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 Finance and Tax
BILL: CS/SB 1246
INTRODUCER: Finance and Tax Committee and Senator Rodrigues
SUBJECT: Capital Investment Tax Credit
DATE: April 14, 2021 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Reeve McKay CM Favorable
2. Kim Babin FT Fav/CS
3. AP
I. Summary:
CS/SB 1246 amends s. 220.191, F.S., to authorize certain qualifying travel agency or passenger
car rental businesses to carry over 50 percent of their unused capital investment tax credits in
their taxable year beginning in 2020 if the business’s gross receipts between April 1 and
December 31, 2020, were 50 percent lower than its receipts from the same period in 2019.
A business may transfer its tax credits to another taxpayer, use its tax credits against amounts
payable for sales and use tax liability, or apply its unused tax credits against corporate income
tax payments in taxable years beginning after January 1, 2021, and ending before
December 31, 2025. The bill also authorizes the Department of Revenue (DOR) to adopt
emergency rules.
The Revenue Estimating Conference determined the bill will reduce General Revenue Fund
receipts by $1.7 million and reduce local government receipts by $600,000 in Fiscal Year
2021-2022.
The bill takes effect July 1, 2021, except for the DOR’s emergency rulemaking authority, which
takes effect upon the act becoming a law.
II. Present Situation:
Capital Investment Tax Credit
The Capital Investment Tax Credit (CITC) was established by the Legislature in 1998 to attract
and grow capital-intensive industries in the state.1 The CITC is currently comprised of two tax
credits–one that is available for three categories of qualifying projects and that provides a credit
1
Chapter 98-61, Laws of Fla.
BILL: CS/SB 1246 Page 2
against the state corporate income tax or insurance premium tax2, and a second that is limited to
certain headquarters facilities and that provides a credit against the corporate income tax.3 Both
credits are granted to qualified businesses certified by the Department of Economic Opportunity
(DEO).
Credit under s. 220.191(2), F.S.
The first credit under the CITC is available for three categories of qualifying projects:4
A new or expanded Florida facility that is in a designated high-impact sector5 and that creates
at least 100 new jobs in Florida (high-impact sector facilities).
A new or expanded Florida facility that is in a qualified target industry6 and that creates or
retains at least 1,000 jobs in Florida, provided that at least 100 of those jobs are new, pay an
annual average wage of at least 130 percent of the average private sector wage in the area,
and result in a cumulative capital investment of at least $100 million (QTI facilities).
A new or expanded Florida headquarters facility that is located in an enterprise zone and
brownfield area; that creates at least 1,500 jobs, which on average pay at least 200 percent of
the statewide average annual private sector wage; and that makes a cumulative capital
investment in this state of at least $250 million (headquarters facilities).
The annual credit amount is 5 percent of the eligible capital costs generated by the qualifying
project for up to 20 years,7 beginning with the commencement of operations of the project.8 The
credit is granted against state corporate income tax liability or premium tax liability generated
by, or arising out of, the qualifying project. Annual limits for the tax credit apply, depending on
the type of qualifying project:
For a QTI facility, annual credits against the state corporate income tax may not exceed
50 percent of the increased annual corporate income tax liability or the premium tax liability
generated by, or arising out of, the qualifying project.9
For high-impact sector facilities and headquarters facilities, the annual credit limits depend
on the amount of cumulative capital investment resulting from the qualifying project:
o For a qualifying project resulting in a cumulative capital investment of at least
$100 million, the annual credit may not exceed 100 percent of the annual corporate
2
Section 220.191(2), F.S.
3
Section 220.191(3), F.S.
4
Section 220.191(1)(g) and (2)(a), F.S.
5
The sectors currently designated as high impact are clean energy, life sciences, financial services, information technology,
semi-conductors, transportation equipment manufacturing, advanced manufacturing, or a corporate headquarters facility. See
Department of Economic Opportunity, 2020 Annual Incentives Report, 53-54, available at
https://floridajobs.org/docs/default-source/reports-and-legislation/2019-2020-annual-incentives-report-
final.pdf?sfvrsn=af674ab0_2 (last visited April 8, 2021).
6
The current qualified target industries are aviation and aerospace; corporate headquarters; clean technology; defense and
homeland security; financial and professional services; global logistics and trade; information technology; life sciences;
manufacturing; and research and development. See Department of Economic Opportunity, 2020 Annual Incentives Report,
12, available at https://floridajobs.org/docs/default-source/reports-and-legislation/2019-2020-annual-incentives-report-
final.pdf?sfvrsn=af674ab0_2 (last visited April 8, 2021).
7
For qualified target industry facilities, the tax credit period is limited to 5 years. See s. 220.191(1)(g)2., F.S.
8
Section 220.191(2)(a), F.S. Eligible capital costs include all expenses incurred in the acquisition, construction, installation,
and equipping of a project from the beginning of construction to the commencement of operations. They do not include the
cost of any property previously owned or leased by the qualifying business.
9
Section 220.191(1)(g)2., F.S.
BILL: CS/SB 1246 Page 3
income tax liability or premium tax liability generated by, or arising out of, the qualifying
project.
o For a qualifying project resulting in a cumulative capital investment of at least
$50 million to under $100 million, the annual credit may not exceed 75 percent of the
annual corporate income tax liability or premium tax liability generated by, or arising out
of, the qualifying project.
o For a qualifying project resulting in a cumulative capital investment of at least
$25 million to under $50 million, the annual credit may not exceed 50 percent of the
annual corporate income tax liability or premium tax liability generated by, or arising out
of, the qualifying project.
A qualifying project with less than a $25 million cumulative capital investment is not eligible for
the credit.
Generally, an unused credit may not be carried backward or forward to apply to tax liabilities in
previous or subsequent years, respectively.10 However, a business with a qualifying project
resulting in a cumulative capital investment of at least $100 million may apply unused credits
beginning with the 21st year after the commencement of the project’s operations and ending the
30th year after the commencement of the project’s operations.11
The credit may not be assigned or transferred, except by a qualifying business establishing a
qualifying project that includes locating a new solar panel manufacturing facility in Florida and
that generates a minimum of 400 jobs within 6 months after commencement of operations, with
an average salary of at least $50,000. Such business may assign or transfer its annual credit or
any portion thereof to any other business, subject to certain limitations and conditions.12
Credit under s. 220.191(3), F.S.
The second credit under the CITC is limited to qualifying businesses that establish a
headquarters facility qualifying project. The annual credit amount is the lesser of $15 million or
5 percent of the eligible capital costs made in connection with a qualifying project for up to
20 years, beginning with the commencement of the project.13 The credit is granted against the
state corporate income tax liability of the qualifying business. The total tax credit is limited to
100 percent of the qualifying project’s eligible capital costs.
Unused credits may be carried forward for up to 20 years after the commencement of the
project’s operations.14 The credit may be used by certain related entities of the qualifying
business.15
10
Section 220.191(2)(a), F.S.
11
Section 220.191(2)(d), F.S.
12
Section 220.191(2)(c), F.S.
13
Section 220.191(3)(a), F.S.
14
Section 220.191(3)(b), F.S.
15
Section 220.191(3)(c), F.S.
BILL: CS/SB 1246 Page 4
Certification of Qualifying Businesses and Issuance of Tax Credits
The DEO must certify a business as eligible to receive either of the CITC tax credits before the
commencement of operations of a qualifying project. If a business is certified, the DEO will
enter into an agreement with the business that specifies the planned commencement date of
operations and the total amount of credit the business can expect if the project proceeds as
planned. Agreements are drafted so that a qualified business’s annual credit amount begins on
the date of commencement of operations, beginning the 20-year credit period. If for some reason
operations do not commence on time, the 20-year window is not adjusted.16 Before receiving a
tax credit each year, a qualifying business must achieve and maintain its minimum employment
goals beginning with the commencement of operations of a qualifying project.17 Qualifying
businesses must also affirmatively demonstrate to the DOR that they meet job creation and
capital investment requirements.18
Economic Impact
According to the DEO, there were 61 active CITC awardees with 32 reporting performance as of
Fiscal Year 2019-2020; the DEO confirmed 2,887 jobs created and over $308 million in capital
investment in said fiscal year.19 Over $67 million in tax credits were approved to be claimed by
qualified business in calendar year 2019.20
Select State Taxes
The following describes select Florida taxes, which the CITC or the bill provides credits against.
Corporate Income Tax
Florida imposes a tax on the taxable income of certain corporations and financial institutions
doing business in Florida.21 The current rate is 4.458 percent22 of a taxpayer’s net income for its
taxable year (the calendar or fiscal year or period upon which its net income is computed).23
The calculation of Florida corporate income tax starts with a corporation’s federal taxable
income.24 Taxable income earned by corporations operating in more than one state is taxed in
Florida on an apportioned basis using a formula based 25 percent on property, 25 percent on
payroll, and 50 percent on sales.25 Income that is apportioned to Florida using this formula is
16
Florida Senate Committee on Finance and Tax, Issue Brief 2012-2014: Review of the Capital Investment Tax Credit
(September 2011), available at https://www.flsenate.gov/PublishedContent/Session/2012/InterimReports/2012-204ft.pdf (last
visited April 8, 2021). See also s. 220.191(5), F.S.
17
Section 220.191(4), F.S.
18
Section 220.191(7), F.S.
19
Department of Economic Opportunity, 2020 Annual Incentives Report, 8, available at https://floridajobs.org/docs/default-
source/reports-and-legislation/2019-2020-annual-incentives-report-final.pdf?sfvrsn=af674ab0_2 (last visited April 8, 2021).
20
Id at 49.
21
Chapter 220, F.S.
22
The tax rate was adjusted downward to 4.458 percent pursuant to s. 220.1105, F.S., for taxable years beginning on or after
January 1, 2019. Pursuant to s. 220.1105(5), F.S., the rate is scheduled to return to 5.5 percent for taxable years beginning on
or after January 1, 2022.
23
Sections 220.11(2) and 220.63(2), F.S.
24
Section 220.12, F.S.
25
Section 220.15, F.S.
BILL: CS/SB 1246 Page 5
then subject to the Florida income tax. The first $50,000 of net income is exempt, effective with
taxable years beginning January 1, 2013.26
Corporate income tax net collections in Fiscal Year 2019-2020 were $1.7 billion.27
Insurance Premium Tax
Florida imposes on insurers a tax on insurance premiums. For the tax imposed by
s. 624.509(1), F.S., tax is due on:
Insurance premiums;
Premiums for title insurance;
Assessments, including membership fees and policy fees and gross deposits received from
subscribers to reciprocal or interinsurance agreements; and
Annuity premiums or considerations.
The general tax rate is 1.75 percent of gross receipts on account of life and health insurance
policies covering Florida residents and on account of all other types of policies and contracts
covering property, subjects, or risks located, resident, or to be performed in Florida, minus
reinsurance and return premiums.28 Annuity policies or contracts held in Florida are taxed at
1 percent of gross receipts, and direct written premiums for bail bonds are taxed at 1.75 percent,
excluding any amounts retained by licensed bail bond agents or appointed managing general
agents.29 The insurance premium tax is collected by the DOR and distributed to the General
Revenue Fund.30 Total insurance premium tax collections in Fiscal Year 2019-2020 were
$893.7 million.31
Sales and Use Tax
Florida levies a 6 percent sales and use tax on the sale or rental of most tangible personal
property, admissions,32 transient rentals,33 and a limited number of services, and a 5.5 percent
sales and use tax on commercial real estate rentals.34 Chapter 212, F.S., authorizes the levy and
collection of the state sales tax, and provides exemptions and credits applicable to certain items
or uses under specified circumstances.35 Florida requires a dealer to add the tax to the sales price
26
Section 220.14, F.S.
27
Revenue Estimating Conference, General Revenue Consensus Estimating Conference Comparison Report (December 21,
2020), 27, available at http://www.edr.state.fl.us/Content/conferences/generalrevenue/grpackage.pdf (last visited April 8,
2021).
28
Section 624.509(1), F.S.
29
Id.
30
Section 624.509(3), F.S.
31
Supra note 27, at 34.
32
Section 212.04, F.S.
33
Section 212.03, F.S.
34
Section 212.031, F.S.
35
Section 212.02(14)(a), F.S.
BILL: CS/SB 1246 Page 6
of the taxable good or service and collect it from the purchaser at the time of sale.36 Total sales
tax collections in Fiscal Year 2019-2020 were estimated at $29.3 billion.37
In addition to the state sales tax, county and municipal governments and school districts are
authorized to levy certain local discretionary sales surtaxes (also referred to as local option sales
taxes), subject to certain requirements and limitations.38
III. Effect of Proposed Changes:
The bill authorizes a qualifying business to carry over unused credits under the CITC which were
generated in its 2020 taxable year, if:
The qualifying business operated a company within the standard classification codes of
4724 (travel agencies) or 7514 (passenger car rentals); and
The qualifying business’ total gross receipts between April 1, 2020, and December 31, 2020,
were 50 percent less when compared to the same period in 2019.
Such qualifying business may use up to 50 percent of such unused tax credits in the tax year
beginning January 1, 2021, by:
Transferring its unused tax credits to another taxpayer subject to the state corporate income
tax, as long as the business receiving the transferred credits uses the credits only in the year
received;
Using its unused tax credits against amounts payable to the DOR, either as consumer or
dealer, for sales and use tax liability; or
Applying its unused tax credits against corporate income tax payments for tax years
beginning January 1, 2021, and ending December 31, 2025.
The bill authorizes the DOR to adopt emergency rules to administer the act. The a