New Proposed Rule on Florida R&D Tax Credit

By: Carolyn Johnson

Yesterday, the Florida Department of Revenue announced proposed changes to the rule implementing the Florida R&D Tax Credit. If written notice is received, a rulemaking workshop will be held on November 22, 2016. The proposed changes to the rule include the following:

  • Addresses the process if the Florida Department of Economic Opportunity (DEO) denies to certify a company as being in a targeted industry and the company protests.
  • Removes the requirement that the Florida Department of Revenue (DOR) notify companies of their allocation within 10-working days.
  • Specifies that if DOR audits the company and finds the R&D credits were overstated on the application, the Department will proportionately reduce the credit allowed. If DOR audits the company and finds the R&D credits were understated on the application, the company receives no additional credit (due to the capped allocation).
  • Specifies that the credits are not transferrable unless the whole business is sold in a single transaction.

 

CLICK HERE to find additional information on these proposed changes and the rulemaking notice.

Background:

In 2015, the Florida Chamber of Commerce was instrumental in working with the Florida Legislature to improve the R&D Tax Credit program. Prior to these changes, companies applied on a first-come, first-serve basis and the cap on tax credits was met in minutes. Now, companies have a week-long period to apply, and if the cap is exceeded, each qualified company receives a pro-rated portion of their eligible tax credits.

The Florida Chamber also fought to increase the cap the last two years, and was successful in an increase to $23 million in available credits for the 2015 tax year. 118 applications were approved for 2015, compared to 23 applications the prior year. Each company received approximately half of the amount requested. The cap is $9 million for the 2016 tax year.

We will continue to fight to increase available credits to companies performing R&D in our state. To join us, please contact Carolyn Johnson.