Your Refund Is On The Way

Increased Corporate Tax Collections Estimated to Trigger $543.2 Million Statewide Refund

Your Corporate Income Tax refund is on the way!

In a meeting of the Florida Revenue Estimating Conference (REC) on August 14, 2019, state economists announced that Corporate Income Tax collections increased significantly during the last fiscal year, triggering a refund for corporate income tax payers.

The refunds help offset collections from an expanded tax base which is helping pay for the federal Tax Cuts and Jobs Act of 2017. The Florida Chamber of Commerce credits the Florida Legislature for taking steps to ensure Florida continues to have one of the best tax climates in the country.

“Two years ago, the Florida Legislature had the foresight to avoid an inadvertent tax increase on job creators which would have resulted following the implementation of the federal Tax Cut and Jobs Act of 2017,” said Carolyn Johnson, Florida Chamber of Commerce Business Climate Policy Director. “This not only signals that Florida is serious about being a top tax climate in the country, but allows businesses to continue to reinvest in their employees and their company to further strengthen Florida’s economy.”

According to the REC, the corporate income tax refund is approximately $543.2 million, and refunds will be distributed in spring 2020.

While some of the increases in corporate income tax collections could be attributed to increased economic growth, a significant portion of the increase is due to the expansion of the tax base resulting from the federal Tax Cuts and Jobs Act (TCJA) of 2017.

The TCJA resulted in significant tax cuts to families and job creators at the federal level, however, in order to pay for a portion of these tax cuts, Congress removed certain tax exemptions and expanded the tax base. As a result, Florida’s corporate tax base would likewise expand, unless action was taken. Soon after passage of the TCJA, the Council on State Taxation estimated that the increase to Florida’s tax base could be 13 percent – a significante increase in corporate income tax collections.


With support from the Florida Chamber, the Florida Legislature established a refund and rate cut mechanism in the event corporate income tax collections exceeded previous estimated revenue projections for the first two state fiscal years.

Today’s meeting of the REC determined the net collections for FY 2018-2019 were substantially higher than previous estimates. Corporate taxpayers will receive an automatic refund on or before May 1, 2020 proportionate to the amount of corporate income tax paid during fiscal year 2018-2019. In addition to the automatic refunds, later this fall the Department of Revenue will determine a new 2019 corporate income tax rate based on today’s information.

Want More Tax Information?

The Department of Revenue has recently published two Taxpayer Information Publications (TIPs) with more information regarding the corporate income tax:

TIP #19C01-01 – Florida Corporate Income Tax – Tax Cut and Jobs Act of 2017

TIP #19C01-02 – Florida Corporate Income Tax Adoption of Internal Revenue Code and Other 2019 Legislative Changes

Targeted Tax Reform

Learn more about the Florida Chamber’s targeted tax reform efforts by contacting Carolyn Johnson at cjohnson@flchamber.com.

Lawmakers Continue Advancing Bills to Improve Florida’s Legal Climate

 

Watch Senator Doug Broxson      Sign the AOB Petition

 

Lawmakers in the Florida House of Representatives continue taking steps to improve on Florida’s bottom-five legal climate and lower the cost of doing business on Florida’s families and small-businesses.

The House Civil Justice Subcommittee and the House Insurance and Banking Subcommittee passed three Florida Chamber-backed lawsuit abuse reform bills this week:

  • Medical Malpractice- PCB CJS 19-02
  • Dangerous Instrumentality Doctrine- HB 355
  • Duty of Good Faith – HB 751

Three additional lawsuit abuse reform related bills are expected to be heard on Monday in the Senate Banking and Insurance Committee and Senate Judiciary Committee, including AOB reform (SB 122). Also, on Monday, SB 1464 (Fair Settlement Act) and SB 862 (Dangerous Instrumentality Doctrine) are expected to be heard.

Three Ways You Can Get Involved:

  1. Watch Senator Doug Broxson talk about the importance of AOB reform on the Florida Chamber Bottom Line.
  2. Sign the petition seeking AOB reform by visiting www.FightFraud.Today.
  3. Read Florida Chamber CEO’s Point of View: Florida lawmakers must fix the assignment of benefits crisis.

Senate Takes Steps to Modernize Online Sales Taxes

 

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The Senate Commerce and Tourism Committee today took the first step in leveling the playing field between brick and mortar businesses and online retailers by passing SB 1112. Under this bill, online businesses that conduct 200 or more transactions or sales of over $100,000 in Florida will be required to register with the Florida Department of Revenue (DOR) and collect and remit sales tax. Alternatively, the bill allows for marketplace providers, like Ebay or Amazon, to collect and remit the sales tax. With the increased revenue and in order to be revenue neutral, the bill proposes reducing the Florida-only Business Rent Tax by 1.5 percent and includes a sales tax holiday for hurricane supplies.

In June 2018, the U.S. Supreme Court issued an opinion in South Dakota v. Wayfair which paved the way for states to begin collecting the sales tax on internet purchases if a company has a significant economic presence in the state. Over 40 states have adopted rules or passed legislation to implement the Wayfair decision and set minimum requirements to establish an economic presence. In Florida, this is a tax that has always been due, but the burden has been on the taxpayer to submit the tax to the DOR for online purchases.

Let Us Know What You Think

Contact Carolyn Johnson at cjohnson@flchamber.com or 850-521-1235.

Lawmakers Take Aim at Lawsuit Abuse Reform By Passing Three Key Bills

Thanks to your calls, emails and continued support, the House Civil Justice Subcommittee today passed three Florida Chamber-backed lawsuit abuse reform bills:

  • Assignment of Benefits (AOB) Reform – PCB CSJ 19-01
  • Tort Reform – HB 0017
  • Dangerous Instrumentality Doctrine – HB 355

For the first time in half a decade, lawmakers are taking steps to improve Florida’s bottom-five legal climate and lower the cost of doing business on Florida’s families and small-businesses.

A special thank you to Representative Tom Leek for sponsoring the tort reform and dangerous instrumentality bills. Also, thank you to Civil Justice Subcommittee Chair Bob Rommel for championing AOB reform, and further advancing the Florida Chamber’s Business Agenda.

We will keep you up-to-date as these proposals move forward.

Take Two Minutes

Please take two minutes to thank these lawsuit abuse reform bill sponsors, Civil Justice Subcommittee Chair Bob Rommel, and Representative Tom Leek. If you want to learn more about lawsuit abuse, visit the Florida Chamber’s lawsuit abuse website.

Senate Banking and Insurance Committee Votes Favorably for SB 122

On March 4, 2019, in a five to three vote, the Senate Banking and Insurance Committee passed SB 122— a bill related to attorney fee awards under insurance policies and contracts.

The Florida Chamber-backed bill, sponsored by Senator Doug Broxson, levels the playing field between insurers and service providers and subcontractors and provides a step toward real Assignment of Benefits (AOB) reform.

In 2018, there were more than 34,000 AOB lawsuits filed, compared to only 405 AOB lawsuits in 2006. Increasing amounts of AOB abuse are costing 90 percent of Florida families an increase in their homeowners’ insurance.  Florida’s bottom-five legal climate, including AOB fraud and abuse, costs Florida families an average of $4,442 a year. The Florida Chamber will continue to support SB 122 and other efforts that protect consumers and small businesses from billboard trial lawyers trying to make a payday.

A proposed committee bill (PCB CSJ 19-01) related to AOB reform will be heard in the House Civil Justice Subcommittee on Wednesday.

We Need Your Support

We’re hearing that busloads of trial lawyers are making their way to Florida’s Capitol to oppose important legal reform efforts, including AOB reform. PLEASE TAKE 2 MINUTES to help us improve Florida’s bottom-five legal climate by contacting members of the House Civil Justice Subcommittee TODAY and urging them to vote yes on PCB CSJ 19-01 (AOB Reform), HB 17 (Tort Reform) and HB 355 (Dangerous Instrumentality Doctrine).

 

Keeping Florida’s Business Climate Competitive

 

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Why It Matters to Florida

Florida is the only state in the country that charges a nearly six percent sales tax on business rent, a cost impacting any business that leases space- from mom and pop stores to multi-national operations. When Florida is seen as the only state that hinders business growth in this way, word gets around to CEOs. Furthermore, the Florida Chamber has found that in some instances, businesses are subject to “double” taxation through the tax imposed on business rents. Business may find themselves paying property taxes as a portion of their rent, with sales tax being levied on the entire rent.

Florida’s Competitiveness Agenda

While Florida already has one of the best tax climates in the nation for residents, enacting smart and targeted tax reforms for job creators will produce greater economic growth. Creating a fair tax system means putting small business capital to work and eliminating uncompetitive tax policies like the Business Rent Tax.

The Fight for Free Enterprise

The Florida Chamber will remain diligent in fighting for this proposal. We will continue to create a state that attracts and retains businesses of all sizes. Reducing this tax keeps money directly in the pockets of job creators, allowing them to expand, grow and become more productive.

Act Now

Florida wins when we create a business climate that attracts our nation’s top job creators. Help us eliminate unnecessary taxes and create a more competitive Florida by contacting Carolyn Johnson at cjohnson@flchamber.com.

Research & Development Tax Credit Bill Passes Senate Commerce and Tourism Committee

 

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On March 4, 2019, the Senate Commerce and Tourism Committee passed SB 750, which permanently increases the cap on Florida’s Research & Development Tax Credit to $35 million.

This Florida Chamber- backed bill, sponsored by Senator Joe Gruters, would allow companies to receive a greater percentage of the R&D credits allowed under law while encouraging high wage jobs, capital investments and innovation in Florida. The Florida Chamber has led the effort to improve Florida’s R&D Tax Credit and provide additional funding over the last five years.

As Florida continues to try to drive innovation and attract high-wage, high-skill jobs, a strategic but underfunded component is the R&D tax credit. The Florida Chamber will continue to promote SB 750 and other efforts that will make Florida a top-three state for research and development and innovation by 2030.

Thank Senator Joe Gruters

Please take a moment to send a quick email thanking Senator Joe Gruters for working to further smarter and more competitive tax policies for Florida.

Legislature Begins Examining Federal Tax Reform Impacts on Florida

The House Ways and Means Committee has begun its initial work of examining the impact of the federal Tax Cuts and Jobs Act (TCJA) for Florida corporate income tax purposes. Today, the committee heard a presentation from committee staff and the Florida Department of Revenue (DOR) on how the changes to the Internal Revenue Code are impacting corporations in Florida and have expanded the tax base. Like many other states, Florida uses federal taxable income as a starting point to determine Florida income for the purposes of corporate income tax. Because of the many changes contained within the TCJA, it is estimated that a full adoption, or “piggyback” of these changes, would increase Florida’s tax base by 13 percent.

This follows a nearly year-long review by DOR at the direction of the Legislature. DOR recently released an examination of the TCJA and identified 14 topics that will have a significant impact on Florida’s corporate income tax. These topics are the same that have been identified in previous status reports and have been brought to DOR through public testimony, including:

  • Like-kind exchanges,
  • Global Intangible Low-Tax Income (GILTI), and
  • Net interest deductions.

The final report includes a full analysis of each topic, including an analysis on the impact to state revenue. The Florida Chamber offered comment in a written letter to the Department of Revenue encouraging Florida to decouple from the GILTI and net interest deduction changes in the TCJA. The Florida Chamber will continue to be engaged as this is the initial step as the Florida Legislature uses the information from this report and today’s workshop to implement federal tax reform changes for state corporate income tax purposes.

Share With Your CFO

Share this important message with your company’s CFO to help ensure they have the latest information on this important issue. For more details, contact Carolyn Johnson at cjohnson@flchamber.com or at 850-521-1235 to get involved in our efforts to ensure Florida’s tax climate remains competitive.

New Report Highlights Federal Tax Reform Impacts on Florida 

The Florida Department of Revenue (DOR) recently released an examination of the federal Tax Cuts and Jobs Act of 2017’s (TCJA) impact in Florida – a nearly year-long review that was directed by the Florida Legislature. Like many other states, Florida uses federal taxable income as a starting point to determine Florida income for the purposes of corporate income tax. Because of the many changes contained within the TCJA, it is estimated that a full adoption, or “piggyback” of these changes, would increase Florida’s tax base by 13 percent.

DOR identified 14 topics that will have a significant impact on Florida’s corporate income tax.  These topics are the same that have been identified in previous status reports and have been brought to DOR through public testimony, including:

  • Like-kind exchanges,
  • Global Intangible Low-Tax Income (GILTI) and
  • Net interest deductions.

The final report includes a full analysis of each topic, including an analysis on the impact to state revenue. The Florida Chamber offered comment in a written letter to the Department of Revenue encouraging Florida to decouple from the GILTI and net interest deduction changes in the TCJA.  We will continue to be engaged as the Florida Legislature uses the information from this report to implement federal tax reform changes for state corporate income tax purposes.

Share With Your CFO

Share this important message with your company’s CFO to help ensure they have the latest information on this important issue. For more details, contact Carolyn Johnson at cjohnson@flchamber.com or at 850-521-1235 to get involved in our efforts to ensure Florida’s tax climate remains competitive.

Florida Department of Revenue Issues Status Report on Federal Tax Reform

Since the end of the 2018 Legislative Session, the Florida Department of Revenue (DOR) has been busy examining the impact of the federal Tax Cuts and Jobs Act of 2017 (TCJA) on Florida. Florida, like many other states, uses federal taxable income as a starting point to determine Florida income for the purposes of corporate income tax. Because of the many changes contained within the TCJA, it is estimated that a full adoption, or “piggyback” of these changes, would increase Florida’s tax base by 13 percent.

DOR has hosted two public meetings to hear from businesses and other stakeholders on how components of the TCJA will impact Florida taxes. Additionally, DOR is soliciting public comment by email until December 14, 2018 at CITReview@floridarevenue.com. The department issued its second and final status report before submitting their report to the legislature by February 1, 2019.

DOR has identified 14 topics for further investigation and review, including:

  • Global Intangible Low-Tax Income (GILTI);
  • Bonus Depreciation;
  • Amortization of Research and Experimental Expenditures;
  • Net Interest Deduction;
  • Changes to the Treatment of Capital Contributions; and
  • Like-kind Exchanges.

The Florida Chamber has also offered comment in a written letter to the Department of Revenue, encouraging Florida to decouple from the GILTI and net interest deduction changes in the TCJA.

Stay Informed

How Florida adopts the changes under the Tax Cuts and Jobs Act will be a significant discussion during the 2019 Legislative Session. For more information or to provide feedback on how the Tax Cuts and Jobs Act impacts your business, please contact Carolyn Johnson at cjohnson@flchamber.com or 850-521-1235.

Workers’ Comp Rates Decrease by 13.8 Percent

Automation and Employers’ Efforts to Create Safer Workplaces Produce Short-Term Rate Reduction, but Increased Attorney Fees Poised to Have Greater Impact on Future Rates

On Friday, November 9, 2018, the Office of Insurance Regulation (OIR) approved an average 13.8 percent decrease in workers’ comp rates to take effect January 1, 2019 for new and renewal policies. This is based on the National Council on Compensation Insurance’s (NCCI) filing for a 13.4 percent decrease to OIR at the end of August, 2018. When making its filing, NCCI pointed to improved loss experience as the reason for the decrease. More information and an analysis of NCCI’s August filing can be found here.

In a statement, Florida’s Chief Financial Officer Jimmy Patronis said:

“A workers’ compensation insurance decrease of 13.8 percent amounts to almost a half billion dollars in savings for Florida’s business community who support local economies, employ our neighbors, and give back to our communities. We must continue to do all we can to support and fuel Florida businesses, the backbone of our economy. While today’s news is good news, we must keep a close watch on Florida’s workers’ compensation insurance market so that we don’t go back to the time of skyrocketing rates.”

The Florida Chamber will continue to advise businesses on the impact of rising attorney fees and other cost drivers to the system. Friday’s rate decrease is good news for Florida job creators, but employers should be prepared for potential rate increases on the horizon as attorney fees continue to exert pressure on the workers’ comp system. As more time passes following the Castellanos decision in April 2016, these increased costs will be included in future experience rate filings.

Does Florida’s Workers’ Comp System Work For You?

Join us in advance of the 2019 Legislative Session to discuss workers’ comp and other issues important to Florida’s job creators by registering for the 2019 Florida Chamber of Commerce Legislative Fly-In on February 19-21, 2019.

Expert Witness Standard Rejected And Next Supreme Court Justices

The Florida Supreme Court on Monday once again rejected the Florida Legislature’s efforts to improve Florida’s expert witness standard to the Daubert standard. In a 4-3 opinion in Richard Delisle vs. Crane Co.,the Florida Supreme Court rejected the Daubert standard passed in 2013 by the Florida Legislature – thus maintaining the weaker Frye standard. The Florida Supreme Court had previously ruled against amending the Evidence Code to the higher Daubert standard.

“We recognize that Frye and Daubert are competing methods for a trial judge to determine the reliability of expert testimony before allowing it to be admitted into evidence,” Justice Peggy Quince wrote in the majority opinion.  “With our decision today, we reaffirm that Frye, not Daubert, is the appropriate test in Florida courts.”

In 2013, the Florida Legislature passed HB 7015 – a Florida Chamber-backed bill that would have rejected the Frye standard in favor of Daubert.  This evidence standard is used in federal court and in 36 other states, and would have only allowed expert testimony if it met a three-pronged test.  In the Crane opinion, justices argued that the Legislature had exceeded its authority and only the Supreme Court has the authority to “adopt rules for the practice and procedure in all courts.”

Also, on Monday, the Florida Supreme Court ruled that the next Governor – not current Governor Rick Scott – has the authority to appoint three new justices to the Supreme Court. The forthcoming vacancies result from three justices reaching mandatory retirement age.  The important issue of when the Judicial Nominating Commission can certify its nominations will be the issue of oral arguments on November 8, 2018.  This means the stakes for the 2018 Governor’s race are even higher, because the next Governor has the potential to change the makeup of the Florida Supreme Court for the next several decades.

The Stakes Are High

Join the Florida Chamber’s efforts to help elect candidates that support jobs, Florida’s economy and Florida’s families. Contact Marian Johnson at 850-521-1241 or mjohnson@flchamber.com to help make a difference in the homestretch of Florida’s governor’s race.

Workers’ Comp Rates Continue to Decrease

Automation and Employers’ Efforts to Create Safer Workplaces Produces Short-Term Rate Reduction, but Increased Attorney Fees Poised to Have Greater Impact on Future Rates

The National Council on Compensation Insurance (NCCI) filed a proposed average 13.4 percent decrease in workers’ comp rates with the Office of Insurance Regulation. The proposed rate decrease would take effect January 1, 2019 for new and renewal policies. This is NCCI’s experience filing that is made every year, and NCCI pointed to improved loss experience as the reason for the decrease. The Office of Insurance Regulation will have to approve or ask NCCI to modify the filing before it takes effect.

It should be pointed out that about 50 percent of the data examined to inform this rate filing is from post Castellanos v. Next Door Company, a Florida Supreme Court decision that came out in April 2016 that eliminated the cap on attorney fees in workers’ comp cases. The experience used to calculate the rate decrease is from 2015 and 2016.

Key Takeaways:

1. Rates Are Decreasing In Short Term Because of Automation, Safer Workplaces and Other Factors. In addition to it taking time for the data to cycle through to experience filings, thanks to advancements of technology and improving safety policies, workers are getting injured less often and injuries are generally less severe.

Additionally, the Miles case, which was released a week prior to Castellanos, might also play a role. The Miles decision allows injured workers to contract and pay for attorney fees, which had previously been paid for by the employer/carrier according to the statutory formula. This shifting of attorney fees to injured workers is not a cost that is borne by the workers’ comp system, therefore keeping workers’ comp costs lower despite claimants’ attorneys making more money.

2. Attorneys Fees Are Increasing…Dramatically. As of right now not, the favorable loss experience has offset the cost increases that have emerged from the court decisions, but NCCI points out in its rate filing that the court decisions are exerting upward pressure on system costs.

Recent attorney fee data shows that the Castellanos decision is increasing costs to the system. The year after the decision, claimant attorney fees jumped by more than 36 percent, and this year attorney fees increased another 7 percent. Prior to the Supreme Court decision, the effectively hourly attorney fee was $150 and has since increased to roughly $250 an hour.

Additionally, the data shows that claimants’ attorney fees are making up a larger portion of settlements post-Castellanos, with about one-third of settlements showing attorney fees of more than 20 percent.

The Florida Chamber will continue to monitor this rate filing and advise businesses on the impact of rising attorney fees and other cost drivers to the system. Today’s rate filing is good news for Florida job creators, but employers should be prepared for potential rate increases on the horizon as attorney fees continue to exert pressure on the workers’ comp system and more time has passed for these increased costs to be included in the rate filing.

Does Florida’s Workers Comp System Work for You?

We want to hear your thoughts on Florida’s workers’ compensation system – send your comments and concerns to me at cjohnson@flchamber.com.

 Supreme Court Levels Playing Field for Brick and Mortar Businesses, Decides in Favor of Fair and Equitable Tax System

Florida’s brick and mortar retailers have long been at a competitive disadvantage with the current tax system tilted in favor of online-only retailers. Today, the U.S. Supreme Court decided in favor of a fair and equitable tax system that discourages government from picking winners and losers through unfair tax policy.

The Supreme Court’s 5-4 decision in South Dakota v. Wayfair paves the way for states like Florida to collect sales tax from out-of-state retailers when residents make purchases. Prior to this decision, states were only able to tax sellers with a “physical presence” in the state, such as employees and/or real estate.

The South Dakota Legislature had passed a law that would require out-of-state sellers to collect and remit sales tax as if they had a physical presence for sellers that delivered more than $100,000 of goods or services in the state or had more than 200 separate transactions. Online retailers, such as Wayfair, challenged the South Dakota law. The U.S. Supreme Court over-turned two outdated court opinions from before the digital age and ruled in favor of the state of South Dakota under the Commerce Clause.

What Does This Mean?

Shortly after today’s ruling, Florida Chamber of Commerce President and CEO Mark Wilson reached out to Department of Revenue Executive Director Leon Biegalski.

The Florida Legislature can now pass laws to collect sales tax from out-of-state retailers that don’t have a “physical presence” in Florida. In order for the law to comply with the Wayfair decision, the business must engage in significant business in the state.

Closing this loophole does not create a new tax. Florida already requires individuals to report online sales taxes to the Florida Department of Revenue. The decision allows Florida to change current law to require online businesses to collect sales tax, rather than the consumer.

Workers’ Comp Rates Decrease 1.8 Percent Next Month

 

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On May 1, the Florida Office of Insurance Regulation approved a law-only filing that decreases workers’ comp rates by 1.8 percent, effective June 1, 2018.  This decrease is the result of the federal tax cut package signed into law at the end of last year, the Tax Cuts and Jobs Act, which produced an increase to many carriers’ profit and contingency margins. In response, the National Council on Compensation Insurance filed a corresponding rate decrease to offset the increases to insurance carriers.

What This Means for You

As a result of federal tax reform, job creators will experience lowered costs of doing business in the form of needed workers’ comp rate relief. However, this relief may only be temporary. The result is modest, albeit temporary, rate relief for businesses across the state of Florida.

It is expected that the National Council on Compensation Insurance will file its annual experience filing in late summer, and rate increases could be on the horizon.  The fact remains that while businesses across the state have continued to become safer and the severity of claims have decreased, attorney fees remain a cost driver in Florida’s workers’ comp system.  Recent data by the Office of Judges of Compensation Claims show that attorney fees increased by 36 percent over the previous year, and hourly attorney fees have jumped by 200 percent.

The experience rate filing expected in late summer will start to reflect some of this new data as a result of the Florida Supreme Court’s 2016 decision in Castellanos v. Next Door Company.

Join the Task Force

We need your help in pushing legislators to enact meaningful and comprehensive workers’ comp reform by addressing skyrocketing attorney fees. Join the Florida Chamber of Commerce’s Workers’ Compensation Task Force by contacting Carolyn Johnson at (850) 521-1235 or cjohnson@flchamber.com.