HB 577

1	A bill to be entitled
2	An act relating to tax credits for research and
3	development; creating s. 220.194, F.S.; providing
4	legislative findings; creating a research and development
5	tax credit program in the Department of Revenue; providing
6	purposes for the program; defining the terms "base
7	amount," "business enterprise," "qualified research
8	expenses," "manufacturing industry," "transportation and
9	warehousing industry," "telecommunications industry,"
10	"tourism industry," "retail industry," "research and
11	development industry," and "base period"; providing
12	eligibility requirements for research and development tax
13	credits; providing limitations regarding eligibility;
14	providing an amount for such credit; providing a maximum
15	amount of credit that may be taken during a single tax
16	year; providing that any unused credit may be carried
17	forward for a specified period; authorizing the sale or
18	assignment of unused credit to certain taxpayers under
19	certain conditions; requiring that a party to a sale or
20	assignment file certain information and documents with the
21	department; requiring that parties to a sale or assignment
22	obtain the department's approval before completing such
23	sale or assignment; prohibiting the department from
24	unreasonable withholding of such approval; providing
25	requirements for the use tax credits sold or assigned;
26	limiting the total amount of tax credits that may be
27	assigned in a calendar year; providing that applications
28	for credits may be filed on or after a specified date;
29	requiring that the credits be granted in the order in
30	which applications are received; authorizing the
31	department to adopt rules; amending s. 220.02, F.S.;
32	revising legislative intent to include the research and
33	development tax credit in the ordered list according to
34	which credits against corporate income tax or franchise
35	tax are applied; providing an effective date.
36
37	Be It Enacted by the Legislature of the State of Florida:
38
39	Section 1.  Section 220.194, Florida Statutes, is created
40	to read:
41	220.194  Research and development tax credit program.--
42	(1)  FINDINGS; CREATION.--
43	(a)1.  The Legislature finds that research and development
44	has become the underlying source of wealth in the 21st century
45	by generating ideas and technologies that encourage productivity
46	and economic growth. Furthermore, companies generate the main
47	body of growth-stimulating innovations, making current ideas and
48	technologies more market-sensitive than other sources of
49	research and development.
50	2.  The Legislature further finds that research and
51	development tax credits provide incentives for corporate
52	research and development beyond expected levels. Research
53	demonstrates that the federal research and development tax
54	credit is an effective tool for stimulating additional research
55	and development, which in turn leads to faster economic growth,
56	and state research and development tax credit programs are
57	nearly as important to corporate research and development as the
58	federal research and development tax credit program. Also, the
59	typical state research and development tax credit program
60	increases general, company-funded research and development
61	within a state, often enhancing the state's competitiveness by
62	enabling it to draw research and development activity away from
63	other states.
64	3.  Additionally, the Legislature finds that this state
65	needs a state research and development tax credit program to
66	ensure economic competition. More than half of the states of
67	this nation have a research and development tax credit program.
68	Without a state research and development tax credit program,
69	Florida lags behind the rest of the nation in important
70	corporate research and development.
71	(b)  A research and development tax credit program is
72	created within the Department of Revenue for the purposes of
73	encouraging corporate research and development activity within
74	the state, sharpening the state's competitive edge by leveling
75	the playing field with the state's regional and national
76	economic competitors, supporting the state's vibrant innovation
77	economy, and attracting high-wage, professional research jobs to
78	this state.
79	(2)  DEFINITIONS.--As used in this section, the term:
80	(a)  "Base amount" means the amount resulting from the
81	following calculation:
82	1.  The average of the business enterprise's qualified
83	research expenses in this state allowed under s. 41 of the
84	Internal Revenue Code for the 4 taxable years preceding the
85	taxable year for which the credit is being determined.
86	2.  The qualified research expenses taken into account in
87	computing the base amount shall be determined on a basis
88	consistent with the determination of qualified research expenses
89	for the credit year.
90	(b)  "Business enterprise" means any corporation, as
91	defined in s. 220.03(1)(e), which is engaged in the
92	manufacturing, transportation and warehousing,
93	telecommunications, tourism, or research and development
94	industries in this state, including retail businesses.
95	(c)  "Qualified research expenses" means research expenses
96	qualifying for the credit under s. 41 of the Internal Revenue
97	Code and allocated for in-house research expenses incurred in
98	this state or contract research expenses incurred in this state.
99	The term does not include research conducted outside this state,
100	research that is excluded under s. 41 of the Internal Revenue
101	Code, or research conducted by a business enterprise that is not
102	within its principal business activity.
103	(d)  "Manufacturing industry" means corporations clearly
104	engaged in manufacture which, during all years of the base
105	period reports, list the principal business activity codes for
106	manufacturing on their federal income tax returns.
107	(e)  "Transportation and warehousing industry" means
108	corporations clearly engaged in transportation or warehousing
109	business which, during all years of the base period reports,
110	list the principal business activity codes for transportation
111	and warehousing on their federal income tax returns.
112	(f)  "Telecommunications industry" means corporations
113	clearly engaged in the telecommunications business which, during
114	all years of the base period reports, list the principal
115	business activity codes for telecommunications on their federal
116	income tax returns.
117	(g)  "Tourism industry" means corporations clearly engaged
118	in the tourism business which, during all years of the base
119	period reports, list the principal business activity codes for
120	arts, entertainment, and recreation or accommodations on their
121	federal income tax returns.
122	(h)  "Retail industry" means corporations clearly engaged
123	in the retail business which, during all years of the base
124	period reports, list the principal business activity codes for
125	retail trade on their federal income tax returns.
126	(i)  "Research and development industry" means a
127	corporation clearly engaged in the research and development
128	business which, during all years of the base period reports,
129	list the principal business activity codes for scientific
130	research and development services on their federal income tax
131	returns.
132	(j)  "Base period" means the 4 taxable years preceding the
133	taxable year for which the credit is being determined. If a
134	corporation has not been in existence for the entire base
135	period, then the credit shall be reduced by 25 percent for each
136	of those years unless the corporation establishes that its
137	predecessor was a corporation meeting the requirements of
138	paragraph (b) during that part of the base period.
139	(3)  TAX CREDIT.--Subject to the limitations contained in
140	paragraph (e), a business enterprise is eligible for a credit
141	against the tax imposed by this chapter if such business
142	enterprise has qualified research expenses in this state in the
143	calendar year exceeding the base amount and, for the same
144	calendar year, claims and is allowed a research credit for such
145	qualified research expenses under s. 41 of the Internal Revenue
146	Code.
147	(a)  The tax credit shall be 10 percent of the excess
148	qualified research expenses over the base amount.
149	(b)  The credit taken in any single tax year may not exceed
150	50 percent of the business enterprise's remaining net income tax
151	liability under this chapter after all other credits have been
152	applied under s. 220.02(8).
153	(c)  Any unused credit authorized pursuant to this section
154	may be carried forward and claimed by the taxpayer for up to 5
155	years following the close of the taxable year in which the
156	qualified research expenses are incurred.
157	(d)  Any unused credit authorized pursuant to this section
158	may be assigned or sold to another taxpayer, as defined in s.
159	220.03(1)(e), in this state which is otherwise qualified under
160	paragraph (2)(i), if a claim for the allowance has not been
161	filed within 1 calendar year following the date on which the
162	department approved the credit. The business enterprise and the
163	purchaser or assignee must file an application, waivers of
164	confidentiality, and affidavits to transfer the credit on a form
165	provided by the department and obtain the prior approval of the
166	department for such transfer. The department may not
167	unreasonably withhold such approval. The purchaser or assignee
168	must use the tax credit in the taxable year in which the
169	purchase or assignment of the credit is made. The transfer or
170	purchase of any amount of the tax credit may not be exchanged
171	for less than 75 percent of the credit's value.
172	(e)  The combined total amount of tax credits that may be
173	granted and approved to all business enterprises under this
174	section during any calendar year is $15 million. Applications
175	may be filed with the department on or after March 20 for
176	qualified research expenses incurred within the preceding
177	calendar year, and credits shall be granted in the order in
178	which completed applications are received.
179	(4)  RULES.--The department may adopt rules to administer
180	this section, including, but not limited to, rules prescribing
181	forms, application procedures and dates, and notification or
182	other procedures for the sale or assignment of a credit, and may
183	establish guidelines for making an affirmative showing of
184	qualification for a credit and any evidence needed to
185	substantiate a claim for credit under this section.
186	Section 2.  Subsection (8) of section 220.02, Florida
187	Statutes, is amended to read:
188	220.02  Legislative intent.--
189	(8)  It is the intent of the Legislature that credits
190	against either the corporate income tax or the franchise tax be
191	applied in the following order: those enumerated in s. 631.828,
192	those enumerated in s. 220.191, those enumerated in s. 220.181,
193	those enumerated in s. 220.183, those enumerated in s. 220.182,
194	those enumerated in s. 220.1895, those enumerated in s. 221.02,
195	those enumerated in s. 220.184, those enumerated in s. 220.186,
196	those enumerated in s. 220.1845, those enumerated in s. 220.19,
197	those enumerated in s. 220.185, those enumerated in s. 220.187,
198	those enumerated in s. 220.192, and those enumerated in s.
199	220.193, and those enumerated in s. 220.194.
200	Section 3.  This act shall take effect July 1, 2009, and is
201	effective for tax years beginning on or after January 1, 2010.

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