Senate Takes Steps to Modernize Online Sales Taxes
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.
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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.
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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.
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 firstname.lastname@example.org or 850-521-1235.
Florida Department of Revenue Seeks Comments on Federal Tax Cuts and Jobs Act Impact
The Florida Department of Revenue (DOR) is asking business leaders for their thoughts and comments regarding the federal Tax Cuts and Jobs Act and its effect on the state corporate income tax.
The Florida Legislature and the Department of Revenue are relying heavily on public comment to identify areas where the state tax base may be expanded and how the Tax Cats and Jobs Act might increase state taxes on businesses. Changes to how Florida adopts the Internal Revenue Code for state tax purposes are expected to be adopted in the 2019 Legislative Session.
Comments may be submitted by email to: CITReview@floridarevenue.com or by regular mail to: Corporate Income Tax Review, c/o Director of Legislative and Cabinet Services, Department of Revenue, P.O. Box 5906, Tallahassee, Florida 32314-5906. These comments will be posted to DOR’s website.
In addition, DOR will be holding two public workshops to receive public comments on the Tax Cuts and Jobs Act, the first of which will be held August 22, 2018 at 9 AM EST in Tallahassee. Those unable to attend in person can register by webinar here.
For more information, please visit the DOR website.
New Proposed Rule on Florida R&D Tax Credit
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.
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.
Find Out How to Qualify for R&D Tax Credit
The Florida Department of Revenue (DOR) will begin collecting applications for the R&D Tax Credit against the Corporate Income Tax for tax year 2015 on Sunday, March 20, 2016. The application will be live online until March 26, 2016 at 11:59 PM. During that time, the amount of credits that will be awarded is $23 million, and if applications exceed the cap, will be awarded on a pro-rata basis.
Prior to applying through DOR, companies must certify through the Department of Economic Opportunity that they are a qualified targeted industry business. For additional information on how to apply, including screenshots of the application and information on how to qualify, DOR has released a “Tax Information Publication.”
R&D Tax Credits for 2016 Tax Year
During the 2016 Legislative Session, the Florida Chamber, along with Representatives Ed Narain (D-Tampa), Jay Fant (R-Jacksonville), Matt Gaetz (R-Shalimar) and Senator Jeff Brandes (R- St. Petersburg), advocated to increase the $9 million cap for a second year in a row. Unfortunately, these efforts were not fruitful. The maximum amount of tax credits awarded during the 2017 application period, for the 2016 tax year, will be $9 million. However, these credits will continue to be awarded on a pro-rata basis if the cap is exceeded.
Contact Carolyn Johnson and share the great R&D work that you are performing in Florida or how fewer credits awarded in 2017 might impact your business at 850-521-1235 or email@example.com.