The Florida Department of Revenue (DOR) has revised the process for obtaining the state’s research and development (R&D) tax credit. For the 2015 calendar year the total credit available increased to $23 million from $9 million in 2014.
In previous years, the Florida R&D credit was awarded on a first-come-first-serve basis, with a $9 million annual cap. During the 2015 application period for 2014 calendar year claims, the DOR received a total of 81 applications for $24 million of credits. Of these, only 21 received funding. All of the applications that received funding were filed within 9 minutes of the application period opening. For the 2015 calendar-year period, the Florida R&D tax credit will be awarded to all qualifying businesses through a weeklong application window that runs from March 20, 2016, through March 26, 2016. Credits will be distributed on a pro rata basis to all qualifying applicants if the total credits applied for exceed the annual cap.
The credit is available only to C corporations and limited liability companies taxed as corporations in the manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology industries.
Any business applying for the credit first must obtain a letter from the Florida Department of Economic Opportunity (DEO) that will certify it as eligible to apply for the credit. Additional information on the certification process is available on the DOR website. In addition to completing the certification process with the DEO, taxpayers are required to include their 2015 federal Form 6765, “Credit for Increasing Research Activities,” with their application for the credit to the Florida DOR as proof of eligibility for the credit. Form 6765 can be submitted during the application process even if the business has not filed its 2015 income tax return.
The Florida credit is equal to 10 percent of the current tax year’s qualified research expenses (QREs) incurred in Florida over the base amount. The base amount is the average of QREs incurred in Florida for the previous four tax years. Florida generally follows the federal definition of QREs. If the business has existed less than four years, then the credit amount is reduced by 25 percent for each year the business or predecessor corporation did not exist. Fiscal year filers may claim a credit for eligible QREs incurred during the 2015 calendar year matched up against a fiscal year base period.
Businesses should evaluate their 2015 Florida research activities to determine if they are eligible for the expanded Florida research credit.