, a corporate stock tax
1028 including a bank shares tax, a single business tax, an earned
1029 surplus tax, or any tax that is imposed upon or measured by net
1030 income; or
1031 2. That another state has jurisdiction to subject the
1032 taxpayer to any of such taxes regardless of whether, in fact,
1033 the state does or does not.
1034 (u) “Transportation property” means vehicles and vessels
1035 capable of moving under their own power, such as aircraft,
1036 trains, water vessels, and motor vehicles, as well as any
1037 equipment or containers attached to such property, such as
1038 rolling stock, barges, trailers, or the like.
1039 (3) RECEIPTS FACTOR.—
1040 (a) General.—The receipts factor is a fraction, the
1041 numerator of which is the receipts of the taxpayer in this state
1042 during the taxable year and the denominator of which is the
1043 receipts of the taxpayer within and without this state during
1044 the taxable year. The method of calculating receipts for
1045 purposes of the denominator is the same as the method used in
1046 determining receipts for purposes of the numerator. The receipts
1047 factor shall include only those receipts described in this
1048 subsection which constitute and are included in the computation
1049 of adjusted federal income for the taxable year.
1050 (b) Receipts from the lease of real property.—The numerator
1051 of the receipts factor includes receipts from the lease or
1052 rental of real property owned by the taxpayer if the property is
1053 located within this state or receipts from the sublease of real
1054 property if the property is located within this state.
1055 (c) Receipts from the lease of tangible personal property.—
1056 1. Except as described in subparagraph 2., the numerator of
1057 the receipts factor includes receipts from the lease or rental
1058 of tangible personal property owned by the taxpayer if the
1059 property is located within this state when it is first placed in
1060 service by the lessee.
1061 2. Receipts from the lease or rental of transportation
1062 property owned by the taxpayer are included in the numerator of
1063 the receipts factor to the extent that the property is used in
1064 this state. The extent an aircraft is deemed to be used in this
1065 state and the amount of receipts that are included in the
1066 numerator of this state’s receipts factor is determined by
1067 multiplying all the receipts from the lease or rental of the
1068 aircraft by a fraction, the numerator of which is the number of
1069 landings of the aircraft in this state and the denominator of
1070 which is the total number of landings of the aircraft. If the
1071 extent of the use of any transportation property within this
1072 state cannot be determined, the property shall be deemed to be
1073 used wholly in the state in which the property has its principal
1074 base of operations. A motor vehicle shall be deemed to be used
1075 wholly in the state in which it is registered.
1076 (d) Interest from loans secured by real property.—
1077 1. The numerator of the receipts factor includes interest
1078 and fees or penalties in the nature of interest from loans
1079 secured by real property if the property is located within this
1080 state. If the property is located both within this state and one
1081 or more other states, the receipts described in this subsection
1082 are included in the numerator of the receipts factor if more
1083 than 50 percent of the fair market value of the real property is
1084 located within this state. If more than 50 percent of the fair
1085 market value of the real property is not located within any one
1086 state, the receipts described in this subsection shall be
1087 included in the numerator of the receipts factor if the borrower
1088 is located in this state.
1089 2. The determination of whether the real property securing
1090 a loan is located within this state shall be made as of the time
1091 the original agreement was made and any and all subsequent
1092 substitutions of collateral shall be disregarded.
1093 (e) Interest from loans not secured by real property.—The
1094 numerator of the receipts factor includes interest and fees or
1095 penalties in the nature of interest from loans not secured by
1096 real property if the borrower is located in this state.
1097 (f) Net gains from the sale of loans.—The numerator of the
1098 receipts factor includes net gains from the sale of loans. Net
1099 gains from the sale of loans includes income recorded under the
1100 coupon stripping rules of s. 1286 of the Internal Revenue Code.
1101 1. The amount of net gains, but not less than zero, from
1102 the sale of loans secured by real property included in the
1103 numerator is determined by multiplying such net gains by a
1104 fraction the numerator of which is the amount included in the
1105 numerator of the receipts factor pursuant to paragraph (d) and
1106 the denominator of which is the total amount of interest and
1107 fees or penalties in the nature of interest from loans secured
1108 by real property.
1109 2. The amount of net gains, but not less than zero, from
1110 the sale of loans not secured by real property included in the
1111 numerator is determined by multiplying such net gains by a
1112 fraction the numerator of which is the amount included in the
1113 numerator of the receipts factor pursuant to paragraph (e) and
1114 the denominator of which is the total amount of interest and
1115 fees or penalties in the nature of interest from loans not
1116 secured by real property.
1117 (g) Receipts from credit card receivables.—The numerator of
1118 the receipts factor includes interest and fees or penalties in
1119 the nature of interest from credit card receivables and receipts
1120 from fees charged to card holders, such as annual fees, if the
1121 billing address of the card holder is in this state.
1122 (h) Net gains from the sale of credit card receivables.—The
1123 numerator of the receipts factor includes net gains, but not
1124 less than zero, from the sale of credit card receivables
1125 multiplied by a fraction, the numerator of which is the amount
1126 included in the numerator of the receipts factor pursuant to
1127 paragraph (g) and the denominator of which is the taxpayer’s
1128 total amount of interest and fees or penalties in the nature of
1129 interest from credit card receivables and fees charged to card
1130 holders.
1131 (i) Credit card issuer’s reimbursement fees.—The numerator
1132 of the receipts factor includes all credit card issuer’s
1133 reimbursement fees multiplied by a fraction, the numerator of
1134 which is the amount included in the numerator of the receipts
1135 factor pursuant to paragraph (g) and the denominator of which is
1136 the taxpayer’s total amount of interest and fees or penalties in
1137 the nature of interest from credit card receivables and fees
1138 charged to card holders.
1139 (j) Receipts from merchant discount.—The numerator of the
1140 receipts factor includes receipts from merchant discount if the
1141 commercial domicile of the merchant is in this state. Such
1142 receipts shall be computed net of any cardholder charge backs,
1143 but shall not be reduced by any interchange transaction fees or
1144 by any issuer’s reimbursement fees paid to another for charges
1145 made by its card holders.
1146 (k) Loan servicing fees.—
1147 1.a. The numerator of the receipts factor includes loan
1148 servicing fees derived from loans secured by real property
1149 multiplied by a fraction the numerator of which is the amount
1150 included in the numerator of the receipts factor pursuant to
1151 paragraph (d) and the denominator of which is the total amount
1152 of interest and fees or penalties in the nature of interest from
1153 loans secured by real property.
1154 b. The numerator of the receipts factor includes loan
1155 servicing fees derived from loans not secured by real property
1156 multiplied by a fraction the numerator of which is the amount
1157 included in the numerator of the receipts factor pursuant to
1158 paragraph (e) and the denominator of which is the total amount
1159 of interest and fees or penalties in the nature of interest from
1160 loans not secured by real property.
1161 2. In circumstances in which the taxpayer receives loan
1162 servicing fees for servicing the secured or the unsecured loans
1163 of another, the numerator of the receipts factor shall include
1164 such fees if the borrower is located in this state.
1165 (l) Receipts from services.—The numerator of the receipts
1166 factor includes receipts from services not otherwise apportioned
1167 under this subsection if the service is performed in this state.
1168 If the service is performed both within and without this state,
1169 the numerator of the receipts factor includes receipts from
1170 services not otherwise apportioned under this section, if a
1171 greater proportion of the income-producing activity is performed
1172 in this state based on cost of performance.
1173 (m) Receipts from investment assets and activities and
1174 trading assets and activities.—
1175 1. Interest, dividends, net gains, but not less than zero,
1176 and other income from investment assets and activities and from
1177 trading assets and activities shall be included in the receipts
1178 factor. Investment assets and activities and trading assets and
1179 activities include, but are not limited to: investment
1180 securities; trading account assets; federal funds; securities
1181 purchased and sold under agreements to resell or repurchase;
1182 options; futures contracts; forward contracts; notional
1183 principal contracts such as swaps; equities; and foreign
1184 currency transactions. With respect to the investment and
1185 trading assets and activities described in sub-subparagraphs a.
1186 and b., the receipts factor shall include the amounts described
1187 in such sub-subparagraphs.
1188 a. The receipts factor shall include the amount by which
1189 interest from federal funds sold and securities purchased under
1190 resale agreements exceeds interest expense on federal funds
1191 purchased and securities sold under repurchase agreements.
1192 b. The receipts factor shall include the amount by which
1193 interest, dividends, gains, and other income from trading assets
1194 and activities, including, but not limited to, assets and
1195 activities in the matched book, in the arbitrage book, and
1196 foreign currency transactions, exceed amounts paid in lieu of
1197 interest, amounts paid in lieu of dividends, and losses from
1198 such assets and activities.
1199 2. The numerator of the receipts factor includes interest,
1200 dividends, net gains, but not less than zero, and other income
1201 from investment assets and activities and from trading assets
1202 and activities described in subparagraph 1. which are
1203 attributable to this state.
1204 a. The amount of interest, dividends, net gains, but not
1205 less than zero, and other income from investment assets and
1206 activities in the investment account to be attributed to this
1207 state and included in the numerator is determined by multiplying
1208 all such income from such assets and activities by a fraction,
1209 the numerator of which is the average value of such assets that
1210 are properly assigned to a regular place of business of the
1211 taxpayer within this state and the denominator of which is the
1212 average value of all such assets.
1213 b. The amount of interest from federal funds sold and
1214 purchased and from securities purchased under resale agreements
1215 and securities sold under repurchase agreements attributable to
1216 this state and included in the numerator is determined by
1217 multiplying the amount described in sub-subparagraph 1.a. from
1218 such funds and such securities by a fraction, the numerator of
1219 which is the average value of federal funds sold and securities
1220 purchased under agreements to resell which are properly assigned
1221 to a regular place of business of the taxpayer within this state
1222 and the denominator of which is the average value of all such
1223 funds and such securities.
1224 c. The amount of interest, dividends, gains, and other
1225 income from trading assets and activities, including, but not
1226 limited to, assets and activities in the matched book, in the
1227 arbitrage book, and foreign currency transactions, but excluding
1228 amounts described in sub-subparagraphs a. or b., attributable to
1229 this state and included in the numerator is determined by
1230 multiplying the amount described in sub-subparagraph 1.b. by a
1231 fraction, the numerator of which is the average value of such
1232 trading assets that are properly assigned to a regular place of
1233 business of the taxpayer within this state and the denominator
1234 of which is the average value of all such assets.
1235 d. For purposes of this paragraph, average value shall be
1236 determined using the rules for determining the average value of
1237 tangible personal property set forth in paragraphs (4)(c) and
1238 (d).
1239 3. In lieu of using the method set forth in subparagraph
1240 2., the taxpayer may elect, or the department may require in
1241 order to fairly represent the business activity of the taxpayer
1242 in this state, the use of the method set forth in this
1243 subparagraph.
1244 a. The amount of interest, dividends, net gains, but not
1245 less than zero, and other income from investment assets and
1246 activities in the investment account to be attributed to this
1247 state and included in the numerator is determined by multiplying
1248 all such income from such assets and activities by a fraction,
1249 the numerator of which is the gross income from such assets and
1250 activities that are properly assigned to a regular place of
1251 business of the taxpayer within this state and the denominator
1252 of which is the gross income from all such assets and
1253 activities.
1254 b. The amount of interest from federal funds sold and
1255 purchased and from securities purchased under resale agreements
1256 and securities sold under repurchase agreements attributable to
1257 this state and included in the numerator is determined by
1258 multiplying the amount described in sub-subparagraph 1.a. from
1259 such funds and such securities by a fraction, the numerator of
1260 which is the gross income from such funds and such securities
1261 that are properly assigned to a regular place of business of the
1262 taxpayer within this state and the denominator of which is the
1263 gross income from all such funds and such securities.
1264 c. The amount of interest, dividends, gains, and other
1265 income from trading assets and activities, including, but not
1266 limited to, assets and activities in the matched book, in the
1267 arbitrage book, and foreign currency transactions, but excluding
1268 amounts described in sub-subparagraph a. or sub-subparagraph b.,
1269 attributable to this state and included in the numerator is
1270 determined by multiplying the amount described in sub
1271 subparagraph 1.b. by a fraction, the numerator of which is the
1272 gross income from such trading assets and activities that are
1273 properly assigned to a regular place of business of the taxpayer
1274 within this state and the denominator of which is the gross
1275 income from all such assets and activities.
1276 4. If the taxpayer elects or is required by the department
1277 to use the method set forth in subparagraph 3., it shall use
1278 this method on all subsequent returns unless the taxpayer
1279 receives prior permission from the department to use, or the
1280 department requires, a different method.
1281 5. The taxpayer has the burden of proving that an
1282 investment asset or activity or trading asset or activity was
1283 properly assigned to a regular place of business outside this
1284 state by demonstrating that the day-to-day decisions regarding
1285 the asset or activity occurred at a regular place of business
1286 outside this state. If the day-to-day decisions regarding an
1287 investment asset or activity or trading asset or activity occur
1288 at more than one regular place of business and one such regular
1289 place of business is in this state and one such regular place of
1290 business is outside this state, such asset or activity shall be
1291 considered to be located at the regular place of business of the
1292 taxpayer where the investment or trading policies or guidelines
1293 with respect to the asset or activity are established. Unless
1294 the taxpayer demonstrates to the contrary, such policies and
1295 guidelines shall be presumed to be established at the commercial
1296 domicile of the taxpayer.
1297 (n) Attribution of certain receipts to commercial
1298 domicile.—All receipts that would be assigned under this section
1299 to a state in which the taxpayer is not taxable shall be
1300 included in the numerator of the receipts factor, if the
1301 taxpayer’s commercial domicile is in this state.
1302 (4) PROPERTY FACTOR.—
1303 (a) General.—The property factor is a fraction, the
1304 numerator of which is the average value of real property and
1305 tangible personal property rented to the taxpayer which is
1306 located or used within this state during the taxable year, the
1307 average value of the taxpayer’s real and tangible personal
1308 property that is owned and located or used within this state
1309 during the taxable year, and the average value of the taxpayer’s
1310 loans and credit card receivables that are located within this
1311 state during the taxable year, and the denominator of which is
1312 the average value of all such property that is located or used
1313 within and without this state during the taxable year.
1314 (b) Property included.—The property factor shall include
1315 only property the income or expenses of which are included, or
1316 would have been included if not fully depreciated or expensed,
1317 or depreciated or expensed to a nominal amount, in the
1318 computation of the adjusted federal income for the taxable year.
1319 (c) Value of property owned by the taxpayer.—
1320 1. The value of real property and tangible personal
1321 property owned by the taxpayer is the original cost or other
1322 basis of such property for federal income tax purposes without
1323 regard to depletion, depreciation, or amortization.
1324 2. Loans are valued at their outstanding principal balance,
1325 without regard to any reserve for bad debts. If a loan is
1326 charged off in whole or in part for federal income tax purposes,
1327 the portion of the loan charged off is not outstanding. A
1328 specifically allocated reserve established pursuant to
1329 regulatory or financial accounting guidelines which is treated
1330 as charged off for federal income tax purposes shall be treated
1331 as charged off for purposes of this section.
1332 3. Credit card receivables are valued at their outstanding
1333 principal balance, without regard to any reserve for bad debts.
1334 If a credit card receivable is charged off in whole or in part
1335 for federal income tax purposes, the portion of the receivable
1336 charged off is not outstanding.
1337 (d) Average value of property owned by the taxpayer.—The
1338 average value of property owned by the taxpayer is computed on
1339 an annual basis by adding the value of the property on the first
1340 day of the taxable year and the value on the last day of the
1341 taxable year and dividing the sum by two. If averaging on this
1342 basis does not properly reflect average value, the department
1343 may require averaging on a more frequent basis. The taxpayer may
1344 elect to average on a more frequent basis. When averaging on a
1345 more frequent basis is required by the department or is elected
1346 by the taxpayer, the same method of valuation must be used
1347 consistently by the taxpayer with respect to property within and
1348 without this state and on all subsequent returns unless the
1349 taxpayer receives prior permission from the department or the
1350 department requires a different method of determining average
1351 value.
1352 (e) Average value of real property and tangible personal
1353 property rented to the taxpayer.—
1354 1. The average value of real property and tangible personal
1355 property that the taxpayer has rented from another and that is
1356 not treated as property owned by the taxpayer for federal income
1357 tax purposes shall be determined annually by multiplying the
1358 gross rents payable during the taxable year by eight.
1359 2. If the use of the general method described in this
1360 subsection results in inaccurate valuations of rented property,
1361 any other method that properly reflects the value may be adopted
1362 by the department or by the taxpayer when approved in writing by
1363 the department. Once approved, such other method of valuation
1364 must be used on all subsequent returns unless the taxpayer
1365 receives prior approval from the department or the department
1366 requires a different method of valuation.
1367 (f) Location of real property and tangible personal
1368 property owned by or rented to the taxpayer.—
1369 1. Except as described in subparagraph 2., real property
1370 and tangible personal property owned by or rented to the
1371 taxpayer is considered to be located within this state if it is
1372 physically located, situated, or used within this state.
1373 2. Transportation property is included in the numerator of
1374 the property factor to the extent that the property is used in
1375 this state. The extent an aircraft is deemed to be used in this
1376 state and the amount of value that is included in the numerator
1377 of this state’s property factor is determined by multiplying the
1378 average value of the aircraft by a fraction, the numerator of
1379 which is the number of landings of the aircraft in this state
1380 and the denominator of which is the total number of landings of
1381 the aircraft everywhere. If the extent of the use of any
1382 transportation property within this state cannot be determined,
1383 the property shall be deemed to be used wholly in the state in
1384 which the property has its principal base of operations. A motor
1385 vehicle shall be deemed to be used wholly in the state in which
1386 it is registered.
1387 (g) Location of loans.—
1388 1.a. A loan is considered to be located within this state
1389 if it is properly assigned to a regular place of business of the
1390 taxpayer within this state.
1391 b. A loan is properly assigned to the regular place of
1392 business with which it has a preponderance of substantive
1393 contacts. A loan assigned by the taxpayer to a regular place of
1394 business without the state shall be presumed to have been
1395 properly assigned if:
1396 (I) The taxpayer has assigned, in the regular course of its
1397 business, such loan on its records to a regular place of
1398 business consistent with federal or state regulatory
1399 requirements;
1400 (II) Such assignment on its records is based upon
1401 substantive contacts of the loan to such regular place of
1402 business; and
1403 (III) The taxpayer uses said records reflecting assignment
1404 of loans for the filing of all state and local tax returns for
1405 which an assignment of loans to a regular place of business is
1406 required.
1407 c. The presumption of proper assignment of a loan provided
1408 in sub-subparagraph b. may be rebutted upon a showing by the
1409 department, supported by a preponderance of the evidence, that
1410 the preponderance of substantive contacts regarding such loan
1411 did not occur at the regular place of business to which it was
1412 assigned on the taxpayer’s records. When such presumption has
1413 been rebutted, the loan shall be located within this state if:
1414 (I) The taxpayer had a regular place of business within
1415 this state at the time the loan was made; and
1416 (II) The taxpayer fails to show, by a preponderance of the
1417 evidence, that the preponderance of substantive contacts
1418 regarding such loan did not occur within this state.
1419 2. In the case of a loan that is assigned by the taxpayer
1420 to a place without this state which is not a regular place of
1421 business, it shall be presumed, subject to rebuttal by the
1422 taxpayer on a showing supported by the preponderance of
1423 evidence, that the preponderance of substantive contacts
1424 regarding the loan occurred within this state if, at the time
1425 the loan was made the taxpayer’s commercial domicile, as defined
1426 by paragraph (2)(c), was within this state.
1427 3. To determine the state in which the preponderance of
1428 substantive contacts relating to a loan have occurred, the facts
1429 and circumstances regarding the loan at issue shall be reviewed
1430 on a case-by-case basis and consideration shall be given to such
1431 activities as the solicitation, investigation, negotiation,
1432 approval, and administration of the loan. The terms
1433 “solicitation,” “investigation,” “negotiation,” “approval,” and
1434 “administration” are defined as follows:
1435 a. Solicitation is either active or passive. Active
1436 solicitation occurs when an employee of the taxpayer initiates
1437 the contact with the customer. Such activity is located at the
1438 regular place of business that the taxpayer’s employee is
1439 regularly connected with or working out of, regardless of where
1440 the services of such employee were actually performed. Passive
1441 solicitation occurs when the customer initiates the contact with
1442 the taxpayer. If the customer’s initial contact was not at a
1443 regular place of business of the taxpayer, the regular place of
1444 business, if any, where the passive solicitation occurred is
1445 determined by the facts in each case.
1446 b. Investigation is the procedure whereby employees of the
1447 taxpayer determine the credit worthiness of the customer, as
1448 well as the degree of risk involved in making a particular
1449 agreement. Such activity is located at the regular place of
1450 business that the taxpayer’s employees are regularly connected
1451 with or working out of, regardless of where the services of such
1452 employees were actually performed.
1453 c. Negotiation is the procedure whereby employees of the
1454 taxpayer and its customer determine the terms of the agreement,
1455 such as the amount, duration, interest rate, frequency of
1456 repayment, currency denomination, and security required. Such
1457 activity is located at the regular place of business that the
1458 taxpayer’s employees are regularly connected with or working out
1459 of, regardless of where the services of such employees were
1460 actually performed.
1461 d. Approval is the procedure whereby employees or the board
1462 of directors of the taxpayer make the final determination
1463 whether to enter into the agreement. Such activity is located at
1464 the regular place of business that the taxpayer’s employees are
1465 regularly connected with or working out of, regardless of where
1466 the services of such employees were actually performed. If the
1467 board of directors makes the final determination, such activity
1468 is located at the commercial domicile of the taxpayer.
1469 e. Administration is the process of managing the account.
1470 This process includes bookkeeping, collecting the payments,
1471 corresponding with the customer, reporting to management
1472 regarding the status of the agreement, and proceeding against
1473 the borrower or the security interest if the borrower is in
1474 default. Such activity is located at the regular place of
1475 business that oversees this activity.
1476 (h) Location of credit card receivables.—For purposes of
1477 determining the location of credit card receivables, credit card
1478 receivables shall be treated as loans and are subject to the
1479 provisions of paragraph (g).
1480 (i) Period for which properly assigned loan remains
1481 assigned.—A loan that has been properly assigned to a state
1482 shall, absent any change of material fact, remain assigned to
1483 the state for the length of the original term of the loan.
1484 Thereafter, the loan may be properly assigned to another state
1485 if the loan has a preponderance of substantive contact to a
1486 regular place of business there.
1487 (5) PAYROLL FACTOR.—
1488 (a) General.—The payroll factor is a fraction, the
1489 numerator of which is the total amount paid in this state during
1490 the taxable year by the taxpayer for compensation and the
1491 denominator of which is the total compensation paid both within
1492 and without this state during the taxable year. The payroll
1493 factor shall include only that compensation included in the
1494 computation of adjusted federal income for the taxable year.
1495 (b) Compensation relating to nonbusiness income and
1496 independent contractors.—The compensation of any employee for
1497 services or activities that are connected with the production of
1498 nonbusiness income, or income that is not includable in adjusted
1499 federal income, and payments made to any independent contractor
1500 or any other person not properly classifiable as an employee
1501 shall be excluded from both the numerator and denominator of the
1502 factor.
1503 (c) When compensation is paid in this state.—Compensation
1504 is paid in this state if any one of the following tests, applied
1505 consecutively, is met:
1506 1. The employee’s services are performed entirely within
1507 this state.
1508 2. The employee’s services are performed both within and
1509 without the state, but the service performed without the state
1510 is incidental to the employee’s service within the state. The
1511 term “incidental” means any service that is temporary or
1512 transitory in nature or that is rendered in connection with an
1513 isolated transaction.
1514 3. If the employee’s services are performed both within and
1515 without this state, the employee’s compensation shall be
1516 attributed to this state:
1517 a. If the employee’s principal base of operations is within
1518 this state;
1519 b. If there is no principal base of operations in any state
1520 in which some part of the services are performed, but the place
1521 from which the services are directed or controlled is in this
1522 state; or
1523 c. If the principal base of operations and the place from
1524 which the services are directed or controlled are not in any
1525 state in which some part of the service is performed but the
1526 employee’s residence is in this state.
1527 Section 12. Subsections (2) and (3) of section 220.151,
1528 Florida Statutes, are amended to read:
1529 220.151 Apportionment; methods for special industries.—
1530 (2) The tax base for a taxpayer furnishing transportation
1531 services other than by air, for the purpose of computing a tax
1532 on those activities, shall be apportioned to this state by
1533 multiplying such base by a fraction the numerator of which is
1534 the revenue miles of the taxpayer in this state and the
1535 denominator of which is the revenue miles of the taxpayer
1536 everywhere. The term “revenue miles in this state” also includes
1537 all miles traversed between points in this state, even though
1538 the route of travel is not wholly over the land mass of the
1539 state.
1540 (a) For transportation other than by pipeline or by air, a
1541 revenue mile is the transportation of one passenger or 1 net ton
1542 of freight the distance of 1 mile for a consideration. When a
1543 taxpayer is engaged in the transportation of both passengers and
1544 freight, the fraction shall be determined by means of an average
1545 of the passenger revenue mile fraction and the freight revenue
1546 mile fraction, weighted to reflect the taxpayer’s relative
1547 railway operating income from total passenger and total freight
1548 service as reported to the United States Department of
1549 Transportation Interstate Commerce Commission, in the case of
1550 transportation by railroad, or weighted to reflect the
1551 taxpayer’s relative gross receipts from passenger and freight
1552 transportation, in case of transportation other than by
1553 railroad.
1554 (b) For transportation by pipeline, a revenue mile is the
1555 transportation by pipeline of 1 barrel of oil, 1,000 cubic feet
1556 of gas, or any specified quantity of any other substance the
1557 distance of 1 mile for a consideration.
1558 (c) The tax base for a taxpayer furnishing transportation
1559 services by air, for purposes of computing a tax on those
1560 activities, shall be apportioned to this state by multiplying
1561 such base by a fraction the numerator of which is the number of
1562 takeoffs and landings in this state and the denominator is the
1563 number of takeoffs and landings everywhere. For purposes of
1564 paragraph (a), in computing the revenue miles of any taxpayer
1565 engaged in furnishing air or sea transportation services, the
1566 “revenue miles in this state” shall include all miles traversed
1567 within the area bounded on the west by the meridian of longitude
1568 87°30′ west from Greenwich, bounded on the north by the northern
1569 land border of this state or the parallel of latitude 31° north
1570 from the equator, bounded on the east by the meridian of
1571 longitude 80° west from Greenwich, and bounded on the south by
1572 the parallel of latitude 23°30′ north from the equator as the
1573 case may be. The “revenue miles in this state” shall also
1574 include all miles traversed between points in this state, even
1575 though the route of travel is not wholly over the land mass of
1576 the state. The department may prescribe standard mileage tables
1577 for the purpose of determining revenue miles in the state under
1578 this paragraph, rather than requiring taxpayers to compute from
1579 their records the actual number of miles traversed within such
1580 boundaries or points from time to time.
1581 (d) For taxpayers furnishing transportation services by
1582 sea, revenue miles within this state shall be miles traversed
1583 within the constitutional boundaries of Florida.
1584 (e) For purposes of this subsection, revenue miles not
1585 allocable or apportionable to any taxing jurisdiction, otherwise
1586 known as “nowhere miles,” are eliminated from both the numerator
1587 and denominator of the apportionment computation.
1588 (f)(d) For purposes of this subsection, the term “taxpayer
1589 furnishing transportation services” includes taxpayers engaged
1590 exclusively in interstate commerce.
1591 (3) For any taxable year beginning on or after January 1,
1592 1999, a citrus processing company may, if required to apportion
1593 its taxable net income pursuant to the three-factor
1594 apportionment method set forth in s. 220.15(1), elect to have
1595 such apportionment determined for that taxable year solely by
1596 use of the sales factor, as set forth in s. 220.15(4) s.
1597 220.15(5). The election shall be made by the filing of a return
1598 for the taxable year utilizing this method.
1599 Section 13. Section 220.152, Florida Statutes, is amended
1600 to read:
1601 220.152 Apportionment; other methods.—If the apportionment
1602 methods of ss. 220.15, 220.1505, and 220.151 do not fairly
1603 represent the extent of a taxpayer’s tax base attributable to
1604 this state, the taxpayer may petition for, or the department may
1605 require, in respect to all or any part of the taxpayer’s tax
1606 base, if reasonable:
1607 (1) Separate accounting;
1608 (2) The exclusion of any one or more factors;
1609 (3) The inclusion of one or more additional factors which
1610 will fairly represent the taxpayer’s tax base attributable to
1611 this state; or
1612 (4) The employment of any other method which will produce
1613 an equitable apportionment.
1614 Section 14. Section 213.054, Florida Statutes, is repealed.
1615 Section 15. Subsections (3) and (5) of section 220.62,
1616 Florida Statutes, are repealed.
1617 Section 16. Subsection (5) of section 220.63, Florida
1618 Statutes, is repealed.
1619 Section 17. Section 220.64, Florida Statutes, is amended to
1620 read:
1621 220.64 Other provisions applicable to franchise tax.—To the
1622 extent that they are not manifestly incompatible with the
1623 provisions of this part, parts I, III, IV, V, VI, VIII, IX, and
1624 X of this code and ss. 220.12, 220.13, 220.15, 220.1505, and
1625 220.16 apply to the franchise tax imposed by this part. Under
1626 rules prescribed in s. 220.131, a consolidated return may be
1627 filed by any affiliated group of corporations composed of one or
1628 more banks or savings associations, its or their Florida parent
1629 corporation, and any nonbank or nonsavings subsidiaries of such
1630 parent corporation.
1631 Section 18. Section 220.51, Florida Statutes, is amended to
1632 read:
1633 220.51 Promulgation of rules and regulations.—
1634 (1) In accordance with the Administrative Procedure Act,
1635 chapter 120, the department is authorized to make, promulgate,
1636 and enforce such reasonable rules and regulations, and to
1637 prescribe such forms relating to the administration and
1638 enforcement of the provisions of this code, as it may deem
1639 appropriate, including:
1640 (a)(1) Rules for initial implementation of this code and
1641 for taxpayers’ transitional taxable years commencing before and
1642 ending after January 1, 1972;
1643 (b)(2) Rules or regulations to clarify whether certain
1644 groups, organizations, or associations formed under the laws of
1645 this state or any other state, country, or jurisdiction shall be
1646 deemed “taxpayers” for the purposes of this code, in accordance
1647 with the legislative declarations of intent in s. 220.02; and
1648 (c)(3) Regulations relating to consolidated reporting for
1649 affiliated groups of corporations, in order to provide for an
1650 equitable and just administration of this code with respect to
1651 multicorporate taxpayers.
1652 (2) The department may adopt rules pursuant to ss.
1653 120.536(1) and 120.54 to administer this chapter, including
1654 rules interpreting each definition used in this chapter and
1655 rules for interpreting the reasonable attribution of intangible
1656 property to income-producing activity.
1657 Section 19. (1) It is the intent of the Legislature to
1658 require all corporations filing Florida nexus group corporate
1659 income tax returns to either file separate Florida income tax
1660 returns or to make an election to file a consolidated Florida
1661 income tax returns composed of the identical component members
1662 to those that have consolidated their taxable incomes for
1663 federal income tax purposes.
1664 (2) It is further the intent of the Legislature to clarify
1665 that the amendments to ss. 220.23 and 220.809, Florida Statutes,
1666 made by sections 44 and 45 of chapter 2002-218, Laws of Florida,
1667 were intended to apply to all notifications of adjustments
1668 required to be reported on or after January 1, 2003, by s.
1669 220.23, Florida Statutes, and that those amendments were
1670 intended to apply retroactively to all tax years represented by
1671 such notifications and returns, including tax years prior to
1672 January 1, 2003. It is the intent of the Legislature that this
1673 clarification applies retroactively to January 1, 2003, and
1674 applies retroactively to all returns and notices required to be
1675 filed under s. 220.23, Florida Statutes, on or after January 1,
1676 2003.
1677 (3) It is further the intent of the Legislature that the
1678 amendments made by sections 5, 6, and 7 of this act to ss.
1679 220.02(1), 220.03(1)(e) and (6), and 220.13(2)(a), Florida
1680 Statutes, are remedial in nature and apply retroactively to tax
1681 years beginning after December 31, 2000.
1682 Section 20. This act shall take effect upon becoming a law,
1683 and applies to tax years ending on or after December 31, 2009,
1684 except as otherwise expressly provided in section 18 of this
1685 act.
1686
1687 ================= T I T L E A M E N D M E N T ================
1688 And the title is amended as follows:
1689 Delete everything before the enacting clause
1690 and insert:
1691 A bill to be entitled
1692 An act relating to corporate income tax; creating the
1693 “Florida Fair Business Competition Act”; amending s.
1694 196.012, F.S.; conforming cross-references; amending
1695 ss. 213.053 and 213.054, F.S.; conforming provisions
1696 to the repeal of provisions allowing certain
1697 deductions by certain financial institutions; amending
1698 s. 220.02, F.S.; revising legislative intent with
1699 respect to the classifications of organizations for
1700 purposes of the corporate income tax; amending s.
1701 220.03, F.S.; redefining the terms “corporation” and
1702 “nonbusiness income”; providing requirements for the
1703 classification of corporations that are partners in
1704 partnerships; defining the term “tiered partnership
1705 arrangement”; amending s. 220.13, F.S.; defining the
1706 term “adjusted federal income” with respect to certain
1707 expenses related to a business asset; defining the
1708 term “taxable income” for purposes of certain
1709 corporate entities; providing certain restrictions
1710 with respect to the deductibility of intangible
1711 expenses, interest expenses, and management fees;
1712 providing requirements for filing tax returns;
1713 providing for making certain calculations and
1714 providing for certain deductions; amending s. 220.131,
1715 F.S.; providing a limitation on the net operating loss
1716 that may be claimed by a member of an affiliated
1717 group; providing for the expiration of eligibility for
1718 a specified election with respect to certain tax
1719 filings; requiring that certain gross receipts be
1720 excluded from sales between affiliated corporations
1721 for purposes of determining taxable income; amending
1722 s. 220.15, F.S.; revising requirements governing the
1723 apportionment of adjusted federal income; clarifying
1724 circumstances under which a sale of services occurs in
1725 the state; amending s. 220.1501, F.S.; conforming
1726 cross-references; creating s. 220.1505, F.S.;
1727 providing requirements for the apportionment of income
1728 of a financial institution whose business activity is
1729 taxable within and without the state; providing
1730 definitions; providing apportionment factors with
1731 respect to receipts, property, and payroll; amending
1732 s. 220.151, F.S.; providing for the apportionment of
1733 the tax base for taxpayers furnishing certain
1734 transportation services; defining the term “revenue
1735 miles in this state”; amending s. 220.152, F.S.;
1736 conforming provisions to changes made by the act;
1737 repealing s. 213.054, F.S., relating to certain tax
1738 exemptions or deductions; repealing ss. 220.62(3) and
1739 (5), and 220.63(5), F.S., relating to the franchise
1740 tax imposed on banks and savings associations;
1741 amending s. 220.64, F.S.; conforming provisions to
1742 changes made by the act; amending s. 220.51, F.S.;
1743 authorizing the Department of Revenue to adopt rules;
1744 providing legislative intent with respect to
1745 corporations filing corporate income tax returns;
1746 clarifying legislative intent with respect to the
1747 retroactive application of certain amendments made by
1748 chapter 2002-218, Laws of Florida; providing for
1749 application; providing an effective date.