Florida Senate - 2020                                    SB 1268
       
       
        
       By Senator Gruters
       
       
       
       
       
       23-01429A-20                                          20201268__
    1                        A bill to be entitled                      
    2         An act relating to the capital investment tax credit;
    3         amending s. 220.191, F.S.; redefining terms; defining
    4         the term “intellectual property”; providing a credit
    5         against the corporate income tax, the sales and use
    6         tax, or a stated combination of the two taxes to a
    7         qualifying business that establishes a qualifying
    8         project for the creation of intellectual property
    9         which meets certain capital investment criteria;
   10         specifying the calculation of the credit; authorizing
   11         the carryover or transfer of credits, subject to
   12         certain conditions; conforming provisions to changes
   13         made by the act; amending s. 288.1089, F.S.; revising
   14         the definition of the term “cumulative investment” to
   15         conform to changes made by the act; providing an
   16         effective date.
   17          
   18  Be It Enacted by the Legislature of the State of Florida:
   19  
   20         Section 1. Section 220.191, Florida Statutes, is amended to
   21  read:
   22         220.191 Capital investment tax credit.—
   23         (1) DEFINITIONS.—As used in For purposes of this section,
   24  the term:
   25         (a) “Commencement of operations” means the beginning of
   26  active operations by a qualifying business of the principal
   27  function for which a qualifying project was constructed.
   28         (b) “Cumulative capital investment” means the total capital
   29  investment in land, buildings, and equipment, and intellectual
   30  property made in connection with a qualifying project during the
   31  period from the beginning of construction or the start date of
   32  the project to the commencement of operations or the completion
   33  of the project, as applicable.
   34         (c) “Eligible capital costs” means all expenses incurred by
   35  a qualifying business in connection with the acquisition,
   36  construction, installation, and equipping, and development of a
   37  qualifying project during the period from the beginning of
   38  construction or the start date of the project to the
   39  commencement of operations or the completion of the project, as
   40  applicable, including, but not limited to:
   41         1. The costs of acquiring, constructing, installing,
   42  equipping, and financing a qualifying project, including all
   43  obligations incurred for labor and obligations to contractors,
   44  subcontractors, builders, and materialmen.
   45         2. The costs of acquiring land or rights to land and any
   46  cost incidental thereto, including recording fees.
   47         3. The costs of architectural and engineering services,
   48  including test borings, surveys, estimates, plans and
   49  specifications, preliminary investigations, environmental
   50  mitigation, and supervision of construction, as well as the
   51  performance of all duties required by or consequent to the
   52  acquisition, construction, installation, and equipping of a
   53  qualifying project.
   54         4. The costs associated with the installation of fixtures
   55  and equipment; surveys, including archaeological and
   56  environmental surveys; site tests and inspections; subsurface
   57  site work and excavation; removal of structures, roadways, and
   58  other surface obstructions; filling, grading, paving, and
   59  provisions for drainage, storm water retention, and installation
   60  of utilities, including water, sewer, sewage treatment, gas,
   61  electricity, communications, and similar facilities; and offsite
   62  construction of utility extensions to the boundaries of the
   63  property.
   64         5.For the development of intellectual property, the wages,
   65  salaries, or other compensation paid to legal residents of this
   66  state and the costs of newly purchased computer software and
   67  hardware unique to the project, including servers, data
   68  processing, and visualization technologies, which are located
   69  and used exclusively in this state for the project.
   70  
   71  Eligible capital costs shall not include the cost of any
   72  property previously owned or leased by the qualifying business.
   73         (d) “Income generated by or arising out of the qualifying
   74  project” means the qualifying project’s annual taxable income as
   75  determined by generally accepted accounting principles and under
   76  s. 220.13.
   77         (e) “Intellectual property” means a copyrightable project
   78  for which the eligible capital costs are principally paid
   79  directly or indirectly for the creation of the project. As used
   80  in this paragraph, the term “copyrightable project” includes,
   81  but is not limited to, a copyrightable software or multimedia
   82  application and its expansion content made available to an end
   83  user, internal development platforms that support the production
   84  of multiple applications, cloud-based services that support the
   85  functionality of multiple applications, and copyrighted projects
   86  registered with the United States Copyright Office which include
   87  digital visualization and sound synchronization technologies.
   88  The project may not be intended for distribution solely inside
   89  this state, and at least 75 percent of forecasted revenues for
   90  the project must be from outside this state.
   91         (f) “Jobs” means full-time equivalent positions, as that
   92  term is consistent with terms used by the Department of Economic
   93  Opportunity and the United States Department of Labor for
   94  purposes of reemployment assistance tax administration and
   95  employment estimation, resulting directly from a project in this
   96  state. The term does not include temporary construction jobs
   97  involved in the construction of the project facility.
   98         (g)(f) “Qualifying business” means a business which
   99  establishes a qualifying project in this state and which is
  100  certified by the Department of Economic Opportunity to receive
  101  tax credits pursuant to this section.
  102         (h)(g) “Qualifying project” means a facility or project in
  103  this state meeting one or more of the following criteria:
  104         1. A new or expanding facility in this state which creates
  105  at least 100 new jobs in this state and is in one of the high
  106  impact sectors identified by Enterprise Florida, Inc., and
  107  certified by the Department of Economic Opportunity pursuant to
  108  s. 288.108(6), including, but not limited to, aviation,
  109  aerospace, automotive, and silicon technology industries.
  110  However, between July 1, 2011, and June 30, 2014, the
  111  requirement that a facility be in a high-impact sector is waived
  112  for any otherwise eligible business from another state which
  113  locates all or a portion of its business to a Disproportionally
  114  Affected County. For purposes of this section, the term
  115  “Disproportionally Affected County” means Bay County, Escambia
  116  County, Franklin County, Gulf County, Okaloosa County, Santa
  117  Rosa County, Walton County, or Wakulla County.
  118         2. A new or expanded facility in this state which is
  119  engaged in a target industry designated pursuant to the
  120  procedure specified in s. 288.106(2) and which is induced by
  121  this credit to create or retain at least 1,000 jobs in this
  122  state, provided that at least 100 of those jobs are new, pay an
  123  annual average wage of at least 130 percent of the average
  124  private sector wage in the area as defined in s. 288.106(2), and
  125  make a cumulative capital investment of at least $100 million.
  126  Jobs may be considered retained only if there is significant
  127  evidence that the loss of jobs is imminent. Notwithstanding
  128  subsection (2), annual credits against the tax imposed by this
  129  chapter may not exceed 50 percent of the increased annual
  130  corporate income tax liability or the premium tax liability
  131  generated by or arising out of a project qualifying under this
  132  subparagraph. A facility that qualifies under this subparagraph
  133  for an annual credit against the tax imposed by this chapter may
  134  take the tax credit for a period not to exceed 5 years.
  135         3. A new or expanded headquarters facility in this state
  136  which locates in an enterprise zone and brownfield area and is
  137  induced by this credit to create at least 1,500 jobs which on
  138  average pay at least 200 percent of the statewide average annual
  139  private sector wage, as published by the Department of Economic
  140  Opportunity, and which new or expanded headquarters facility
  141  makes a cumulative capital investment in this state of at least
  142  $250 million.
  143         4.For the creation of intellectual property, a qualifying
  144  project may be made up of one or more projects with different
  145  start and completion dates. The annual average wage of the
  146  project jobs in this state must be at least 150 percent of the
  147  average private sector wage in the area as defined in s.
  148  288.106(2)(c).
  149         (2)(a) An annual credit against the tax imposed by this
  150  chapter shall be granted to any qualifying business in an amount
  151  equal to 5 percent of the eligible capital costs generated by a
  152  qualifying project, for a period not to exceed 20 years
  153  beginning with the commencement of operations of the project.
  154  Unless assigned as described in this subsection, the tax credit
  155  shall be granted against only the corporate income tax liability
  156  or the premium tax liability generated by or arising out of the
  157  qualifying project, and the sum of all tax credits provided
  158  pursuant to this section shall not exceed 100 percent of the
  159  eligible capital costs of the project. In no event may any
  160  credit granted under this section be carried forward or backward
  161  by any qualifying business with respect to a subsequent or prior
  162  year. The annual tax credit granted under this section shall not
  163  exceed the following percentages of the annual corporate income
  164  tax liability or the premium tax liability generated by or
  165  arising out of a qualifying project:
  166         1. One hundred percent for a qualifying project which
  167  results in a cumulative capital investment of at least $100
  168  million.
  169         2. Seventy-five percent for a qualifying project which
  170  results in a cumulative capital investment of at least $50
  171  million but less than $100 million.
  172         3. Fifty percent for a qualifying project which results in
  173  a cumulative capital investment of at least $25 million but less
  174  than $50 million.
  175         (b) A qualifying project which results in a cumulative
  176  capital investment of less than $25 million is not eligible for
  177  the capital investment tax credit. An insurance company claiming
  178  a credit against premium tax liability under this program shall
  179  not be required to pay any additional retaliatory tax levied
  180  pursuant to s. 624.5091 as a result of claiming such credit.
  181  Because credits under this section are available to an insurance
  182  company, s. 624.5091 does not limit such credit in any manner.
  183         (c) A qualifying business that establishes a qualifying
  184  project that includes locating a new solar panel manufacturing
  185  facility in this state that generates a minimum of 400 jobs
  186  within 6 months after commencement of operations with an average
  187  salary of at least $50,000 may assign or transfer the annual
  188  credit, or any portion thereof, granted under this section to
  189  any other business. However, the amount of the tax credit that
  190  may be transferred in any year shall be the lesser of the
  191  qualifying business’s state corporate income tax liability for
  192  that year, as limited by the percentages applicable under
  193  paragraph (a) and as calculated prior to taking any credit
  194  pursuant to this section, or the credit amount granted for that
  195  year. A business receiving the transferred or assigned credits
  196  may use the credits only in the year received, and the credits
  197  may not be carried forward or backward. To perfect the transfer,
  198  the transferor shall provide the department with a written
  199  transfer statement notifying the department of the transferor’s
  200  intent to transfer the tax credits to the transferee; the date
  201  the transfer is effective; the transferee’s name, address, and
  202  federal taxpayer identification number; the tax period; and the
  203  amount of tax credits to be transferred. The department shall,
  204  upon receipt of a transfer statement conforming to the
  205  requirements of this paragraph, provide the transferee with a
  206  certificate reflecting the tax credit amounts transferred. A
  207  copy of the certificate must be attached to each tax return for
  208  which the transferee seeks to apply such tax credits.
  209         (d) If the credit granted under subparagraph (a)1. is not
  210  fully used in any one year because of insufficient tax liability
  211  on the part of the qualifying business, the unused amounts may
  212  be used in any one year or years beginning with the 21st year
  213  after the commencement of operations of the project and ending
  214  the 30th year after the commencement of operations of the
  215  project.
  216         (3)(a) Notwithstanding subsection (2), a credit against the
  217  tax imposed by this chapter, against state taxes collected or
  218  accrued under chapter 212, or against a stated combination of
  219  the two taxes shall be granted to a qualifying business that
  220  establishes a qualifying project pursuant to subparagraph
  221  (1)(h)4. for which the cumulative capital investment of one or
  222  more projects is an aggregate of at least $50 million per year
  223  for 3 years, and the capital investment of each individual
  224  project is at least $3.75 million. The tax credit shall be
  225  granted in an amount equal to 20 percent of the eligible capital
  226  costs generated by the qualifying project. The tax credit shall
  227  be granted against the tax liability of the qualifying business.
  228         (b)If the credit granted under this subsection is not
  229  fully used in 1 year because of insufficient tax liability on
  230  the part of the qualifying business, the unused amounts may be
  231  transferred or used in any one year or years beginning with the
  232  year of the completion date of the project and ending the 9th
  233  year after the completion date of the project. A business
  234  receiving the transferred credits may use the credits only in
  235  the year received, and the credits may not be carried forward or
  236  backward. A transfer must be perfected in accordance with the
  237  requirements of paragraph (2)(c).
  238         (4)(a) Notwithstanding subsection (2), an annual credit
  239  against the tax imposed by this chapter shall be granted to a
  240  qualifying business which establishes a qualifying project
  241  pursuant to subparagraph (1)(h)3. (1)(g)3., in an amount equal
  242  to the lesser of $15 million or 5 percent of the eligible
  243  capital costs made in connection with a qualifying project, for
  244  a period not to exceed 20 years beginning with the commencement
  245  of operations of the project. The tax credit shall be granted
  246  against the corporate income tax liability of the qualifying
  247  business and as further provided in paragraph (c). The total tax
  248  credit provided pursuant to this subsection shall be equal to no
  249  more than 100 percent of the eligible capital costs of the
  250  qualifying project.
  251         (b) If the credit granted under this subsection is not
  252  fully used in any one year because of insufficient tax liability
  253  on the part of the qualifying business, the unused amount may be
  254  carried forward for a period not to exceed 20 years after the
  255  commencement of operations of the project. The carryover credit
  256  may be used in a subsequent year when the tax imposed by this
  257  chapter for that year exceeds the credit for which the
  258  qualifying business is eligible in that year under this
  259  subsection after applying the other credits and unused
  260  carryovers in the order provided by s. 220.02(8).
  261         (c) The credit granted under this subsection may be used in
  262  whole or in part by the qualifying business or any corporation
  263  that is either a member of that qualifying business’s affiliated
  264  group of corporations, is a related entity taxable as a
  265  cooperative under subchapter T of the Internal Revenue Code, or,
  266  if the qualifying business is an entity taxable as a cooperative
  267  under subchapter T of the Internal Revenue Code, is related to
  268  the qualifying business. Any entity related to the qualifying
  269  business may continue to file as a member of a Florida-nexus
  270  consolidated group pursuant to a prior election made under s.
  271  220.131(1), Florida Statutes (1985), even if the parent of the
  272  group changes due to a direct or indirect acquisition of the
  273  former common parent of the group. Any credit can be used by any
  274  of the affiliated companies or related entities referenced in
  275  this paragraph to the same extent as it could have been used by
  276  the qualifying business. However, any such use shall not operate
  277  to increase the amount of the credit or extend the period within
  278  which the credit must be used.
  279         (5)(4) Prior to receiving tax credits pursuant to this
  280  section, a qualifying business must achieve and maintain the
  281  minimum employment goals beginning with the commencement of
  282  operations or the completion date of at a qualifying project and
  283  continuing each year thereafter during which tax credits are
  284  available pursuant to this section.
  285         (6)(5) Applications shall be reviewed and certified
  286  pursuant to s. 288.061. The Department of Economic Opportunity,
  287  upon a recommendation by Enterprise Florida, Inc., shall first
  288  certify a business as eligible to receive tax credits pursuant
  289  to this section prior to the commencement of operations or the
  290  completion date of a qualifying project, and such certification
  291  shall be transmitted to the Department of Revenue. Upon receipt
  292  of the certification, the Department of Revenue shall enter into
  293  a written agreement with the qualifying business specifying, at
  294  a minimum, the method by which income generated by or arising
  295  out of the qualifying project will be determined.
  296         (7)(6) The Department of Economic Opportunity, in
  297  consultation with Enterprise Florida, Inc., is authorized to
  298  develop the necessary guidelines and application materials for
  299  the certification process described in subsection (6) (5).
  300         (8)(7) It shall be the responsibility of the qualifying
  301  business to affirmatively demonstrate to the satisfaction of the
  302  Department of Revenue that such business meets the job creation
  303  and capital investment requirements of this section.
  304         (9)(8) The Department of Revenue may specify by rule the
  305  methods by which a project’s pro forma annual taxable income is
  306  determined.
  307         Section 2. Paragraph (d) of subsection (2) of section
  308  288.1089, Florida Statutes, is amended to read:
  309         288.1089 Innovation Incentive Program.—
  310         (2) As used in this section, the term:
  311         (d) “Cumulative investment” means cumulative capital
  312  investment and all eligible capital costs, as defined in former
  313  s. 220.191, Florida Statutes 2019.
  314         Section 3. This act shall take effect upon becoming a law.