Florida Senate - 2022 SB 1878 By Senator Gruters 23-00592B-22 20221878__ 1 A bill to be entitled 2 An act relating to the capital investment tax credit; 3 amending s. 220.191, F.S.; defining and redefining 4 terms; providing a credit against the corporate income 5 tax, the sales and use tax, or a stated combination of 6 the two taxes to a qualifying business that 7 establishes a qualifying project for the creation of 8 intellectual property which meets a certain capital 9 investment threshold; specifying the calculation of 10 the credit; authorizing use of the credit or portions 11 of the credit by the business or members of its 12 affiliated group of corporations; authorizing use of 13 the credit within a certain timeframe; requiring the 14 department to grant credits within a certain timeframe 15 after costs are certified by the Department of 16 Economic Opportunity; providing for revocation and 17 rescindment of credits under certain circumstances; 18 conforming provisions to changes made by the act; 19 amending s. 288.1089, F.S.; revising the definition of 20 the term cumulative investment; providing 21 applicability; providing an effective date. 22 23 Be It Enacted by the Legislature of the State of Florida: 24 25 Section 1.Section 220.191, Florida Statutes, is amended to 26 read: 27 220.191Capital investment tax credit. 28 (1)DEFINITIONS.As used in For purposes of this section, 29 the term: 30 (a)Commencement of operations means the beginning of 31 active operations by a qualifying business of the principal 32 function for which a qualifying project was constructed. 33 (b)Cumulative capital investment means the total capital 34 investment in land, buildings, and equipment made in connection 35 with a qualifying project during the period from the beginning 36 of construction of the project to the commencement of 37 operations. 38 (c)Cumulative intellectual property investment means the 39 total investment for the development of intellectual property 40 during the period from the start date of the project to the 41 completion of the project in buildings or equipment; in wages, 42 salaries, or other compensation paid to employees, including 43 amounts paid through an employee leasing company; and any 44 employer-paid taxes and benefits, regardless of location. 45 (d)Direct production costs means direct expenses related 46 to the preproduction, development or filming, and postproduction 47 of intellectual property. The term does not include the 48 distribution and marketing of intellectual property. 49 (e)1.Eligible capital costs means all expenses incurred 50 by a qualifying business in connection with: 51 a.The acquisition, construction, installation, and 52 equipping of a qualifying project during the period from the 53 beginning of construction of the project to the commencement of 54 operations; or 55 b.A qualifying project for the development or creation of 56 intellectual property during the period from the start date of 57 the project to the completion of the project. 58 2.The term includes, including, but is not limited to: 59 a.1.The costs of acquiring, constructing, installing, 60 equipping, and financing a qualifying project, including all 61 obligations incurred for labor and obligations to contractors, 62 subcontractors, builders, and materialmen. 63 b.2.The costs of acquiring land or rights to land and any 64 cost incidental thereto, including recording fees. 65 c.3.The costs of architectural and engineering services, 66 including test borings, surveys, estimates, plans and 67 specifications, preliminary investigations, environmental 68 mitigation, and supervision of construction, as well as the 69 performance of all duties required by or consequent to the 70 acquisition, construction, installation, and equipping of a 71 qualifying project. 72 d.4.The costs associated with the installation of fixtures 73 and equipment; surveys, including archaeological and 74 environmental surveys; site tests and inspections; subsurface 75 site work and excavation; removal of structures, roadways, and 76 other surface obstructions; filling, grading, paving, and 77 provisions for drainage, storm water retention, and installation 78 of utilities, including water, sewer, sewage treatment, gas, 79 electricity, communications, and similar facilities; and offsite 80 construction of utility extensions to the boundaries of the 81 property. 82 83 Eligible capital costs do shall not include the cost of any 84 property previously owned or leased by the qualifying business. 85 (f)Employer-paid taxes and benefits includes social 86 security tax; Medicare tax; federal unemployment and state 87 reemployment assistance taxes; workers compensation premiums 88 and benefits; vacation pay, holiday pay, and sick pay; payroll 89 handling fees; mileage; car allowances; housing allowances; and 90 per diem. 91 (g)(d)Income generated by or arising out of the 92 qualifying project means the qualifying projects annual 93 taxable income as determined by generally accepted accounting 94 principles and under s. 220.13. If a qualifying business has 95 more than one qualifying project pursuant to subparagraph 96 (2)(a)1., the term means the annual taxable income as determined 97 by generally accepted accounting principles and under s. 220.13 98 for each qualifying project, aggregated during the years that 99 more than one qualifying project is allowed to claim credits. 100 (h)(e)Intellectual property means a qualifying 101 copyrightable project for which the cumulative intellectual 102 property investment is principally paid directly or indirectly 103 for the creation of the project. 104 (i)Jobs means full-time equivalent positions, as that 105 term is consistent with terms used by the Department of Economic 106 Opportunity and the United States Department of Labor for 107 purposes of reemployment assistance tax administration and 108 employment estimation, resulting directly from a project in this 109 state. The term does not include temporary construction jobs 110 involved in the construction of the project facility. 111 (j)(f)Qualifying business means a business which 112 establishes a qualifying project in this state and which is 113 certified by the Department of Economic Opportunity to receive 114 tax credits pursuant to this section. 115 (k)Qualifying copyrightable project means television or 116 streaming video projects that include only the following 117 content: series, pilots, commercial advertisements, music 118 videos, music, animation, interactive entertainment, or sound 119 recording projects used in series or pilots. The term is limited 120 to projects recorded in this state, in whole or in part. The 121 term includes projects provided for distribution using delivery 122 systems that include film, videotape, computer disc, laser disc, 123 and any element of the digital domain from which the program is 124 viewed or reproduced and which is intended for licensing for 125 exhibition by individual television stations, groups of 126 stations, networks, cable television stations, public 127 broadcasting stations, corporations, live venues, the Internet, 128 or any other channel of exhibition except for theaters. The term 129 does not include software or feature-length films exceeding 80 130 minutes in length. 131 (l)(g)Qualifying project means a facility or project in 132 this state meeting one or more of the following criteria: 133 1.A new or expanding facility in this state which creates 134 at least 100 new jobs in this state and is in one of the high 135 impact sectors identified by Enterprise Florida, Inc., and 136 certified by the Department of Economic Opportunity pursuant to 137 s. 288.108(6), including, but not limited to, aviation, 138 aerospace, automotive, and silicon technology industries. 139 However, between July 1, 2011, and June 30, 2014, the 140 requirement that a facility be in a high-impact sector is waived 141 for any otherwise eligible business from another state which 142 locates all or a portion of its business to a Disproportionally 143 Affected County. For purposes of this section, the term 144 Disproportionally Affected County means Bay County, Escambia 145 County, Franklin County, Gulf County, Okaloosa County, Santa 146 Rosa County, Walton County, or Wakulla County. 147 2.A new or expanded facility in this state which is 148 engaged in a target industry designated pursuant to the 149 procedure specified in s. 288.106(2) and which is induced by 150 this credit to create or retain at least 1,000 jobs in this 151 state, provided that at least 100 of those jobs are new, pay an 152 annual average wage of at least 130 percent of the average 153 private sector wage in the area as defined in s. 288.106(2), and 154 make a cumulative capital investment of at least $100 million. 155 Jobs may be considered retained only if there is significant 156 evidence that the loss of jobs is imminent. Notwithstanding 157 subsection (2), annual credits against the tax imposed by this 158 chapter may not exceed 50 percent of the increased annual 159 corporate income tax liability or the premium tax liability 160 generated by or arising out of a project qualifying under this 161 subparagraph. A facility that qualifies under this subparagraph 162 for an annual credit against the tax imposed by this chapter may 163 take the tax credit for a period not to exceed 5 years. 164 3.A new or expanded headquarters facility in this state 165 which locates in an enterprise zone and brownfield area and is 166 induced by this credit to create at least 1,500 jobs which on 167 average pay at least 200 percent of the statewide average annual 168 private sector wage, as published by the Department of Economic 169 Opportunity, and which new or expanded headquarters facility 170 makes a cumulative capital investment in this state of at least 171 $250 million. 172 4.A project involving the development or creation of 173 intellectual property, provided that the projects jobs in this 174 state pay an annual average wage of at least 150 percent of the 175 average private sector wage in the area as defined in s. 176 288.106. A project that qualifies under this subparagraph may 177 consist of one or more projects with different start and 178 completion dates. 179 (2)(a)An annual credit against the tax imposed by this 180 chapter shall be granted to any qualifying business in an amount 181 equal to 5 percent of the eligible capital costs generated by a 182 qualifying project, for a period not to exceed 20 years 183 beginning with the commencement of operations of the project. 184 Unless assigned as described in this subsection, the tax credit 185 shall be granted against only the corporate income tax liability 186 or the premium tax liability generated by or arising out of the 187 qualifying project, and the sum of all tax credits provided 188 pursuant to this section may shall not exceed 100 percent of the 189 eligible capital costs of the project. In no event may any 190 credit granted under this section be carried forward or backward 191 by any qualifying business with respect to a subsequent or prior 192 year. The annual tax credit granted under this section may shall 193 not exceed the following percentages of the annual corporate 194 income tax liability or the premium tax liability generated by 195 or arising out of a qualifying project: 196 1.One hundred percent for a qualifying project which 197 results in a cumulative capital investment of at least $100 198 million. 199 2.Seventy-five percent for a qualifying project which 200 results in a cumulative capital investment of at least $50 201 million but less than $100 million. 202 3.Fifty percent for a qualifying project which results in 203 a cumulative capital investment of at least $25 million but less 204 than $50 million. 205 (b)A qualifying project which results in a cumulative 206 capital investment of less than $25 million is not eligible for 207 the capital investment tax credit. An insurance company claiming 208 a credit against premium tax liability under this program may 209 shall not be required to pay any additional retaliatory tax 210 levied pursuant to s. 624.5091 as a result of claiming such 211 credit. Because credits under this section are available to an 212 insurance company, s. 624.5091 does not limit such credit in any 213 manner. 214 (c)A qualifying business that establishes a qualifying 215 project that includes locating a new solar panel manufacturing 216 facility in this state that generates a minimum of 400 jobs 217 within 6 months after commencement of operations with an average 218 salary of at least $50,000 may assign or transfer the annual 219 credit, or any portion thereof, granted under this section to 220 any other business. However, the amount of the tax credit that 221 may be transferred in any year shall be the lesser of the 222 qualifying businesss state corporate income tax liability for 223 that year, as limited by the percentages applicable under 224 paragraph (a) and as calculated before prior to taking any 225 credit pursuant to this section, or the credit amount granted 226 for that year. A business receiving the transferred or assigned 227 credits may use the credits only in the year received, and the 228 credits may not be carried forward or backward. To perfect the 229 transfer, the transferor shall provide the department with a 230 written transfer statement notifying the department of the 231 transferors intent to transfer the tax credits to the 232 transferee; the date the transfer is effective; the transferees 233 name, address, and federal taxpayer identification number; the 234 tax period; and the amount of tax credits to be transferred. The 235 department shall, upon receipt of a transfer statement 236 conforming to the requirements of this paragraph, provide the 237 transferee with a certificate reflecting the tax credit amounts 238 transferred. A copy of the certificate must be attached to each 239 tax return for which the transferee seeks to apply such tax 240 credits. 241 (d)If the credit granted under subparagraph (a)1. is not 242 fully used in any one year because of insufficient tax liability 243 on the part of the qualifying business, the unused amounts may 244 be used in any one year or years beginning with the 21st year 245 after the commencement of operations of the project and ending 246 the 30th year after the commencement of operations of the 247 project. 248 (3)(a)Notwithstanding subsection (2), a credit against the 249 tax imposed by this chapter, against state taxes collected or 250 accrued under chapter 212, or against a stated combination of 251 the two taxes must be granted to a qualifying business that 252 establishes a qualifying project pursuant to subparagraph 253 (1)(l)4. for which the cumulative intellectual property 254 investment of one or more projects is, at the election of the 255 qualifying business, at least an aggregate of $500 million over 256 a 3-year period. The tax credit must be granted in an amount 257 equal to 20 percent of the eligible wages, salaries, employer 258 paid taxes and benefits, or other compensation paid to any 259 individual, including amounts paid through an employee leasing 260 company, and the direct production costs paid to any business, 261 regardless of the location, generated by the qualifying project. 262 The tax credit must be granted against the tax liability of the 263 qualifying business. 264 (b)The credit granted under this subsection may be used in 265 whole or in part by the qualifying business or any corporation 266 that is a member of that qualifying business affiliated group 267 of corporations. Any credit may be used by any of the affiliated 268 corporations to the same extent as it could have been used by 269 the qualifying business. However, any such use may not operate 270 to increase the amount of the credit or extend the period within 271 which the credit must be used. 272 (c)A qualifying business that elects to use the tax credit 273 may use the tax credit in any one year or years beginning with 274 the commencement of the project and ending the second year after 275 the completion of the project. 276 (d)Notwithstanding the cumulative intellectual property 277 investment threshold under paragraph (a), the department must 278 grant tax credits to a qualifying business within 30 days after 279 the date any costs described in this subsection are certified by 280 the Department of Economic Opportunity. 281 (e)1.If the qualifying business fails to meet the level of 282 cumulative intellectual property investment required by this 283 subsection, then any previously granted tax credit issued 284 pursuant to this subsection must be revoked and rescinded. 285 2.This paragraph may not result in the revocation or 286 rescindment of any credits or incentives awarded to a project 287 outside of this subsection. 288 3.If such revoked and rescinded credit has already been 289 claimed on a return, the business must repay the credit plus the 290 interest applicable under s. 213.235 and a 10 percent penalty. 291 4.If such revoked and rescinded credit has already been 292 transferred to another business, the transferor must repay the 293 credit plus the interest applicable under s. 213.235 and a 10 294 percent penalty. 295 (4)(a)Notwithstanding subsection (2), an annual credit 296 against the tax imposed by this chapter must shall be granted to 297 a qualifying business that which establishes a qualifying 298 project pursuant to subparagraph (1)(l)3. (1)(g)3., in an amount 299 equal to the lesser of $15 million or 5 percent of the eligible 300 capital costs made in connection with a qualifying project, for 301 a period not to exceed 20 years beginning with the commencement 302 of operations of the project. The tax credit must shall be 303 granted against the corporate income tax liability of the 304 qualifying business and as further provided in paragraph (c). 305 The total tax credit provided pursuant to this subsection must 306 shall be equal to no more than 100 percent of the eligible 307 capital costs of the qualifying project. 308 (b)If the credit granted under this subsection is not 309 fully used in any one year because of insufficient tax liability 310 on the part of the qualifying business, the unused amount may be 311 carried forward for a period not to exceed 20 years after the 312 commencement of operations of the project. The carryover credit 313 may be used in a subsequent year when the tax imposed by this 314 chapter for that year exceeds the credit for which the 315 qualifying business is eligible in that year under this 316 subsection after applying the other credits and unused 317 carryovers in the order provided by s. 220.02(8). 318 (c)The credit granted under this subsection may be used in 319 whole or in part by the qualifying business or any corporation 320 that is either a member of that qualifying businesss affiliated 321 group of corporations, is a related entity taxable as a 322 cooperative under subchapter T of the Internal Revenue Code, or, 323 if the qualifying business is an entity taxable as a cooperative 324 under subchapter T of the Internal Revenue Code, is related to 325 the qualifying business. Any entity related to the qualifying 326 business may continue to file as a member of a Florida-nexus 327 consolidated group pursuant to a prior election made under s. 328 220.131(1), Florida Statutes (1985), even if the parent of the 329 group changes due to a direct or indirect acquisition of the 330 former common parent of the group. Any credit can be used by any 331 of the affiliated companies or related entities referenced in 332 this paragraph to the same extent as it could have been used by 333 the qualifying business. However, any such use may shall not 334 operate to increase the amount of the credit or extend the 335 period within which the credit must be used. 336 (5)(4)Before Prior to receiving tax credits pursuant to 337 this section, a qualifying business must achieve and maintain 338 the minimum employment goals beginning with the commencement of 339 operations or the completion date of at a qualifying project and 340 continuing each year thereafter during which tax credits are 341 available pursuant to this section. 342 (6)(5)Applications must shall be reviewed and certified 343 pursuant to s. 288.061. The Department of Economic Opportunity, 344 upon a recommendation by Enterprise Florida, Inc., shall first 345 certify a business as eligible to receive tax credits pursuant 346 to this section before prior to the commencement of operations 347 or the completion date of a qualifying project, and such 348 certification must shall be transmitted to the Department of 349 Revenue. Upon receipt of the certification, the Department of 350 Revenue shall enter into a written agreement with the qualifying 351 business specifying, at a minimum, the method by which income 352 generated by or arising out of the qualifying project will be 353 determined. 354 (7)(6)The Department of Economic Opportunity, in 355 consultation with Enterprise Florida, Inc., is authorized to 356 develop the necessary guidelines and application materials for 357 the certification process described in subsection (6) (5). 358 (8)(7)It shall be the responsibility of the qualifying 359 business to affirmatively demonstrate to the satisfaction of the 360 Department of Revenue that such business meets the job creation 361 and capital investment requirements of this section. 362 (9)(8)The Department of Revenue may specify by rule the 363 methods by which a projects pro forma annual taxable income is 364 determined. 365 Section 2.Paragraph (d) of subsection (2) of section 366 288.1089, Florida Statutes, is amended to read: 367 288.1089Innovation Incentive Program. 368 (2)As used in this section, the term: 369 (d)Cumulative investment means cumulative capital 370 investment and all eligible capital costs, as defined in s. 371 220.191, Florida Statutes (2021). 372 Section 3.The amendments made by this act to s. 220.191, 373 Florida Statutes, do not apply to any qualifying project 374 application certified before December 31, 2021. 375 Section 4.This act shall take effect July 1, 2022.