Florida Senate - 2012                                     SB 236
       By Senator Ring
       32-00321-12                                            2012236__
    1                        A bill to be entitled                      
    2         An act relating to economic development; creating the
    3         Commercialization Credit Transfer Program; providing
    4         legislative findings that it is in the state’s
    5         interest to promote the commercialization of products
    6         and services developed by technology companies;
    7         amending s. 213.053, F.S.; authorizing the Department
    8         of Revenue to share certain confidential information
    9         with the Department of Economic Opportunity; amending
   10         s. 220.02, F.S.; adding the certified credits
   11         available under s. 220.198, F.S., to the list of
   12         credits that may be taken against state corporate
   13         income tax; amending s. 220.13, F.S.; redefining the
   14         term “adjusted federal income” in relation to net
   15         operating losses transferred and payments received for
   16         a certified credit pursuant to the Commercialization
   17         Credit Transfer Program; amending s. 220.16, F.S.;
   18         providing for the allocation of financial assistance
   19         pursuant to the Commercialization Credit Transfer
   20         Program as income in this state; creating s. 220.198,
   21         F.S.; creating the Commercialization Credit Transfer
   22         Program; providing a purpose, intent, goals, and
   23         objectives; providing definitions; requiring the
   24         Department of Economic Opportunity to certify eligible
   25         companies for the transfer of corporate income tax net
   26         operating loss amounts as certified credits; providing
   27         qualifications and an application process and
   28         requirements; requiring an application fee; providing
   29         for an application deadline; requiring the Department
   30         of Economic Opportunity to grant or deny an
   31         application within a specified time after receiving a
   32         completed application; providing for calculating the
   33         certified credit amount; providing a maximum amount
   34         that may be transferred; providing a penalty;
   35         requiring each certified company to file an annual
   36         report with the Department of Economic Opportunity;
   37         requiring the Department of Economic Opportunity to
   38         create an annual report; requiring the Department of
   39         Economic Opportunity to adopt rules; authorizing the
   40         Department of Revenue to adopt rules; providing
   41         appropriations; providing for future repeal of the
   42         Commercialization Credit Transfer Program; providing
   43         an effective date.
   45  Be It Enacted by the Legislature of the State of Florida:
   47         Section 1. Legislative findings.—The Legislature finds that
   48  it is in the best interests of this state to promote the
   49  commercialization of products and services developed by
   50  technology companies in this state which can lead to the
   51  creation of high-wage and high-skilled jobs. One mechanism to
   52  this end is the Commercialization Credit Transfer Program.
   53         Section 2. Paragraph (cc) is added to subsection (8) of
   54  section 213.053, Florida Statutes, to read:
   55         213.053 Confidentiality and information sharing.—
   56         (8) Notwithstanding any other provision of this section,
   57  the department may provide:
   58         (cc) Information relative to tax credits taken under s.
   59  220.198 to the Department of Economic Opportunity.
   61  Disclosure of information under this subsection shall be
   62  pursuant to a written agreement between the executive director
   63  and the agency. Such agencies, governmental or nongovernmental,
   64  shall be bound by the same requirements of confidentiality as
   65  the Department of Revenue. Breach of confidentiality is a
   66  misdemeanor of the first degree, punishable as provided by s.
   67  775.082 or s. 775.083.
   68         Section 3. Subsection (8) of section 220.02, Florida
   69  Statutes, is amended to read:
   70         220.02 Legislative intent.—
   71         (8) It is the intent of the Legislature that credits
   72  against either the corporate income tax or the franchise tax be
   73  applied in the following order: those enumerated in s. 631.828,
   74  those enumerated in s. 220.191, those enumerated in s. 220.181,
   75  those enumerated in s. 220.183, those enumerated in s. 220.182,
   76  those enumerated in s. 220.1895, those enumerated in s. 220.195,
   77  those enumerated in s. 220.184, those enumerated in s. 220.186,
   78  those enumerated in s. 220.1845, those enumerated in s. 220.19,
   79  those enumerated in s. 220.185, those enumerated in s. 220.1875,
   80  those enumerated in s. 220.192, those enumerated in s. 220.193,
   81  those enumerated in s. 288.9916, those enumerated in s.
   82  220.1899, those enumerated in s. 220.1896, those enumerated in
   83  s. 220.194, and those enumerated in s. 220.196, and those
   84  enumerated in s. 220.198.
   85         Section 4. Paragraph (b) of subsection (1) of section
   86  220.13, Florida Statutes, is amended to read:
   87         220.13 “Adjusted federal income” defined.—
   88         (1) The term “adjusted federal income” means an amount
   89  equal to the taxpayer’s taxable income as defined in subsection
   90  (2), or such taxable income of more than one taxpayer as
   91  provided in s. 220.131, for the taxable year, adjusted as
   92  follows:
   93         (b) Subtractions.—
   94         1. There shall be subtracted from such taxable income:
   95         a. The net operating loss deduction allowable for federal
   96  income tax purposes under s. 172 of the Internal Revenue Code
   97  for the taxable year, except that any net operating loss that is
   98  transferred pursuant to s. 220.194(6) may not be deducted by the
   99  seller,
  100         b. The net capital loss allowable for federal income tax
  101  purposes under s. 1212 of the Internal Revenue Code for the
  102  taxable year,
  103         c. The excess charitable contribution deduction allowable
  104  for federal income tax purposes under s. 170(d)(2) of the
  105  Internal Revenue Code for the taxable year, and
  106         d. The excess contributions deductions allowable for
  107  federal income tax purposes under s. 404 of the Internal Revenue
  108  Code for the taxable year, except that any net operating loss
  109  transferred pursuant to s. 220.198 may not be deducted by the
  110  seller.
  112  However, a net operating loss and a capital loss shall never be
  113  carried back as a deduction to a prior taxable year, but all
  114  deductions attributable to such losses shall be deemed net
  115  operating loss carryovers and capital loss carryovers,
  116  respectively, and treated in the same manner, to the same
  117  extent, and for the same time periods as are prescribed for such
  118  carryovers in ss. 172 and 1212, respectively, of the Internal
  119  Revenue Code.
  120         2. There shall be subtracted from such taxable income any
  121  amount to the extent included therein the following:
  122         a. Dividends treated as received from sources without the
  123  United States, as determined under s. 862 of the Internal
  124  Revenue Code.
  125         b. All amounts included in taxable income under s. 78 or s.
  126  951 of the Internal Revenue Code.
  128  However, as to any amount subtracted under this subparagraph,
  129  there shall be added to such taxable income all expenses
  130  deducted on the taxpayer’s return for the taxable year which are
  131  attributable, directly or indirectly, to such subtracted amount.
  132  Further, no amount shall be subtracted with respect to dividends
  133  paid or deemed paid by a Domestic International Sales
  134  Corporation.
  135         3. In computing “adjusted federal income” for taxable years
  136  beginning after December 31, 1976, there shall be allowed as a
  137  deduction the amount of wages and salaries paid or incurred
  138  within this state for the taxable year for which no deduction is
  139  allowed pursuant to s. 280C(a) of the Internal Revenue Code
  140  (relating to credit for employment of certain new employees).
  141         4. There shall be subtracted from such taxable income any
  142  amount of nonbusiness income included therein, including
  143  payments received for a certified credit pursuant to s. 220.198.
  144         5. There shall be subtracted any amount of taxes of foreign
  145  countries allowable as credits for taxable years beginning on or
  146  after September 1, 1985, under s. 901 of the Internal Revenue
  147  Code to any corporation which derived less than 20 percent of
  148  its gross income or loss for its taxable year ended in 1984 from
  149  sources within the United States, as described in s.
  150  861(a)(2)(A) of the Internal Revenue Code, not including credits
  151  allowed under ss. 902 and 960 of the Internal Revenue Code,
  152  withholding taxes on dividends within the meaning of sub
  153  subparagraph 2.a., and withholding taxes on royalties, interest,
  154  technical service fees, and capital gains.
  155         6. Notwithstanding any other provision of this code, except
  156  with respect to amounts subtracted pursuant to subparagraphs 1.
  157  and 3., any increment of any apportionment factor which is
  158  directly related to an increment of gross receipts or income
  159  which is deducted, subtracted, or otherwise excluded in
  160  determining adjusted federal income shall be excluded from both
  161  the numerator and denominator of such apportionment factor.
  162  Further, all valuations made for apportionment factor purposes
  163  shall be made on a basis consistent with the taxpayer’s method
  164  of accounting for federal income tax purposes.
  165         Section 5. Subsection (6) is added to section 220.16,
  166  Florida Statutes, to read:
  167         220.16 Allocation of nonbusiness income.—Nonbusiness income
  168  shall be allocated as follows:
  169         (6) The amount of financial assistance received in exchange
  170  for transferring a net operating loss as authorized by s.
  171  220.198 is allocable to this state.
  172         Section 6. Section 220.198, Florida Statutes, is created to
  173  read:
  174         220.198Commercialization Credit Transfer Program; transfer
  175  of net loss carryforward as a certified credit.—
  176         (1)PURPOSE; GOALS AND OBJECTIVES.—It is the intent of the
  177  Legislature that the Commercialization Credit Transfer Program
  178  act as a catalyst for eligible technology companies to
  179  accelerate their revenue and job growth and their market
  180  penetration by monetizing their net operating losses into
  181  transferable credits. The program’s objectives include:
  182         (a)Accelerating the entry of new technology-based products
  183  and services into the marketplace;
  184         (b)Producing high-wage, technology-based jobs for this
  185  state; and
  186         (c)Encouraging the expansion of high-impact technology
  187  based firms in this state.
  188         (2)DEFINITIONS.—As used in this section, the term
  189  certified credit” means the product of the net operating loss
  190  generated in the current year apportioned to Florida, multiplied
  191  by the corporate income tax rate imposed during the year in
  192  which the loss occurred.
  193         (3)ELIGIBILITY.—A company seeking to transfer a certified
  194  credit shall be certified by the Department of Economic
  195  Opportunity if it timely files a completed application and meets
  196  the requirements of this subsection. For purposes of this
  197  subsection, all conditions in paragraphs (a)-(g) must be met by
  198  the date that the application is filed with the department. In
  199  order to be certified, a company must demonstrate that it:
  200         (a)Is registered with the Secretary of State to operate in
  201  this state and is operating in Florida.
  202         (b)Is primarily engaged in developing, manufacturing,
  203  producing, or providing technology for commercial or public
  204  purposes and has a federally assigned NAICS code identifying the
  205  company as such.
  206         (c)Has fewer than 100 full-time employees worldwide,
  207  including full-time employees leased to the applicant, of which
  208  at least 75 percent work full time in this state at the time the
  209  transfer of certified credits is first allowed.
  210         (d)Has been audited by an independent certified public
  211  accountant, and:
  212         1.Has not had positive net income in either of the 2
  213  previous years of ongoing operations;
  214         2.Has reported a net operating loss in either of the 2
  215  previous years of operation; and
  216         3.Is not at least 50 percent owned or controlled, directly
  217  or indirectly, by another corporation that has demonstrated
  218  positive net income in either of the 2 previous years of ongoing
  219  operations, or is not part of a consolidated group of affiliated
  220  corporations, as filed for federal income tax purposes, which in
  221  the aggregate demonstrated positive net income in either of the
  222  2 previous years of ongoing operations.
  223         (e)Has at least one active application for a patent under
  224  35 U.S.C. s. 111(a) on file with the United States Patent and
  225  Trademark Office.
  226         (f)Has received research grants from governmental
  227  entities, foundations, or other private entities, or received
  228  financial assistance from investors.
  229         (g)Has an established business plan that describes its
  230  commercialization strategy, a business-development plan that
  231  includes revenue projections and a strategy for becoming
  232  profitable, and a timeline for development which addresses
  233  revenue growth and job creation in this state.
  234         (h)Has certified that:
  235         1.It will not transfer a certified credit in exchange for
  236  private financial assistance in an amount that is less than 80
  237  percent of the certified credit;
  238         2.All proceeds from the transfer will be expended to
  239  support the operation or expansion of the company’s business
  240  activity in this state; and
  241         3.Upon transfer of a certified credit, it will notify the
  242  Department of Economic Opportunity of the amount within 30 days
  243  after each certified credit is transferred, the amount of the
  244  financial compensation for the credit received, and the identity
  245  of the purchaser of the certified credit.
  247         (a)A completed application must be filed with the
  248  Department of Economic Opportunity on or after 2 p.m. on the
  249  first business day of August commencing in 2012. The Department
  250  of Economic Opportunity may investigate the qualifications of
  251  each company applicant and may require by rule the applicant to
  252  provide such evidence of its qualification as is necessary to
  253  ensure compliance with the requirements of this section,
  254  including, but not limited to, the state corporate income tax
  255  return supporting the request for certification of a certified
  256  credit, audited financial statements, federal tax returns, and
  257  state and federal employment filings.
  258         (b)The Department of Economic Opportunity shall require a
  259  nonrefundable application fee of $100 per application submitted.
  260  The Department of Revenue shall cooperate with the Department of
  261  Economic Opportunity in its review of the applications.
  262         (c)The Department of Economic Opportunity shall grant or
  263  deny an application in full or in part within 90 days after
  264  receiving a completed application containing the necessary
  265  information, including payment of the application fee. If the
  266  department denies any part of the application, it shall inform
  267  the applicant of the grounds for the denial.
  268         (d)This section does not create a presumption that a
  269  company applicant will be approved by the Department of Economic
  270  Opportunity to transfer its certified credits. However, the
  271  Department of Economic Opportunity may issue a nonbinding
  272  opinion letter, upon the request of a prospective applicant, as
  273  to its eligibility and the potential amount of certified credits
  274  available.
  276  LIMITATIONS.—When submitting an application for certification, a
  277  company shall state the amount of the net operating loss,
  278  including any net operating loss carryover, which it requests to
  279  be transferred as a certified credit. To the extent allowed as a
  280  deduction in this state, a reported net operating loss not
  281  otherwise taken may be certified by the Department of Economic
  282  Opportunity for transfer by a certified company in exchange for
  283  private financial assistance from a purchaser as follows:
  284         (a)The net operating loss shall be transferred as a
  285  certified credit.
  286         (b)The maximum amount of certified credits which a company
  287  may transfer during its existence may not exceed $1 million.
  288         (c)The Department of Economic Opportunity may not certify
  289  the transfer of more than $3 million in certified credits during
  290  a state fiscal year.
  291         (d)The certified company is liable if, after a transfer,
  292  its net operating loss is adjusted by amendment or as a result
  293  of any other recomputation or redetermination of federal or
  294  Florida taxable income or loss. The certified company is also
  295  liable for a penalty equal to the amount of the credit
  296  transferred, reduced in proportion to the amount of the net
  297  operating loss certified for transfer over the amount of the
  298  certified net operating loss disallowed.
  299         (e)The certified company and its successors shall maintain
  300  all records necessary to support the reported amount of
  301  certified credits.
  303         (a)The certified credit must be reported as a credit
  304  against tax due by the unaffiliated corporate purchaser on the
  305  next tax return due to be filed by the purchaser, but in no case
  306  may it be reported later than 1 year after the date of transfer.
  307         (b)If the certified credit is larger than the amount owed
  308  the state on the tax return for the time period in which the
  309  credit is claimed, after applying the other credits and unused
  310  credit carryovers in the order provided in s. 220.02(8), the
  311  amount of the credit for that time period shall be the amount
  312  owed the state on that tax return. Unused certified credit
  313  amounts remaining may not be carried forward.
  314         (c)The purchaser of a certified credit amount may not
  315  further sell, or otherwise transfer, the certified credit
  316  amount.
  317         (d)It is the responsibility of the certified company that
  318  transferred the certified credit amount to notify the Department
  319  of Economic Opportunity, within 30 days after transfer, of the
  320  amount of each certified credit transferred, the amount of the
  321  financial assistance received, and the identity of the purchaser
  322  of the certified credit. The Department of Economic Opportunity
  323  shall certify to the Department of Revenue the same information
  324  within 14 working days.
  326         (a) Each company that is certified to transfer its
  327  certified credit must provide the Department of Economic
  328  Opportunity with an annual report on its development covering
  329  the year after it receives funds from transferring its certified
  330  credits. The report must include a summary of the company’s
  331  commercialization strategy; business development plan; timeline
  332  for development; and actual employment and employment
  333  projections, both total and within this state only. The report
  334  is due January 3 of each applicable year.
  335         (b) The Department of Economic Opportunity shall provide a
  336  report by February 1 each year to the Governor, the President of
  337  the Senate, and the Speaker of the House of Representatives
  338  containing a synopsis of the individual company reports
  339  described in paragraph (a).
  340         (8)RULEMAKING AUTHORITY.—
  341         (a)The Department of Economic Opportunity shall adopt
  342  rules to administer this section. The rules must establish the
  343  criteria for qualified technology research and experimental
  344  development, production, or provision of technology for
  345  commercial or public purposes; the format of application forms;
  346  and the procedures to implement the program.
  347         (b)The Department of Revenue may adopt rules to administer
  348  this section.
  349         Section 7. (1)The sum of $.... is appropriated to the
  350  Economic Development Trust Fund to be drawn, as needed, to pay
  351  the administrative costs incurred by the Department of Economic
  352  Opportunity and associated with implementing the
  353  commercialization credit transfer program.
  354         (2)The sum of $.... is appropriated to the Department of
  355  Revenue to pay the initial administrative costs associated with
  356  amending tax forms, modifying computer software, creating a
  357  tracking system for the transferred credits, and otherwise
  358  implementing the commercialization credit transfer program.
  359         Section 8. Section 220.198, Florida Statutes, is repealed
  360  effective June 30, 20l7, unless reviewed and saved from repeal
  361  through reenactment by the Legislature.
  362         Section 9. This act shall take effect July 1, 2012.