Florida Senate - 2013 SB 450 By Senator Soto 14-00702-13 2013450__ 1 A bill to be entitled 2 An act relating to economic development; creating s. 3 220.1945, F.S.; providing definitions; providing tax 4 credits for use by a corporation against the state 5 corporate income tax in an amount equal to a specified 6 percentage of the corporation’s payments to a small 7 business providing goods or services to the 8 corporation pursuant to a contract; providing 9 qualification criteria; requiring a business to submit 10 an application to the Department of Economic 11 Opportunity for approval to earn credits; providing 12 application requirements; providing procedures and 13 requirements for department approval; specifying the 14 amount of the tax credit; prohibiting tax credits from 15 being carried forward or backward or being transferred 16 or sold; providing criminal and administrative 17 penalties for fraudulently claiming tax credits; 18 authorizing the Department of Economic Opportunity and 19 the Department of Revenue to adopt rules; amending s. 20 220.02, F.S.; revising the order in which credits 21 against the corporate income tax or franchise tax may 22 be taken to include certain credits relating to a 23 corporation’s execution of a business contract with a 24 small business; amending s. 220.13, F.S.; redefining 25 the term “adjusted federal income” to include the 26 amount of such tax credits; providing an effective 27 date. 28 29 Be It Enacted by the Legislature of the State of Florida: 30 31 Section 1. Section 220.1945, Florida Statutes, is created 32 to read: 33 220.1945 Corporate tax credit for corporations contracting 34 with small businesses.— 35 (1) For the purposes of the credit provided in this 36 section, the term: 37 (a) “Business contract” means a written agreement between a 38 corporation and a small business. 39 (b) “Corporation” means a business that employs 300 or more 40 full-time employees in this state, not including a financial 41 organization as defined in s. 220.15(6) or a bank, savings 42 association, international banking facility, or banking 43 organization as defined in s. 220.62. 44 (c) “Department” means the Department of Economic 45 Opportunity. 46 (d) “Job” means a full-time position as consistent with 47 terms used by the Department of Economic Opportunity and the 48 United States Department of Labor for purposes of unemployment 49 compensation tax administration and employment estimation 50 resulting directly from a business operation in this state. 51 (e) “New employee” means a person who begins a full-time 52 job within a small business but does not include any person who 53 has been employed during the preceding 12 months in a full-time 54 job within the small business. 55 (f)1. “Small business” means a business that employs 25 or 56 fewer full-time employees in the state and 25 or fewer full-time 57 employees outside of the state. 58 2. A business that initially qualifies as a small business 59 under subparagraph 1. remains qualified as a small business if, 60 as a result of the business’s fulfillment of the requirements of 61 subparagraph (3)(c)4., the business employs more than 25 full 62 time employees. 63 (2) Upon an affirmative showing by a corporation and a 64 small business to the satisfaction of the department that the 65 requirements of this section have been met, the corporation is 66 eligible for a credit against its corporate income tax liability 67 under s. 220.11. 68 (3) In order to qualify for the credits provided in this 69 section: 70 (a) A corporation must execute a business contract for the 71 purchase of goods or services with a small business. The terms 72 of the business contract must include, but are not limited to, 73 the following: 74 1. The corporation must pay at least $100,000 to the small 75 business for goods or services within 1 year after the business 76 contract is signed by both the corporation and the small 77 business. 78 2. The small business must hire, within 60 days after the 79 business contract is signed by both the corporation and the 80 small business, at least two new employees for 1 year. 81 (b) The corporation and the small business must be 82 unrelated parties that were not engaged in a contractual 83 business relationship with each other before July 1, 2013. 84 (c) The corporation and the small business must file with 85 the department, within 90 days after the business contract is 86 signed by both the corporation and the small business, an 87 application including, but not limited to, the following: 88 1. A business contract signed by both the corporation and 89 the small business. 90 2. The names, addresses of, and salary or hourly wages 91 paid, to all employees of the small business within the past 92 year. 93 3. The names, addresses of, and salary or hourly wages 94 paid, to any new employees of the small business after the 95 signing of the business contract by both the corporation and the 96 small business. 97 4. Evidence demonstrating to the department that the total 98 number of jobs at the small business grew by at least two after 99 the date the business contract was signed by both the 100 corporation and the small business. 101 (4) The department shall review the initial application 102 and, if necessary, notify the corporation and small business of 103 any omissions and request additional information. An application 104 is complete upon receipt of all requested information. The 105 department shall provisionally certify, within 10 working days, 106 all complete applications containing the information required 107 under this section. A copy of the provisional certification 108 shall be transmitted to the executive director of the Department 109 of Revenue. The department shall also inform the corporation and 110 the small business in writing within 10 working days after the 111 date that the department provisionally certifies an application. 112 (5)(a) Within 60 days after satisfying the terms of the 113 business contract, the corporation and the small business must 114 notify the department, in writing, that: 115 1. All of the conditions required under this section have 116 been met. 117 2. The corporation intends to claim the credit authorized 118 under this section against its corporate income tax liability 119 under s. 220.11 on the first return due after receipt of final 120 approval from the department. 121 (b) It is the responsibility of the corporation and the 122 small business to affirmatively demonstrate to the satisfaction 123 of the department that the conditions of this section have been 124 met. 125 (6)(a) After final certification by the department, the 126 corporation may take a credit against its corporate income tax 127 liability under s. 220.11 equal to 10 percent of the payments 128 made to the small business during the taxable year under the 129 terms of the business contract. 130 (b) A corporation may not claim a tax credit in excess of 131 its corporate income tax liability under s. 220.11. If the 132 credit granted under this section is not fully taken in any 133 single year because of insufficient tax liability on the part of 134 the corporation, the unused amount may not be carried forward or 135 backward. 136 (c) The credits earned under this section may not be sold 137 or transferred. 138 (7) Any corporation that fraudulently claims to be 139 qualified for tax credits under this section commits a 140 misdemeanor of the second degree, punishable as provided in s. 141 775.082 or s. 775.083. In addition, the corporation is 142 administratively liable for repayment of any tax credits 143 fraudulently taken plus a mandatory penalty of 100 percent of 144 the credit plus interest at the rate provided in this chapter. 145 (8) The department and the Department of Revenue may adopt 146 rules to administer this section. 147 Section 2. Subsection (8) of section 220.02, Florida 148 Statutes, is amended to read: 149 220.02 Legislative intent.— 150 (8) It is the intent of the Legislature that credits 151 against either the corporate income tax or the franchise tax be 152 applied in the following order: those enumerated in s. 631.828, 153 those enumerated in s. 220.191, those enumerated in s. 220.181, 154 those enumerated in s. 220.183, those enumerated in s. 220.182, 155 those enumerated in s. 220.1895, those enumerated in s. 220.195, 156 those enumerated in s. 220.184, those enumerated in s. 220.186, 157 those enumerated in s. 220.1845, those enumerated in s. 220.19, 158 those enumerated in s. 220.185, those enumerated in s. 220.1875, 159 those enumerated in s. 220.192, those enumerated in s. 220.193, 160 those enumerated in s. 288.9916, those enumerated in s. 161 220.1899, those enumerated in s. 220.1896, those enumerated in 162 s. 220.194,andthose enumerated in s. 220.196, and those 163 enumerated in s. 220.1945. 164 Section 3. Paragraph (a) of subsection (1) of section 165 220.13, Florida Statutes, is amended to read: 166 220.13 “Adjusted federal income” defined.— 167 (1) The term “adjusted federal income” means an amount 168 equal to the taxpayer’s taxable income as defined in subsection 169 (2), or such taxable income of more than one taxpayer as 170 provided in s. 220.131, for the taxable year, adjusted as 171 follows: 172 (a) Additions.—There shall be added to such taxable income: 173 1. The amount of any tax upon or measured by income, 174 excluding taxes based on gross receipts or revenues, paid or 175 accrued as a liability to the District of Columbia or any state 176 of the United States which is deductible from gross income in 177 the computation of taxable income for the taxable year. 178 2. The amount of interest which is excluded from taxable 179 income under s. 103(a) of the Internal Revenue Code or any other 180 federal law, less the associated expenses disallowed in the 181 computation of taxable income under s. 265 of the Internal 182 Revenue Code or any other law, excluding 60 percent of any 183 amounts included in alternative minimum taxable income, as 184 defined in s. 55(b)(2) of the Internal Revenue Code, if the 185 taxpayer pays tax under s. 220.11(3). 186 3. In the case of a regulated investment company or real 187 estate investment trust, an amount equal to the excess of the 188 net long-term capital gain for the taxable year over the amount 189 of the capital gain dividends attributable to the taxable year. 190 4. That portion of the wages or salaries paid or incurred 191 for the taxable year which is equal to the amount of the credit 192 allowable for the taxable year under s. 220.181. This 193 subparagraph shall expire on the date specified in s. 290.016 194 for the expiration of the Florida Enterprise Zone Act. 195 5. That portion of the ad valorem school taxes paid or 196 incurred for the taxable year which is equal to the amount of 197 the credit allowable for the taxable year under s. 220.182. This 198 subparagraph shall expire on the date specified in s. 290.016 199 for the expiration of the Florida Enterprise Zone Act. 200 6. The amount taken as a credit under s. 220.195 which is 201 deductible from gross income in the computation of taxable 202 income for the taxable year. 203 7. That portion of assessments to fund a guaranty 204 association incurred for the taxable year which is equal to the 205 amount of the credit allowable for the taxable year. 206 8. In the case of a nonprofit corporation which holds a 207 pari-mutuel permit and which is exempt from federal income tax 208 as a farmers’ cooperative, an amount equal to the excess of the 209 gross income attributable to the pari-mutuel operations over the 210 attributable expenses for the taxable year. 211 9. The amount taken as a credit for the taxable year under 212 s. 220.1895. 213 10. Up to nine percent of the eligible basis of any 214 designated project which is equal to the credit allowable for 215 the taxable year under s. 220.185. 216 11. The amount taken as a credit for the taxable year under 217 s. 220.1875. The addition in this subparagraph is intended to 218 ensure that the same amount is not allowed for the tax purposes 219 of this state as both a deduction from income and a credit 220 against the tax. This addition is not intended to result in 221 adding the same expense back to income more than once. 222 12. The amount taken as a credit for the taxable year under 223 s. 220.192. 224 13. The amount taken as a credit for the taxable year under 225 s. 220.193. 226 14. Any portion of a qualified investment, as defined in s. 227 288.9913, which is claimed as a deduction by the taxpayer and 228 taken as a credit against income tax pursuant to s. 288.9916. 229 15. The costs to acquire a tax credit pursuant to s. 230 288.1254(5) that are deducted from or otherwise reduce federal 231 taxable income for the taxable year. 232 16. The amount taken as a credit for the taxable year 233 pursuant to s. 220.194. 234 17. The amount taken as a credit for the taxable year under 235 s. 220.196. The addition in this subparagraph is intended to 236 ensure that the same amount is not allowed for the tax purposes 237 of this state as both a deduction from income and a credit 238 against the tax. The addition is not intended to result in 239 adding the same expense back to income more than once. 240 18. The amount taken as a credit for the taxable year 241 pursuant to s. 220.1945. 242 Section 4. This act shall take effect January 1, 2014.