What project-income method did Florida approve for the Capital Investment Tax Credit in TAA 24C1-004?

Plain-English summary

The Department approved a yearly jobs-change factor to determine income generated by the qualifying project. The taxpayer would divide the project's new-to-Florida jobs to date by the taxpayer's jobs, then multiply that factor by the Florida portion of total net income.

Total net income would be calculated on a separate pro forma basis. The schedules would include total revenues, cost of goods sold, payroll, direct expenses, and allocated indirect costs.

The resulting project taxable income would be multiplied by the applicable tax rate to determine annual project tax liability.

What this means for you

This agreement isolates project income through job growth and a separate financial schedule. It is not a general formula for businesses or projects with different facts.

Common questions

What was the numerator of the factor? The project's new-to-Florida jobs to date.

What amount did the factor apply to? The Florida portion of total net income.

What did the pro forma schedule include? Revenues, cost of goods sold, payroll, direct expenses, and allocated indirect costs.

Citations and references

• Fla. Stat. §§ 220.11, 220.13, 220.15, and 220.191 and Fla. Admin. Code r. 12C-1.0191, as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 24C1-004

Original ruling text

Florida Department of Revenue
Office of Technical Assistance

Jim Zingale
Executive Director

5050 West Tennessee Street Tallahassee FL 32399

floridarevenue.com

QUESTION: Taxpayer requests a written agreement between themselves 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 the Florida Capital
Investment Tax Credit under s. 220.191, F.S.
ANSWER: 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 be determined to be substantially different, this TAA would not apply,
and the methodology may be deemed inappropriate.
November 26, 2024

Via email to:
Re:

Dear

Technical Assistance Advisement –
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.”)
. (“Taxpayer”)
BP#
FEIN:
Project ID:
Florida Department of Commerce (“Florida Commerce”)
:

This is in response to your request dated
, for a Technical Assistance Advisement
(“TAA”) pursuant to section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding your request
for an agreement concerning how 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 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

Technical Assistance Advisement
November 26, 2024
Page 2

transmitted to the Department of Revenue. Upon receipt of the certification, the
Department of Revenue shall enter into a written agreement with the qualifying 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.
On
, Florida Commerce certified Taxpayer as 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 Florida Commerce. 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.

ISSUE PRESENTED
In its letter dated
, Taxpayer requests a written agreement to determine how the
qualifying project’s income will be computed, based upon s. 220.191, F.S., and Rule 12C-1.0191,
F.A.C.

FACTS SUPPLIED BY TAXPAYER
Taxpayer and its wholly owned subsidiaries operate

.
The qualifying project (“Project”) consists of

.
Taxpayer intends to create at least 100 net new-to-Florida full-time equivalent jobs in connection
with the project in
paying an average annualized wage of at least
(“project wage”). Taxpayer estimates that its cumulative capital investment will be
. Commencement of operations is estimated to occur by
.
The project investment is being made by
where the project operations will reside. Taxpayer

. (Taxpayer), which is the entity
.

Technical Assistance Advisement
November 26, 2024
Page 3

.
Taxpayer proposes using a jobs-change factor to determine the income generated by or arising
out of the Qualifying Project. The jobs-change factor would be determined yearly by dividing the
project’s new-to-Florida jobs to date by the
jobs employed by Taxpayer, which
includes
. The jobs-change factor would be multiplied
by the Florida portion of total
net income. Total
net income would be
determined on a separate pro-forma basis by scheduling total
revenues and expenses
of Taxpayer and its affiliates, which would include
sales
), associated cost of goods sold,
payroll,
direct
expenses, and other allocated indirect costs (
).

. The
factor would be applied against
total
net income to determine the qualifying project’s annual taxable income. The
qualifying project’s annual taxable income will then be multiplied by the applicable tax rate to
determine the project’s annual tax liability. Total
net income and the Florida portion of
total
net income would be determined by generally accepted accounting principles and
will conform to the provisions within Florida Income Tax Law under Chapter 220, F.S.

LEGAL AUTHORITY
Section 220.11, F.S., states in part:
(1) A tax measured by net income is hereby imposed on every taxpayer for each taxable
year commencing on or after January 1, 1972, and for each taxable year which begins
before and ends after January 1, 1972, for the privilege of conducting business, earning
or receiving income in this state, or being a resident or citizen of this state. Such tax shall
be in addition to all other occupation, excise, privilege, and property taxes imposed by this
state or by any political subdivision thereof, including any municipality or other district,
jurisdiction, or authority of this state….
Section 220.13, F.S., states in part:
(1) The term “adjusted federal income” means an amount equal to the taxpayer’s taxable
income as defined in subsection (2), or such taxable income of more than one taxpayer
as provided in s. 220.131, for the taxable year, adjusted as follows: …
Section 220.15, F.S., states in part:

Technical Assistance Advisement
November 26, 2024
Page 4

(1) Except as provided in ss. 220.151, 220.152, and 220.153, adjusted federal income as
defined in s. 220.13 shall be apportioned to this state by taxpayers doing business
within and without this state by multiplying it by an apportionment fraction composed
of a sales factor representing 50 percent of the fraction, a property factor representing
25 percent of the fraction, and a payroll factor representing 25 percent of the fraction.
…
Section 220.191, F.S., states in part:
(1) DEFINITIONS.—For purposes of this section:
(a) “Commencement of operations” means the beginning of active operations by a
qualifying business of the principal function for which a qualifying project was constructed.
(b) “Cumulative capital investment” means the total capital investment in land, buildings,
and equipment made in connection with a qualifying project during the period from the
beginning of construction of the project to the commencement of operations.
(c) “Eligible capital costs” means all expenses incurred by a qualifying business in
connection with the acquisition, construction, installation, and equipping of a qualifying
project during the period from the beginning of construction of the project to the
commencement of operations, including, but not limited to: …
(d) “Income generated by or arising out of the qualifying project” means the qualifying
project’s annual taxable income as determined by generally accepted accounting
principles and under s. 220.13.

(f) “Qualifying business” means a business which establishes a qualifying project in this
state and which is certified by the Department of Economic Opportunity to receive tax
credits pursuant to this section.

(2)(a) An annual credit against the tax imposed by this chapter shall be granted to any
qualifying business in an amount equal to 5 percent of the eligible capital costs generated
by a qualifying project, for a period not to exceed 20 years beginning with the
commencement of operations of the project. …The annual tax credit granted under this
section shall not exceed the following percentages of the annual corporate income tax
liability or the premium tax liability generated by or arising out of a qualifying project:

1. One hundred percent for a qualifying project which results in a cumulative capital
   investment of at least $100 million.
2. Seventy-five percent for a qualifying project which results in a cumulative capital
   investment of at least $50 million but less than $100 million.
3. Fifty percent for a qualifying project which results in a cumulative capital investment
   of at least $25 million but less than $50 million.

(4) Prior to receiving tax credits pursuant to this section, a qualifying business must
achieve and maintain the minimum employment goals beginning with the commencement

Technical Assistance Advisement
November 26, 2024
Page 5

of operations at a qualifying project and continuing each year thereafter during which tax
credits are available pursuant to this section.

(8) The Department of Revenue may specify by rule the methods by which a project’s pro
forma annual taxable income is determined.

DISCUSSION
On
, Florida Commerce issued a letter approving Taxpayer’s project for
participation in Florida’s CITC program, and indicated in its letter that the “Qualifying Project”
would be located in a High Impact Performance Incentive Sector pursuant to s. 288.108, F.S. The
certification approval entitles the project to eligibility for an annual tax credit against the corporate
income tax imposed if certain criteria are met, 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 cumulative capital investment, which is estimated to be
   ,
   but must be at least $25 million
2. Fifty (50%), seventy-five (75%), or one hundred percent (100%) of the annual corporate
   income tax liability generated by or arising out of the qualifying project, depending on the
   level of cumulative capital investment; or
3. The tax due on the Florida consolidated corporate income tax return prior to application of
   this credit that includes the income generated by or arising out of the qualifying project.
   Florida Commerce has required that the qualifying project meet certain criteria by the
   commencement of operations. The “commencement of operations” (as defined in s. 220.191,
   F.S.) will not be deemed to occur unless Taxpayer has provided Florida Commerce with evidence
   that it has met the following criteria:
4. Capital investment of at least $25 million has been made at the project’s location
   in
   ; and
5. Creation of at least 100 net new-to-Florida full-time equivalent jobs paying at least
   the project wage at the project’s location in
   .
   No annual CITC may be claimed without a letter from Florida Commerce stating that the
   appropriate annual requirements have been satisfied or maintained.
   The Department concurs with Taxpayer’s proposal. With its annual Florida corporate income tax
   filing, Taxpayer will provide a pro forma Florida corporate income tax return for the project and
   calculations used in the determination of the annual CITC. Taxpayer will also provide a copy of
   the letter from Florida Commerce certifying the annual requirements have been satisfied or
   maintained.
   Pursuant to s. 220.191(2)(d), F.S., when the capital investment is at least $100 million, credit
   amounts not fully used in any one year because of insufficient tax liability on the part of the
   qualifying business may be used in any one year or years beginning with the 21st year after the
   commencement of operations of the project and ending with the 30th year after the
   commencement of operations of the qualifying project.

Technical Assistance Advisement
November 26, 2024
Page 6

The amount of carryover from any one taxable year is five (5) percent of the cumulative capital
investment that is at least $100 million less the amount of capital investment tax credit that could
be used on the tax return for the taxable year. The amount of carryover from a taxable year may
not exceed five (5) percent of the cumulative capital investment that is at least $100 million.

CONCLUSION
Given the specific circumstances involved in this case, and based on the representation of the
Taxpayer, the computation above properly computes the income generated by or arising out of
the qualifying project based upon s. 220.191, F.S., and Rule 12C-1.0191, F.A.C. However,
Taxpayer is reminded that should the facts provided in its request of
, 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.
This response constitutes a Technical Assistance Advisement under section 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 section 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 section 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 Technical Assistance Advisement, 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,

Denise L. Smith
Denise L. Smith
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 717-6326
cc:

Technical Assistance Advisement
November 26, 2024
Page 7
Record ID: 7001205520

Office of Technical Assistance Satisfaction Survey
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opportunity to provide feedback on your recent experience with the Department’s office of Office of
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Notification number:

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Respondent code:

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Tax type:

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Correspondence type: Technical Assistance
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Thank you.