Could a support-services CITC project calculate project income using a jobs-change factor applied to consolidated Florida tax?

Plain-English summary

The Florida Department of Revenue accepted a corporation's proposed jobs-change-factor method for determining income and tax generated by a certified Capital Investment Tax Credit project.

The project supplied support services dedicated to the taxpayer's affiliated group, and all project income and expense appeared in the consolidated Florida return. The agreed method applied a factor based on the project-related change in jobs to the tax due on that consolidated return.

The agreement was expressly fact-dependent. If the request's representations were incorrect or later changed, project income and the resulting credit could be substantially different.

What this means for you

CITC project companies

When stand-alone project income is not directly visible, a proxy may be accepted through the required written agreement, but its factual basis must be supportable.

Corporate tax teams

Preserve job-count and consolidated-return data underlying the approved factor and revisit the method if the project changes.

Common questions

Q: Did Florida accept the jobs-change calculation?
A: Yes, for the represented project facts.

Q: Was the methodology permanent regardless of later changes?
A: No.

Citations and references

• Fla. Stat. §§ 220.11, 220.13, 220.15, 220.191, and 213.22
• Fla. Admin. Code r. 12C-1.0191

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 13C1-001

Original ruling text

Interim
Executive Director
Marshall Stranburg

QUESTION: Taxpayer requests a written agreement between itself and the Florida Department of
Revenue, concerning the method by which income generated by or arising out of a qualified capital
investment project shall be determined for purposes of applying the Florida Capital Investment Tax
Credit.
ANSWER: The Department is inclined to concur with Taxpayer’s suggested calculation for the income
generated by or arising out of the qualifying project. However, Taxpayer was reminded that should the
facts provided in its request be determined to be incorrect, the computation for the income generated by
or arising out of the project could be substantially different from what has been agreed upon.
January 11, 2013
XXX
XXX
XXX
Re: Technical Assistance Advisement 13C1-001
Request for Written Agreement for Determination of Income
Sections 220.11, 220.13, 220.15, 220.191, Florida Statutes (F.S.)
Rule 12C-1.0191, Florida Administrative Code (F.A.C.)
XXX (hereinafter referred to as “Taxpayer”)
Florida Department of Economic Opportunity (“DEO”)
Enterprise Florida, Inc. (hereinafter referred to as “EFI”)

Dear XXX:
This is in response to your request dated XXX, for a Technical Assistance Advisement (TAA) pursuant
to s. 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding your request for an agreement concerning
the method by which income generated by or arising out of Taxpayer’s qualified capital investment
project shall be determined for purposes of applying the Capital Investment Tax Credit (CITC).
Section 220.191(5), F.S., addresses applications for CITC. That statute provides:
Applications shall be reviewed and certified pursuant to s. 288.061. The Department of Economic
Opportunity, upon a recommendation by Enterprise Florida, Inc., shall first certify a business as eligible
to receive tax credits pursuant to this section prior to the commencement of operations of a qualifying
project, and such certification shall be transmitted to the Department of Revenue. Upon receipt of the
certification, the Department of Revenue shall enter into a written agreement with the qualifying
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Tallahassee, Florida 32399-0100

Technical Assistance Advisement 13C1-001
Page 2

business specifying, at a minimum, the method by which income generated by or arising out of the
qualifying project will be determined.
Pursuant to Rule 12C-1.0191, F.A.C., the Department of Revenue has adopted TAAs as the method for
entering into such written agreements.
The Department of Economic Opportunity has certified that Taxpayer is eligible to receive tax credits
under s. 220.191, F.S. The Department of Revenue, having received said certification, has examined
your letter and has established that you have complied with the statutory and regulatory requirements for
issuance of a TAA. Therefore, the Department of Revenue is hereby granting your request for a TAA.
The Department of Revenue, in issuing this TAA, has relied on the representations of Taxpayer and the
certification of the Department of Economic Opportunity. This TAA specifies the method by which
income generated by or arising out of the qualifying project will be determined based on the facts as
represented to the Department of Revenue. This response to your request constitutes a Technical
Assistance Advisement under Chapter 12-11, F.A.C., and is issued to you under authority of s. 213.22,
F.S.
ISSUES PRESENTED
May Taxpayer use the methodology described in its request for purposes of computing the income
generated by or arising out of its qualifying project?
DISCUSSION
On XXX, DEO issued a letter approving Taxpayer’s project for participation in Florida’s CITC
program, and indicated in its report that the “Qualifying Project” will be located in a High Impact
Performance Incentive Sector pursuant to s. 288.108, F.S. 1 This certification approval entitles the
project to eligibility for an annual tax credit against the corporate income tax imposed, in an amount
equal to the lesser of the following for up to twenty years, beginning with the commencement of
operations:

1. five (5) percent of the eligible capital costs which are estimated to be $XXX, but must be at least
   $XXX;
2. XXX percent of the annual corporate income tax liability generated by or arising out of the
   Qualifying Project; and
3. the income tax due on the Florida consolidated corporate income tax return that includes the
   income generated by or arising out of the qualifying project.
   Unused credits cannot be carried forward unless the Qualifying Project meets the requirement for credit
   carryovers provided in s. 220.19(2)(d), F.S. In addition, DEO has required the project to create at least
   XXX of the XXX net new jobs before the commencement of operations begins and requires all XXX of
   the net new jobs to be created and maintained for annual approval of Taxpayer’s CITC.
   1

DEO’s approval letter is attached to and incorporated into this Technical Assistance Advisement.

Technical Assistance Advisement 13C1-001
Page 3

Taxpayer’s letters of XXX, requests that the income generated by or arising out of the qualifying project
be determined using a jobs-change factor multiplied by the tax due on the consolidated corporate income
tax return (computation of Florida net income, line 11, Form F-1120). Taxpayer asserts this is
reasonable, because all income and expense of the qualifying project will be included in the consolidated
Florida income tax return of the Taxpayer’s affiliated group, and because the support services to be
provided through the qualifying project will be dedicated to the support of the entire affiliated group. 2
Given the specific circumstances involved in this case, and based on the representation of the Taxpayer,
the Department concurs with Taxpayer’s suggested calculation for the income generated by or arising
out of the qualifying project. However, Taxpayer is reminded that should the facts provided in its
request of XXX, or its supplemental letter of XXX, be determined to be incorrect or changed, the
computation for the income generated by or arising out of the project could be substantially different
from what has been agreed upon in this TAA.
CLOSING LANGUAGE
This response constitutes a TAA under s. 213.22, F.S., which is binding on the Department only under
the facts and circumstances described in the request for this advice as specified in s. 213.22, F.S. Our
response is based on those facts and specific situation summarized above. You are advised that
subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules
upon this advice is based may subject future transactions to a different treatment than expressed in this
response.
You are further advised that this response, your request and related backup documents are public records
under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s. 213.22,
F.S. Confidential information must be deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an edited copy of your request for TAA,
the backup material and this response, deleting names, addresses and any other details which might lead
to identification of the taxpayer. Your response should be received by the Department within 15 days of
the date of this letter.
Sincerely,

Ellen Wolfgang
Deputy Director
Technical Assistance and Dispute Resolution
Record ID 137095

2

Taxpayer’s request is attached to and incorporated into this TAA.