The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Military and Veterans Affairs, Space, and Domestic Security
BILL: CS\SB 952
INTRODUCER: Committee on Military and Veterans Affairs, Space, and Domestic Security and Senator
Gruters
SUBJECT: Taxation
DATE: January 25, 2022
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Lloyd Caldwell MS Fav/CS
2. FT
3. AP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 952 creates a documentary state tax exemption for federal loans made in response to a
state of emergency declared by executive order or proclamation of the Governor. The bill also
increases the combined amount of tax credits which may be awarded to qualified businesses for
research and development under s. 220.196, F.S., from $9 million to $50 million under any
calendar year, and provides a process for the distribution of those tax credits for the 2021
calendar year.
CS/SB 952 shall take effect upon becoming a law.
II. Present Situation:
Documentary Stamp Tax
Florida levies a documentary stamp tax on certain documents, which is comprised of two taxes
imposed on different bases at varying rates. The tax on deeds and other documents related to real
property is 70 cents per $100,
1
and the tax on bonds, debentures, certificates of indebtedness,
promissory notes, nonnegotiable notes, and other written obligations to pay money is 35 cents
1
Section 201.02(1)(a), F.S.
REVISED: BILL: CS\SB 952 Page 2
per $100.
2,
3
Documentary stamp taxes levied on promissory notes, nonnegotiable notes, and
written obligations may not exceed $2,450.
4
Chapter 201, F.S., provides that certain transactions are exempt from the documentary stamp tax;
notably, s. 201.25, F.S., which exempts loans made by the Small Business Emergency Bridge
Loan Program in response to a disaster for which the Governor declares a state of emergency and
any loan made by the Agricultural Economic Development Program pursuant to s. 570.82, F.S.
Federal CARES Act
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on
March 27, 2020, in response to the COVID-19 pandemic. The CARES Act established, among
other programs, the Paycheck Protection Program (PPP), which expanded the scope of both the
businesses eligible for – and allowable uses of – loans made under section 7(a) of the Small
Business Act.
5
In addition to businesses which had already been eligible for Small Business
Administration (SBA) loans, eligibility was expanded to businesses, nonprofits, veterans’
organizations, and tribal businesses with 500 or fewer employees or that meet the size standards
based on the business’s NAICS code.
6
COVID-19 State of Emergency
On April 6, 2020, Governor DeSantis issued Executive Order 20-95, suspending the collection of
documentary stamp taxes levied on notes and other written obligations made under Title I of the
federal CARES Act. The suspension remained in effect until the expiration of Executive Order
20-52 on May 3, 2021 when the Governor issued Executive Orders 20-101 and 102 ending the
state of emergency related to COVID-19.
7,8
Federal Tax Credit
The U.S. Research and Experimentation Tax Credit
9
was created in 1981 as part of the
Economic Recovery Tax Act, a comprehensive package of initiatives designed to boost U.S.
business competitiveness and encourage investment and savings by American taxpayers during a
period of economic recession.
10
In 2015, the Protecting Americans from Tax Hikes (PATH) Act
2
Section 201.07, F.S.
3
Section 201.08(1)(a), F.S.
4
Id.
5
Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, § 1102, 134 Stat. 286 (2020).
6
Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, § 1102, 134 Stat. 288 (2020).
7
Section 252.36(2), F.S., provides that states of emergency may not continue for more than 60 days unless renewed by the
Governor.
8
Governor Ron DeSantis, Fla. Exec. Orders No. 21-101 and 102 (May 3, 2021), available at https://www.flgov.com/2021-
executive-orders/ (last visited January 5, 2022).
9
The U.S. Research and Experimentation Tax Credit is also known as the Research and Development Tax Credit, 26 U.S.C
§41, Credit for increasing research activities.
10
Francisco Moris, The U.S. Research and Experimentation Tax Credit in the 1990s (July 2005), National Science
Foundation Report, available at https://wayback.archive-
it.org/5902/20150627200929/http://www.nsf.gov/statistics/infbrief/nsf05316/ (last visited on January 5, 2022). BILL: CS\SB 952 Page 3
permanently extended the research and experimentation tax credit (also known as the research
and development tax credit or R&D) after 16 temporary extensions.
11
In September 2021, the Internal Revenue Service (IRS) issued a Memorandum containing new
guidance for taxpayers who apply for a refund claim for a research credit. This memorandum
describes new requirements for increased documentation and more detailed information,
including a declaration under the penalty of perjury verifying that the information and facts
provided by the taxpayer are accurate.
12
These changes remained in a grace period until January
10, 2022, and then transitioned to a one-year transition period during which the IRS provides
taxpayers 30 days to perfect research credit claims for refund prior to a final determination by the
IRS.
13
To qualify as a valid research credit claim request, the taxpayer at a minimum must:
Identify all the business components to which the I.R.C. §41 research credit claim relates for
that year.
For each business component,
o Identify all research activities performed;
o Identify all individuals who performed each research activity; and
o Identify all the information each individual sought to discover.
Provide the total qualified employee wage expenses, total qualified supply expenses, and
total qualified contract research expenses for the claim year.
14
Florida Tax Credit
Section 220.196, F.S., authorizes a R&D
tax credit against state corporate income
taxes for certain businesses with qualified
research expenses.
15
Under the federal
definition, a qualified research expense
includes in-house research expenses and
contract research expenses, including any
wages paid or incurred to employees,
supplies used in the conduct of qualified
research, and any amounts paid or
incurred to another person for the right to
use computers in the conduct of qualified
research.
16
11
U.S. Department of the Treasury, Office of Tax Analysis, Research and Experimentation (R&E) Credit, available at
https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/RE-Credit.pdf (last visited January 6, 2022).
12
Internal Revenue Service, Office of the Chief Counsel, Memorandum Relating to I.R.C. § 41 Research Credit Refund
Claims (September 17, 2021), available at https://www.irs.gov/pub/irs-lafa/20214101f.pdf (last visited January 5, 2022).
13
Internal Revenue Service, Office of the Chief Counsel, Memorandum Relating to I.R.C. § 41 Research Credit Refund
Claims (September 17, 2021), available at https://www.irs.gov/pub/irs-lafa/20214101f.pdf (last visited January 5, 2022).
14
Internal Revenue Service, Office of the Chief Counsel, Memorandum Relating to I.R.C. § 41 Research Credit Refund
Claims (September 17, 2021), available at https://www.irs.gov/pub/irs-lafa/20214101f.pdf (last visited January 5, 2022).
15
Section 220.196(1)(c), F.S., defines “qualified research expenses” as research expenses qualifying for the credit under
federal law for in house research expenses incurred in Florida or contract research expenses incurred in Florida.
16
See U.S.C. §41(b). Credit for increasing qualified research; qualified research expenses.
Figure 1: Data source: Florida Department of Revenue Annual Allocation
Reports, available at:
https://floridarevenue.com/taxes/Documents/flCitRDCredit.pdf
Figure 1: Data source: Florida Department of Revenue Annual Allocation
Reports, available at:
https://floridarevenue.com/taxes/Documents/flCitRDCredit.pdf BILL: CS\SB 952 Page 4
A business is eligible for the tax credit if it:
Has qualified research expenses in Florida in the taxable year exceeding the base amount;
17
Claims, and is allowed, a research credit for such qualified expenses under federal law for the
same taxable year; and
Is in a qualified target industry,
18
specifically manufacturing, life sciences, information
technology, aviation and aerospace, homeland security and defense, cloud information
technology, marine sciences, materials sciences, or nanotechnology.
19
The tax credit is 10 percent of the difference between the current tax year’s R&D expenditures in
Florida and the average of R&D expenditures over the previous four tax years. However, if the
business has existed fewer than four years, then the credit amount is reduced by 25 percent for
each year the business or predecessor corporation did not exist.
20
The state tax credit taken in any
taxable year may not exceed 50 percent of the company’s remaining net corporate income tax
liability under ch. 220, F.S., after all other credits to which the business is entitled have been
applied. Any unused credits may be carried forward by the business for up to five years
following the year in which the qualified research expenses were incurred.
21
Currently, the maximum amount of R&D credits that may be approved by the Department of
Revenue (DOR) during any calendar year is $9 million. Applications for the credit may be filed
with the DOR on or after March 20 and before March 27 for qualified research expenses incurred
within the preceding calendar year. If the total amount of credits applied for exceeds the annual
cap, credits are allocated on a prorated basis.
22
Eligible taxpayers are notified of the amount of
credit allocated to them and the year for which the credit may be claimed. The chart below
illustrates the number of applications received and approved by the DOR since program
inception.
23
Since program inception, funding requests have annually exceeded the amount of credit available
to be allocated as the chart below illustrates. The statutory cap has been more than $9 million
twice: $16.5 million during the 2017 calendar year and $23 million in the first program year.
Except for the initial year when funds were distributed on a first come, first served basis, all
qualified applicants receive a pro-rated amount of their funding request if the application is
approved.
24
Qualified Target Industry Businesses
17
“Base amount” means the average of the business’ qualified research expenses in Florida allowed under 26 U.S.C. s. 41 for
the preceding 4 taxable years. Chapter 220.196(1)(a), F.S.
18
The Department of Economic Opportunity (DEO) certifies whether a business is a qualified target industry business,
pursuant to s. 220.196(2)(a)3., F.S.
19
See s. 220.196(2)(a), F.S.
20
See s. 220.196(2)(b), F.S.
21
See s. 220.196(2)(d), F.S.
22
See s. 220.196(2)(e), F.S.
23
Department of Revenue, Research and Development Tax Credit for Florida Corporate Income Tax (2015-2021),
https://floridarevenue.com/taxes/Documents/flCitRDCredit.pdf (last visited January 6, 2022).
24
Department of Revenue, Research and Development Tax Credit for Florida Corporate Income Tax (2015-2021),
https://floridarevenue.com/taxes/Documents/flCitRDCredit.pdf (last visited January 6, 2022). BILL: CS\SB 952 Page 5
The qualified target industry program is used to
identify businesses that are eligible for tax
refunds and which can create jobs with higher
than average wages in industries that are
expected to have a positive economic impact.
25
Target industry businesses are defined in s.
288.106, F.S., as a corporate headquarters
business or any business that is engaged in one of
the target industries identified pursuant to criteria
developed by DEO in consultation with
Enterprise Florida, Inc. (EFI).
26
The criteria
includes future growth, stability, high wage, market and resource independence, industrial base
diversification and strengthening, and positive economic impact.
27
EFI lists the recognized
qualified target industries as manufacturing, corporate headquarters, research and development,
global logistics, cleantech, life sciences, financial and professional services, aviation and
aerospace, homeland security and defense, infotech, emerging technologies, and other
manufacturing.
28
During the 2019 calendar year, DEO reported 76 executed agreements effective
for the 2019-2020 fiscal year. These agreements had a projected capital investment of over $2.2
billion and an average contracted annual wage of $65,176.
29
III. Effect of Proposed Changes:
Section 1 amends s. 201.25, F.S., to exempt any loans relating to a state of emergency declared
through either an executive order or a proclamation from the Governor pursuant to s. 252.36,
F.S., from all taxes imposed under ch. 201, F.S.
Section 2 amends paragraph (e) of subsection (2) of section 220.196, F.S., to increase the total
amount of annual credits available each calendar year from $9 million to $50 million. Obsolete
language relating to the 2018 calendar year is removed.
Section 3 provides that application of the changes contained in CS/SB 952 are applicable to s.
220.196. F.S., for the allocation of credits for expenses incurred in the 2021 calendar year.
Section 4 provides the act shall take effect upon becoming a law.
25
Florida Department of Economic Opportunity and Enterprise Florida, 2020 Incentives Report, p. 12, available at
https://floridajobs.org/docs/default-source/reports-and-legislation/2019-2020-annual-incentives-report-
final.pdf?sfvrsn=af674ab0_2 (last visited January 6, 2022).
26
See s. 288.106(2)(n), F.S.
27
See s. 288.106(2)(q), F.S.
28
Florida Department of Economic Opportunity and Enterprise Florida, 2020 Incentives Report, p. 12, available at
https://floridajobs.org/docs/default-source/reports-and-legislation/2019-2020-annual-incentives-report-
final.pdf?sfvrsn=af674ab0_2 (last visited January 6, 2022).
29
Florida Department of Economic Opportunity and Enterprise Florida, 2020 Incentives Report, p. 13, available at
https://floridajobs.org/docs/default-source/reports-and-legislation/2019-2020-annual-incentives-report-
final.pdf?sfvrsn=af674ab0_2 (last visited January 6, 2022). BILL: CS\SB 952 Page 6
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
CS/SB 952 exempts from collection all taxes imposed under ch. 201, F.S., for any federal
loans relating to a state of emergency which has been declared by executive order or by
proclamation of the Governor pursuant to s. 282.36, F.S. Currently, only two programs
are exempt from taxes imposed by Chapter 201:
Loans made by the Florida Small Business Emergency Bridge Loan Program in
response to a disaster that results in a state of emergency or proclamation of the
Governor; or
Loans made by the Agricultural Economic Development Program, pursuant to s.
570.82, F.S.
The expansion of this exemption would mean an indeterminate loss of additional tax
income relating to the fees that would have otherwise been charged under ch. 201, F.S.,
for these transactions. The DOR did not provide an estimate of a fiscal impact noting that
such an impact would be determined by the Revenue Estimating Conference which has
not yet reviewed this proposal.
30
B. Private Sector Impact:
For eligible taxpayers, the proposed amendments to ch. 201, F.S., would provide
additional mechanisms for tax relief on federal loans during a state of emergency.
30
Florida Department of Revenue, Senate Bill 952 Fiscal Analysis (Nov. 29, 2021)(on file with Senate Committee on
Military Affairs, Veteran Affairs, Space, and Domestic Security). BILL: CS\SB 952 Page 7
Savings on loan costs may assist taxpayers during a difficult financial time and allow
taxpayers, especially those directly impacted by a disaster, to stretch limited financial
resources. The number of taxpayers or private commercial entities that may be impacted
is unknown as is the overall fiscal impact of the bill. The bill likely has an indeterminate
negative fiscal impact to the state based on the number of declarations in any given year,
the breadth of those declarations from a geographic standpoint, the specific areas
involved in those declarations, the length of those declarations or proclamations, and
ultimately the number of taxpayers who utilize the provision.
C. Government Sector Impact:
Governmental entities which now receive funds from federal loan transactions would
likely experience an indeterminate loss of revenue during a state of emergency time
period.
The bill increases the total amount of tax credits to be allocated each calendar year;
however, the funds for those additional tax credits are not incorporated for the 2022-2023
fiscal year or any outgoing fiscal years.
VI. Technical Deficiencies:
None.
VII. Related Issues:
The DOR’s original analysis of SB 952 said that some federal loans may require mortgages and
the current bill language maintains that language and does not contemplate that scenario.
31
As a
result, any required mortgage that may arise out of a federal loan may not be exempt under the
bill.
32
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 201.25 and 220.196,
F.S.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
The CS/SB 952 amends the effective date from July 1, 2022 to upon becoming law to
address a technical issue which impacts implementation during the current state fiscal
31
See United States Department of Agriculture, Farm Loan Information Chart (March 2020),
https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/FactSheets/farm_loan_info_chart-factsheet.pdf (last visited
January 6, 2022).
32
Florida Department of Revenue, Senate Bill 952 Fiscal Analysis (Nov. 29, 2021)(on file with Senate Committee on
Military Affairs, Veterans Affairs, Space, and Domestic Security). BILL: CS\SB 952 Page 8
year. With the amendment made, dissemination of credits in the 2021-2022 fiscal year is
clarified.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.