What project-income method did Florida approve for the Capital Investment Tax Credit in TAA 25C1-002M?

Plain-English summary

The qualifying business proposed a weighted two-factor method for determining project income. The jobs-change factor equaled project new jobs divided by the taxpayer's total Florida jobs including the new project jobs. The property factor equaled project property divided by the taxpayer's total Florida property.

The overall factor weighted job change one-third and property two-thirds. It would be determined once at commencement of operations and apply for the credit term.

The overall factor would multiply the taxpayer's Florida portion of adjusted federal income to determine project taxable income, which would then be multiplied by the applicable tax rate. The Department accepted the calculation.

What this means for you

This agreement fixed a project-specific ratio at commencement of operations. It was not a factor recalculated annually or a general method available without a written agreement.

Common questions

What were the weights? One-third job change and two-thirds property.

When was the factor determined? Once at commencement of operations.

How long did it apply? For the term of the credit.

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 25C1-002M

Original ruling text

Florida Department of Revenue Jim Zingale
Technical Assistance and Dispute Resolution Executive Director

EPARTMENT OF REVENUE

FLORIDA

5050 West Tennessee Street Tallahassee FL 32399

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.

June 13, 2025

Via emai! tc:

Re: Technical Assistance Advisement — 25C1-002M
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.”)
ES (“T2xpayer’)
Business Partner Number:
FEIN:
Project ID:

Florida Department of Commerce (“FloridaCommerce’”)

This is in response to your request dated ME, 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 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 SE . FloridaCommerce 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 MM, 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

The qualifying project (“Project”) Ill
ees

The qualifying project (“Project”) is required to create at least 100 net new-to-Florida full-time

equivalent jobs at the project location in the MM, paying an average

annualized wage of at least SJ (“project wage’).

Taxpayer estimates that its cumulative capital investment will be SJ. The investment
includes aaa
WB. Taxpayer anticipates commencing operations of the project on or before
ee

Taxpayer Ss a

Taxpayer has proposed utilizing a weighted two-factor method to determine the income generated
by or arising out of the Project. The two weighted factors would be a 1/3 jobs-change factor and
a 2/3 property factor. The jobs-change factor would be determined by dividing the Project’s new
jobs by total existing jobs, including the Project’s new jobs, employed by Taxpayer in Florida. The
property factor would be determined by dividing the Project’s property by Taxpayer’s total Florida
property.

The two factors would be weighted on a 1/3rd and 2/3rds basis for jobs-change and property in
determining the overall factor. The determination of the factor would occur once at the
commencement of operations and would apply to the term of the credit. The overall factor would
be multiplied by Taxpayer’s Florida portion of adjusted federal income (line 7 of the Florida
Corporate Income Tax Return, F-1120) to determine the Project's taxable income. The Project's
taxable income would then be multiplied by the applicable tax rate’.

Taxpayer asserts that this is a reasonable methodology as all income and expense of the Project

will be included in the Florida income tax return of Taxpayer, and the services to be provided
through the Project will assist in supporting the Company as a whole.

LEGAL AUTHORITY

Section 220.11(1), 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 220.15(1), F.S., states in part:

(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

1 Please see Exhibit A for weighted two-factor calculation method.

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:

KKK

(b) “Commencement of operations” means the beginning of active operations by
a qualifying business of the principal function for which a qualifying project was
constructed.

(c) “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.

(d) “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: ...

(e) “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

KKK

(h) “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.

KKK

(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.

KKK

(d) If the credit granted under subparagraph (a)1. is not fully used in any one year
because of insufficient tax liability on the part of the qualifying business, the unused
amounts may be used in any one year or years beginning with the 21st year after the
commencement of operations of the project and ending the 30th year after the
commencement of operations of the project.

KKK

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

KKK

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

Rule 12C-1.0191(1)(a)1., F.A.C., states:

In situations where the applicant is using a separate corporate entity to account for the
activities of the qualifying project, the taxable income generated by that entity as reported on
the return filed pursuant to section 220.22(1), F.S., will be used to determine the amount of
income tax due and the subsequent amount of the credit that will be available for use. If the
applicant has other activities not related to the project reported on this return, a pro forma
attachment will be required to separately account for the taxable income generated by the
project, the resulting amount of tax due, and the subsequent amount of the credit that will be
available for use.

DISCUSSION

On . FloridaCommerce issued a letter approving Taxpayer's project for
participation in Florida’s CITC program, and indicated in its letter that the qualifying project will be

located in 2 a 11
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 Sj
   BB. 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 separate Florida corporate income tax return of Taxpayer prior to
   the application of this credit 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 requirements
for credit carryovers provided in s. 220.191(2)(d), F.S. In addition, FloridaCommerce has required
the qualifying project to create and maintain at least 100 net new-to-Florida full-time equivalent
jobs paying an average annualized wage of at least SJ at the project location 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 FloridaCommerce with evidence that it has met the investment and
job creation, and retention requirements as described in FloridaCommerce’s Letter of
Certification.

FloridaCommerce 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 FloridaCommerce with evidence
that it has met the following criteria:

1. Capital investment of at least SJ has been made at the project’s location
2. 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 qm.

No annual CITC may be claimed without a Letter of Certification from FloridaCommerce stating
that the appropriate annual requirements have been met and/or maintained.

Since all the activities in Florida are related to the project, Taxpayer has proposed using the
taxable income determined on the separately filed Florida corporate income tax return as the
income generated by or arising out of the qualifying project. This amount would be used to
determine the tax liability of the project and the corresponding CITC. The Department concurs
with Taxpayer’s methodology.

The Department agrees with Taxpayer’s proposed weighted two-factor method to determine the
income generated by or arising out of the Project. The two weighted factors would be a 1/3 jobs-
change factor and a 2/3 property factor for apportionment in Florida. The Project’s taxable income
would then be multiplied by the applicable tax rate. The allowable CITC will be limited to the
lesser of the limitations stated above.

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.

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 Department concurs with Taxpayer’s suggested calculation for 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
Gb 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

Tax Law Specialist

Office of Technical Assistance
(850) 717-6326

Record ID: 7001430899