February 26, 2015

Florida's R&D Credit: Application Submission Opens March 20th

By Musab Karim - Staff Accountant, Tax & Business Services

Florida's R&D Credit: Application Submission Opens March 20th Tax & Business

Starting with the calendar year 2012, Florida introduced the Research and Development Expense Credit as an incentive for corporations in certain targeted industry businesses, such as manufacturing, biotech, telecommunications and certain finance services. Taxpayers engaged in these targeted industries can apply to take advantage of the Research and Development credit starting March 20, 2015, for research and development expenses incurred in 2014.

The State has allocated $9 million for this specific credit and the allocation must be claimed by businesses on a first come, first serve application process. In the last two years, the application process was so competitive that all the allocations were gone the very first day!  In 2014, the last application approved was accepted just nine minutes after the application process was opened.

What’s the benefit?
The tentative allowable amount of credit is equal to ten percent (10%) of the amount of qualified research expenses incurred in Florida and allowed under pursuant to the Internal Revenue Code rules that exceed a specified base amount. The base amount is defined to be the average of the qualified research expenses incurred in Florida for the four tax years preceding the tax year for which the credit will be taken. The credit cannot offset more than fifty percent (50%) of the net income tax liability, but can be carried forward for a period of 5 years.

Who is eligible?
Corporations doing business in specific targeted industries and qualify for the Federal Research Credit can apply for the allocation of funds for the Florida Research and Development Expense Credit. Target industries include those businesses involved in manufacturing, testing, training, software development, in the following industries:

  • Cleantech
  • Life Sciences
  • Infotech
  • Aviation
  • Aerospace
  • Homeland security
  • Defense
  • Financial Services

A complete list of target industry businesses is provided by Enterprise Florida, Inc., at http://www.enterpriseflorida.com/wp-content/uploads/SI_Targeted_Industries.pdf.

How to apply:
Applications can be submitted online through Florida Department of Revenue website (see details below.) The following information is required to be provided in order to apply:

  • Tax year, Federal Employer Identification Number (FEIN), Corporation’s name and date of incorporation and  mailing address
  • Contact person’s name, telephone number, and email address
  • Parent corporation’s name and FEIN (if filing a consolidated Florida income tax return)
  • Indication of corporation’s target industry and list of activities, products, and services in Florida
  • Indication of corporation’s intent to claim a federal research credit and amount of corporation’s total (including Florida and non-Florida) research expenses qualifying for the federal research credit under section 41, Internal Revenue Code (IRC), incurred during calendar year 2014
  • Research expenses incurred in Florida during the base years that qualified for the federal research credit under section 41, IRC
  • Qualified research expenses incurred in Florida during the 2014 calendar year
The application will be available on the Department of Revenue’s Internet site at www.myflorida.com/dor through the Tax Incentives page. When the completed application is submitted online, the Department will provide a confirmation number.

For more information on target industry businesses, contact Enterprise Florida, Inc., at 407-956-5600 or if you have questions related to your Company’s R&D, contact your Marcum Tax Credit Specialist to assist you in determining eligibility.

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