Florida Senate - 2020 SB 1596 By Senator Rodriguez 37-00418-20 20201596__ Page 1 of 35 CODING: Words stricken are deletions; words underlined are additions. A bill to be entitled 1

An act relating to the corporate income tax; amending 2 s. 220.03, F.S.; revising the definition of the term 3 “taxpayer”; defining terms; amending s. 220.13, F.S.; 4 revising the definition of the term “adjusted federal 5 income” to prohibit specified deductions, to limit 6 certain carryovers, and to require subtractions of 7 certain amounts paid and received within a water’s 8 edge group for the purpose of determining subtractions 9 from taxable income; conforming provisions to changes 10 made by the act; repealing s. 220.131, F.S., relating 11 to the adjusted federal income of affiliated groups; 12 creating s. 220.136, F.S.; specifying circumstances 13 under which a corporation is presumed to be, deemed to 14 be, or deemed not to be a member of a water’s edge 15 group; defining the term “United States”; providing 16 construction; creating s. 220.1363, F.S.; defining the 17 term “water’s edge reporting method”; specifying 18 requirements for, limitations on, and prohibitions in 19 calculating and reporting income in a water’s edge 20 group return; requiring all members of a water’s edge 21 group to use the water’s edge reporting method; 22 defining the term “sale”; specifying requirements for 23 designating the filing member and the taxable year of 24 the water’s edge group; specifying income reporting 25 requirements for certain members of the water’s edge 26 group; requiring that a water’s edge group return 27 include a specified computational

schedule and 28 domestic disclosure spreadsheet; authorizing the 29

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 2 of 35 CODING: Words stricken are deletions; words underlined are additions.

Department of Revenue to adopt rules; providing 30 legislative intent regarding the adoption of rules; 31 amending s. 220.14, F.S.; revising the calculation for 32 prorating a certain corporate income tax exemption to 33 reflect leap years; conforming a provision to changes 34 made by the act; amending ss. 220.15, 220.183, 35 220.1845, 220.1875, 220.191, 220.193, and 220.27, 36 F.S.; conforming provisions to changes made by the 37 act; creating s. 220.28, F.S.; specifying, for certain 38 taxpayers and for taxable years beginning on a 39 specified date, requirements in filing corporate tax 40 returns; amending s. 220.51, F.S.; conforming 41 provisions to changes made by the act; amending s. 42 220.64, F.S.; providing applicability of water’s edge 43 group provisions to the franchise tax; conforming 44 provisions to changes made by the act; amending ss. 45 288.1254 and 376.30781, F.S.; conforming provisions to 46 changes made by the act; requiring that funds 47 recaptured pursuant to this act be appropriated for a 48 certain purpose; providing an effective date. 49 50 WHEREAS, the Legislature finds that the separate accounting 51 system used to measure the income of multistate and 52 multinational corporations for tax purposes often places Florida 53 corporations at a competitive disadvantage and, moreover, that 54 corporate business is increasingly conducted through groups of 55 commonly owned corporations, and 56 WHEREAS, the Legislature intends to more accurately measure 57 the business activities of corporations by adopting a combined 58

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 3 of 35 CODING: Words stricken are deletions; words underlined are additions. system of income tax reporting, NOW, THEREFORE, 59 60 Be It Enacted by the Legislature of the State of Florida: 61 62

Section 1. Paragraph (

z) of subsection (1) of

section 63 220.03, Florida Statutes, is amended, and paragraphs (gg), (hh), 64 and (ii) are added to that subsection, to read: 65 220.03

Definitions.— 66

(1) SPECIFIC TERMS.—When used in this code, and when not 67 otherwise distinctly expressed or manifestly incompatible with 68 the intent thereof, the following terms shall have the following 69 meanings: 70 (z) “Taxpayer” means any corporation subject to the tax 71 imposed by this code, and includes all corporations that are 72 members of a water’s edge group for which a consolidated return 73 is filed under s. 220.131.

However, the term “taxpayer” does not 74 include a corporation having no individuals, (including 75 individuals employed by an affiliate,) receiving compensation in 76 this state as defined in s. 220.15 when the only property owned 77 or leased by the said corporation, (including an affiliate,) in 78 this state is located at the premises of a printer with which it 79 has contracted for printing, if such property consists of the 80 final printed product, property which becomes a part of the 81 final printed product, or property from which the printed 82 product is produced. 83 (gg) “Tax haven” means a jurisdiction to which any of the 84 following apply for a particular taxable year: 85 1.

It is identified by the Organization for Economic Co-86 operation and Development as a tax haven or as having harmful 87

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 4 of 35 CODING: Words stricken are deletions; words underlined are additions. tax practices or a preferential tax regime. 88 2. It is a jurisdiction that does not impose any, or 89 imposes only a nominal, effective tax on relevant income. 90 3. It has laws or practices that prevent the effective 91 exchange of information for tax purposes with other governments 92 regarding taxpayers who are subject to, or who are benefiting 93 from, the tax regime. 94 4. It lacks transparency.

For purposes of this 95 subparagraph, a tax regime lacks transparency if the details of 96 legislative, legal, or administrative requirements are not open 97 to public scrutiny and apparent or are not consistently applied 98 among similarly situated taxpayers. 99 5. It facilitates the establishment of foreign-owned 100 entities without the need for a local substantive presence or 101 prohibits the entities from having any commercial impact on the 102 local economy. 103 6.

It explicitly or implicitly excludes the jurisdiction’s 104 resident taxpayers from taking advantage of the tax regime’s 105 benefits or prohibits enterprises that benefit from the regime 106 from operating in the jurisdiction’s domestic market. 107 7.

It has created a tax regime that is favorable for tax 108 avoidance based on an overall assessment of relevant factors, 109 including whether the jurisdiction has a significant untaxed 110 offshore financial or other services sector relative to its 111 overall economy. 112 (hh) “Tax regime” means a set or system of rules, laws, 113 regulations, or practices by which taxes are imposed on any 114 person, corporation, or entity or on any income, property, 115 incident, indicia, or activity pursuant to government authority. 116

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 5 of 35 CODING: Words stricken are deletions; words underlined are additions. (ii) “Water’s edge group” means a group of corporations 117 related through common ownership whose business activities are 118 integrated with, are dependent upon, or contribute to a flow of 119 value among members of the group. 120

Section

Section 220.13, Florida Statutes, is amended to 121 read: 122 220.13 “Adjusted federal income” defined.— 123

(1) The term “adjusted federal income” means an amount 124 equal to the taxpayer’s taxable income as defined in subsection 125 (2), or such taxable income of a water’s edge group more than 126 one taxpayer as provided in s. 220.1363 s. 220.131, for the 127 taxable year, adjusted as follows: 128 (

a) Additions.—There shall be added to such taxable income: 129 1.a. The amount of any tax upon or measured by income, 130 excluding taxes based on gross receipts or revenues, paid or 131 accrued as a liability to the District of Columbia or any state 132 of the United States which is deductible from gross income in 133 the computation of taxable income for the taxable year. 134 b.

Notwithstanding sub-subparagraph a., if a credit taken 135 under s. 220.1875 is added to taxable income in a previous 136 taxable year under subparagraph 11. and is taken as a deduction 137 for federal tax purposes in the current taxable year, the amount 138 of the deduction allowed shall not be added to taxable income in 139 the current year. The exception in this sub-subparagraph is 140 intended to ensure that the credit under s. 220.1875 is added in 141 the applicable taxable year and does not result in a duplicate 142 addition in a subsequent year. 143 2.

The amount of interest which is excluded from taxable 144 income under s. 103(

a) of the Internal Revenue Code or any other 145

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 6 of 35 CODING: Words stricken are deletions; words underlined are additions. federal law, less the associated expenses disallowed in the 146 computation of taxable income under s. 265 of the Internal 147 Revenue Code or any other law, excluding 60 percent of any 148 amounts included in alternative minimum taxable income, as 149 defined in s. 55(b)(2) of the Internal Revenue Code, if the 150 taxpayer pays tax under s. 220.11(3). 151 3.

In the case of a regulated investment company or real 152 estate investment trust, an amount equal to the excess of the 153 net long-term capital gain for the taxable year over the amount 154 of the capital gain dividends attributable to the taxable year. 155 4. That portion of the wages or salaries paid or incurred 156 for the taxable year which is equal to the amount of the credit 157 allowable for the taxable year under s. 220.181. This 158 subparagraph shall expire on the date specified in s. 290.016 159 for the expiration of the Florida Enterprise Zone Act. 160 5.

That portion of the ad valorem school taxes paid or 161 incurred for the taxable year which is equal to the amount of 162 the credit allowable for the taxable year under s. 220.182. This 163 subparagraph shall expire on the date specified in s. 290.016 164 for the expiration of the Florida Enterprise Zone Act. 165 6. The amount taken as a credit under s. 220.195 which is 166 deductible from gross income in the computation of taxable 167 income for the taxable year. 168 7.

That portion of assessments to fund a guaranty 169 association incurred for the taxable year which is equal to the 170 amount of the credit allowable for the taxable year. 171 8. In the case of a nonprofit corporation which holds a 172 pari-mutuel permit and which is exempt from federal income tax 173 as a farmers’ cooperative, an amount equal to the excess of the 174

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 7 of 35 CODING: Words stricken are deletions; words underlined are additions. gross income attributable to the pari-mutuel operations over the 175 attributable expenses for the taxable year. 176 9. The amount taken as a credit for the taxable year under 177 s. 220.1895. 178 10. Up to nine percent of the eligible basis of any 179 designated project which is equal to the credit allowable for 180 the taxable year under s. 220.185. 181 11. The amount taken as a credit for the taxable year under 182 s. 220.1875.

The addition in this subparagraph is intended to 183 ensure that the same amount is not allowed for the tax purposes 184 of this state as both a deduction from income and a credit 185 against the tax. This addition is not intended to result in 186 adding the same expense back to income more than once. 187 12. The amount taken as a credit for the taxable year under 188 s. 220.192. 189 13. The amount taken as a credit for the taxable year under 190 s. 220.193. 191 14.

Any portion of a qualified investment, as defined in s. 192 288.9913, which is claimed as a deduction by the taxpayer and 193 taken as a credit against income tax pursuant to s. 288.9916. 194 15. The costs to acquire a tax credit pursuant to s. 195 288.1254(5) that are deducted from or otherwise reduce federal 196 taxable income for the taxable year. 197 16. The amount taken as a credit for the taxable year 198 pursuant to s. 220.194. 199 17. The amount taken as a credit for the taxable year under 200 s. 220.196.

The addition in this subparagraph is intended to 201 ensure that the same amount is not allowed for the tax purposes 202 of this state as both a deduction from income and a credit 203

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 8 of 35 CODING: Words stricken are deletions; words underlined are additions. against the tax. The addition is not intended to result in 204 adding the same expense back to income more than once. 205 (

b) Subtractions.— 206 1. There shall be subtracted from such taxable income: 207 a. The net operating loss deduction allowable for federal 208 income tax purposes under s. 172 of the Internal Revenue Code 209 for the taxable year, except that any net operating loss that is 210 transferred pursuant to s. 220.194(6) may not be deducted by the 211 seller, 212 b. The net capital loss allowable for federal income tax 213 purposes under s. 1212 of the Internal Revenue Code for the 214 taxable year, 215 c.

The excess charitable contribution deduction allowable 216 for federal income tax purposes under s. 170(d)(2) of the 217 Internal Revenue Code for the taxable year, and 218 d.

The excess contributions deductions allowable for 219 federal income tax purposes under s. 404 of the Internal Revenue 220 Code for the taxable year. 221 222 However, a net operating loss and a capital loss shall never be 223 carried back as a deduction to a prior taxable year, but all 224 deductions attributable to such losses shall be deemed net 225 operating loss carryovers and capital loss carryovers, 226 respectively, and treated in the same manner, to the same 227 extent, and for the same time periods as are prescribed for such 228 carryovers in ss. 172 and 1212, respectively, of the Internal 229 Revenue Code.

A deduction is not allowed for net operating 230 losses, net capital losses, or excess contribution deductions 231 under 26 U.S.C. ss. 170(d)(2), 172, 1212, and 404 for a member 232

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 9 of 35 CODING: Words stricken are deletions; words underlined are additions. of a water’s edge group which is not a United States member. 233 Carryovers of net operating losses, net capital losses, or 234 excess contribution deductions under 26 U.S.C. ss. 170(d)(2), 235 172, 1212, and 404 may be subtracted only by the member of the 236 water’s edge group which generates a carryover. 237 2. There shall be subtracted from such taxable income any 238 amount to the extent included therein the following: 239 a.

Dividends treated as received from sources without the 240 United States, as determined under s. 862 of the Internal 241 Revenue Code. 242 b. All amounts included in taxable income under s. 78, s. 243 951, or s. 951A of the Internal Revenue Code. 244 245 However, any amount subtracted under this subparagraph is 246 allowed only to the extent such amount is not deductible in 247 determining federal taxable income.

As to any amount subtracted 248 under this subparagraph, there shall be added to such taxable 249 income all expenses deducted on the taxpayer’s return for the 250 taxable year which are attributable, directly or indirectly, to 251 such subtracted amount. Further, no amount shall be subtracted 252 with respect to dividends paid or deemed paid by a Domestic 253 International Sales Corporation. 254 3.

Amounts received by a member of a water’s edge group as 255 dividends paid by another member of the water’s edge group must 256 be subtracted from the taxable income to the extent that the 257 dividends are included in the taxable income. 258 4.3. In computing “adjusted federal income” for taxable 259 years beginning after December 31, 1976, there shall be allowed 260 as a deduction the amount of wages and salaries paid or incurred 261

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 10 of 35 CODING: Words stricken are deletions; words underlined are additions. within this state for the taxable year for which no deduction is 262 allowed pursuant to s. 280C(

a) of the Internal Revenue Code 263 (relating to credit for employment of certain new employees). 264 5.4. There shall be subtracted from such taxable income any 265 amount of nonbusiness income included therein. 266 6.5. There shall be subtracted any amount of taxes of 267 foreign countries allowable as credits for taxable years 268 beginning on or after September 1, 1985, under s. 901 of the 269 Internal Revenue Code to any corporation which derived less than 270 20 percent of its gross income or loss for its taxable year 271 ended in 1984 from sources within the United States, as 272 described in s. 861(a)(2)(

A) of the Internal Revenue Code, not 273 including credits allowed under ss. 902 and 960 of the Internal 274 Revenue Code, withholding taxes on dividends within the meaning 275 of sub-subparagraph 2.a., and withholding taxes on royalties, 276 interest, technical service fees, and capital gains. 277 7.6.

Notwithstanding any other provision of this code, 278 except with respect to amounts subtracted pursuant to 279 subparagraphs 1. and 4. 3., any increment of any apportionment 280 factor which is directly related to an increment of gross 281 receipts or income which is deducted, subtracted, or otherwise 282 excluded in determining adjusted federal income shall be 283 excluded from both the numerator and denominator of such 284 apportionment factor.

Further, all valuations made for 285 apportionment factor purposes shall be made on a basis 286 consistent with the taxpayer’s method of accounting for federal 287 income tax purposes. 288 (

c) Installment sales occurring after October 19, 1980.— 289 1. In the case of any disposition made after October 19, 290

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 11 of 35 CODING: Words stricken are deletions; words underlined are additions. 1980, the income from an installment sale shall be taken into 291 account for the purposes of this code in the same manner that 292 such income is taken into account for federal income tax 293 purposes. 294 2. Any taxpayer who regularly sells or otherwise disposes 295 of personal property on the installment plan and reports the 296 income therefrom on the installment method for federal income 297 tax purposes under s. 453(

a) of the Internal Revenue Code shall 298 report such income in the same manner under this code. 299 (

d) Nonallowable deductions.—A deduction for net operating 300 losses, net capital losses, or excess contributions deductions 301 under ss. 170(d)(2), 172, 1212, and 404 of the Internal Revenue 302 Code which has been allowed in a prior taxable year for Florida 303 tax purposes shall not be allowed for Florida tax purposes, 304 notwithstanding the fact that such deduction has not been fully 305 utilized for federal tax purposes. 306 (

e) Adjustments related to federal acts.—Taxpayers shall be 307 required to make the adjustments prescribed in this paragraph 308 for Florida tax purposes with respect to certain tax benefits 309 received pursuant to the Economic Stimulus Act of 2008, the 310 American Recovery and Reinvestment Act of 2009, the Small 311 Business Jobs Act of 2010, the Tax Relief, Unemployment 312 Insurance Reauthorization, and Job Creation Act of 2010, the 313 American Taxpayer Relief Act of 2012, the Tax Increase 314 Prevention Act of 2014, the Consolidated Appropriations Act, 315 2016, and the Tax Cuts and Jobs Act of 2017. 316 1.

There shall be added to such taxable income an amount 317 equal to 100 percent of any amount deducted for federal income 318 tax purposes as bonus depreciation for the taxable year pursuant 319

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 12 of 35 CODING: Words stricken are deletions; words underlined are additions. to ss. 167 and 168(

k) of the Internal Revenue Code of 1986, as 320 amended by s. 103 of Pub. L. No. 110-185, s. 1201 of Pub. L. No. 321 111-5, s. 2022 of Pub. L. No. 111-240, s. 401 of Pub. L. No. 322 111-312, s. 331 of Pub. L. No. 112-240, s. 125 of Pub. L. No. 323 113-295, s. 143 of Division Q of Pub. L. No. 114-113, and s. 324 13201 of Pub. L. No. 115-97, for property placed in service 325 after December 31, 2007, and before January 1, 2027.

For the 326 taxable year and for each of the 6 subsequent taxable years, 327 there shall be subtracted from such taxable income an amount 328 equal to one-seventh of the amount by which taxable income was 329 increased pursuant to this subparagraph, notwithstanding any 330 sale or other disposition of the property that is the subject of 331 the adjustments and regardless of whether such property remains 332 in service in the hands of the taxpayer. 333 2.

There shall be added to such taxable income an amount 334 equal to 100 percent of any amount in excess of $128,000 335 deducted for federal income tax purposes for the taxable year 336 pursuant to s. 179 of the Internal Revenue Code of 1986, as 337 amended by s. 102 of Pub. L. No. 110-185, s. 1202 of Pub. L. No. 338 111-5, s. 2021 of Pub. L. No. 111-240, s. 402 of Pub. L. No. 339 111-312, s. 315 of Pub. L. No. 112-240, and s. 127 of Pub. L. 340 No. 113-295, for taxable years beginning after December 31, 341 2007, and before January 1, 2015.

For the taxable year and for 342 each of the 6 subsequent taxable years, there shall be 343 subtracted from such taxable income one-seventh of the amount by 344 which taxable income was increased pursuant to this 345 subparagraph, notwithstanding any sale or other disposition of 346 the property that is the subject of the adjustments and 347 regardless of whether such property remains in service in the 348

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 13 of 35 CODING: Words stricken are deletions; words underlined are additions. hands of the taxpayer. 349 3. There shall be added to such taxable income an amount 350 equal to the amount of deferred income not included in such 351 taxable income pursuant to s. 108(i)(1) of the Internal Revenue 352 Code of 1986, as amended by s. 1231 of Pub. L. No. 111-5.

There 353 shall be subtracted from such taxable income an amount equal to 354 the amount of deferred income included in such taxable income 355 pursuant to s. 108(i)(1) of the Internal Revenue Code of 1986, 356 as amended by s. 1231 of Pub. L. No. 111-5. 357 4. Subtractions available under this paragraph may be 358 transferred to the surviving or acquiring entity following a 359 merger or acquisition and used in the same manner and with the 360 same limitations as specified by this paragraph. 361 5.

The additions and subtractions specified in this 362 paragraph are intended to adjust taxable income for Florida tax 363 purposes, and, notwithstanding any other provision of this code, 364 such additions and subtractions shall be permitted to change a 365 taxpayer’s net operating loss for Florida tax purposes. 366

(2) For purposes of this section, a taxpayer’s taxable 367 income for the taxable year means taxable income as defined in 368 s. 63 of the Internal Revenue Code and properly reportable for 369 federal income tax purposes for the taxable year, but subject to 370 the limitations set forth in paragraph (1)(

b) with respect to 371 the deductions provided by ss. 172 (relating to net operating 372 losses), 170(d)(2) (relating to excess charitable 373 contributions), 404(a)(1)(D) (relating to excess pension trust 374 contributions), 404(a)(3)(

A) and (B) (to the extent relating to 375 excess stock bonus and profit-sharing trust contributions), and 376 1212 (relating to capital losses) of the Internal Revenue Code, 377

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 14 of 35 CODING: Words stricken are deletions; words underlined are additions. except that, subject to the same limitations, the term: 378 (a) “Taxable income,” in the case of a life insurance 379 company subject to the tax imposed by s. 801 of the Internal 380 Revenue Code, means life insurance company taxable income; 381 however, for purposes of this code, the total of any amounts 382 subject to tax under s. 815(a)(2) of the Internal Revenue Code 383 pursuant to s. 801(

c) of the Internal Revenue Code shall not 384 exceed, cumulatively, the total of any amounts determined under 385 s. 815(c)(2) of the Internal Revenue Code of 1954, as amended, 386 from January 1, 1972, to December 31, 1983; 387 (b) “Taxable income,” in the case of an insurance company 388 subject to the tax imposed by s. 831(

b) of the Internal Revenue 389 Code, means taxable investment income; 390 (c) “Taxable income,” in the case of an insurance company 391 subject to the tax imposed by s. 831(

a) of the Internal Revenue 392 Code, means insurance company taxable income; 393 (d) “Taxable income,” in the case of a regulated investment 394 company subject to the tax imposed by s. 852 of the Internal 395 Revenue Code, means investment company taxable income; 396 (e) “Taxable income,” in the case of a real estate 397 investment trust subject to the tax imposed by s. 857 of the 398 Internal Revenue Code, means the income subject to tax, computed 399 as provided in s. 857 of the Internal Revenue Code; 400 (f) “Taxable income,” in the case of a corporation which is 401 a member of an affiliated group of corporations filing a 402 consolidated income tax return for the taxable year for federal 403 income tax purposes, means taxable income of such corporation 404 for federal income tax purposes as if such corporation had filed 405 a separate federal income tax return for the taxable year and 406

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 15 of 35 CODING: Words stricken are deletions; words underlined are additions. each preceding taxable year for which it was a member of an 407 affiliated group, unless a consolidated return for the taxpayer 408 and others is required or elected under s. 220.131; 409 (g) “Taxable income,” in the case of a cooperative 410 corporation or association, means the taxable income of such 411 organization determined in accordance with the provisions of ss. 412 1381-1388 of the Internal Revenue Code; 413 (h) “Taxable income,” in the case of an organization which 414 is exempt from the federal income tax by reason of s. 501(

a) of 415 the Internal Revenue Code, means its unrelated business taxable 416 income as determined under s. 512 of the Internal Revenue Code; 417 (i) “Taxable income,” in the case of a corporation for 418 which there is in effect for the taxable year an election under 419 s. 1362(

a) of the Internal Revenue Code, means the amounts 420 subject to tax under s. 1374 or s. 1375 of the Internal Revenue 421 Code for each taxable year; 422 (j) “Taxable income,” in the case of a limited liability 423 company, other than a limited liability company classified as a 424 partnership for federal income tax purposes, as defined in and 425 organized pursuant to

chapter 605 or qualified to do business in 426 this state as a foreign limited liability company or other than 427 a similar limited liability company classified as a partnership 428 for federal income tax purposes and created as an artificial 429 entity pursuant to the statutes of the United States or any 430 other state, territory, possession, or jurisdiction, if such 431 limited liability company or similar entity is taxable as a 432 corporation for federal income tax purposes, means taxable 433 income determined as if such limited liability company were 434 required to file or had filed a federal corporate income tax 435

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 16 of 35 CODING: Words stricken are deletions; words underlined are additions. return under the Internal Revenue Code; 436 (k) “Taxable income,” in the case of a taxpayer liable for 437 the alternative minimum tax as defined in s. 55 of the Internal 438 Revenue Code, means the alternative minimum taxable income as 439 defined in s. 55(b)(2) of the Internal Revenue Code, less the 440 exemption amount computed under s. 55(

d) of the Internal Revenue 441 Code.

A taxpayer is not liable for the alternative minimum tax 442 unless the taxpayer’s federal tax return, or related federal 443 consolidated tax return, if included in a consolidated return 444 for federal tax purposes, reflect a liability on the return 445 filed for the alternative minimum tax as defined in s. 55(b)(2) 446 of the Internal Revenue Code; 447 (l) “Taxable income,” in the case of a taxpayer whose 448 taxable income is not otherwise defined in this subsection, 449 means the sum of amounts to which a tax rate specified in s. 11 450 of the Internal Revenue Code plus the amount to which a tax rate 451 specified in s. 1201(a)(2) of the Internal Revenue Code are 452 applied for federal income tax purposes. 453

Section

Section 220.131, Florida Statutes, is repealed. 454

Section

Section 220.136, Florida Statutes, is created to 455 read: 456 220.136 Determination of the members of a water’s edge 457 group.— 458

(1) A corporation having 50 percent or more of its 459 outstanding voting stock directly or indirectly owned or 460 controlled by a water’s edge group is presumed to be a member of 461 the water’s edge group. A corporation having less than 50 462 percent of its outstanding voting stock directly or indirectly 463 owned or controlled by a water’s edge group is a member of the 464

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 17 of 35 CODING: Words stricken are deletions; words underlined are additions. water’s edge group if the business activities of the corporation 465 show that the corporation is a member of the water’s edge group. 466 All of the income of a corporation that is a member of a water’s 467 edge group is presumed to be unitary. For purposes of this 468 subsection, the attribution rules of 26 U.S.C. s. 318 must be 469 used to determine whether voting stock is indirectly owned. 470 (2)(

a) A corporation that conducts business outside the 471 United States is not a member of a water’s edge group if 80 472 percent or more of the corporation’s property and payroll, as 473 determined by the apportionment factors described in ss. 220.15 474 and 220.1363, may be assigned to locations outside of the United 475 States. However, such a corporation that is incorporated in a 476 tax haven may be a member of a water’s edge group pursuant to 477 subsection (1). This subsection does not exempt a corporation 478 that is not a member of a water’s edge group from this chapter. 479 (

b) As used in this subsection, the term “United States” 480 means the 50 states, the District of Columbia, and Puerto Rico. 481 (

c) The apportionment factors described in ss. 220.1363 and 482 220.15 must be used to determine whether a special industry 483 corporation has engaged in a sufficient amount of activities 484 outside of the United States to exclude it from treatment as a 485 member of a water’s edge group. 486

Section

Section 220.1363, Florida Statutes, is created 487 to read: 488 220.1363 Water’s edge groups; special requirements.— 489

(1) For purposes of this section, the term “water’s edge 490 reporting method” is a method to determine the taxable business 491 profits of a group of entities conducting a unitary business. 492 Under this method, the net income of the entities must be added 493

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 18 of 35 CODING: Words stricken are deletions; words underlined are additions. together, along with the additions and subtractions under s. 494 220.13, and apportioned to this state as a single taxpayer under 495 ss. 220.15 and 220.151. However, each special industry member 496 included in a water’s edge group return which would otherwise be 497 permitted to use a special method of apportionment under s. 498 220.151 shall convert its single-factor apportionment to a 499 three-factor apportionment of property, payroll, and sales.

The 500 special industry member shall calculate the denominator of its 501 property, payroll, and sales factors in the same manner as those 502 denominators are calculated by members that are not special 503 industry members. The numerator of its sales, property, and 504 payroll factors is the product of the denominator of each factor 505 multiplied by the premiums or revenue-miles-factor ratio 506 otherwise applicable under s. 220.151. 507

(2) All members of a water’s edge group must use the 508 water’s edge reporting method, under which: 509 (

a) Adjusted federal income, for purposes of s. 220.12, 510 means the sum of adjusted federal income of all members of the 511 water’s edge group as determined for a concurrent taxable year. 512 (

b) The numerators and denominators of the apportionment 513 factors must be calculated for all members of the water’s edge 514 group combined. 515 (

c) Intercompany sales transactions between members of the 516 water’s edge group are not included in the numerator or 517 denominator of the sales factor under ss. 220.15 and 220.151, 518 regardless of whether indicia of a sale exist. 519 (

d) For sales of intangibles, including, but not limited 520 to, accounts receivable, notes, bonds, and stock, which are made 521 to entities outside the group, only the net proceeds are 522

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 19 of 35 CODING: Words stricken are deletions; words underlined are additions. included in the numerator and denominator of the sales factor. 523 (

e) Sales that are not allocated or apportioned to any 524 taxing jurisdiction, otherwise known as “nowhere sales,” may not 525 be included in the numerator or denominator of the sales factor. 526 (

f) The income attributable to the Florida activities of a 527 corporation that is exempt from taxation under the Interstate 528 Income Act of 1959, Pub. L. No. 86-272, is excluded from the 529 apportionment factor numerators in the calculation of corporate 530 income tax, even if another member of the water’s edge group has 531 nexus with this state and is subject to tax. 532 533 As used in this subsection, the term “sale” includes, but is not 534 limited to, loans, payments for the use of intangibles, 535 dividends, and management fees. 536 (3)(

a) If a parent corporation is a member of the water’s 537 edge group and has nexus with this state, a single water’s edge 538 group return must be filed in the name and under the federal 539 employer identification number of the parent corporation. If the 540 water’s edge group does not have a parent corporation, if the 541 parent corporation is not a member of the water’s edge group, or 542 if the parent corporation does not have nexus with this state, 543 then the members of the water’s edge group must choose a member 544 subject to the tax imposed by this

chapter to file the return. 545 The members of the water’s edge group may not choose another 546 member to file a corporate income tax return in subsequent years 547 unless the filing member does not maintain nexus with this state 548 or does not remain a member of the water’s edge group. The 549 return must be signed by an authorized officer of the filing 550 member as the agent for the water’s edge group. 551

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 20 of 35 CODING: Words stricken are deletions; words underlined are additions. (

b) If members of a water’s edge group have different 552 taxable years, the taxable year of a majority of the members of 553 the water’s edge group is the taxable year of the water’s edge 554 group. If the taxable years of a majority of the members of a 555 water’s edge group do not correspond, the taxable year of the 556 member that must file the return for the water’s edge group is 557 the taxable year of the water’s edge group. 558 (c)1.

A member of a water’s edge group having a taxable 559 year that does not correspond to the taxable year of the water’s 560 edge group shall determine its income for inclusion on the tax 561 return for the water’s edge group. The member shall use: 562 a. The precise amount of taxable income received during the 563 months corresponding to the taxable year of the water’s edge 564 group if the precise amount can be readily determined from the 565 member’s books and records. 566 b.

The taxable income of the member converted to conform to 567 the taxable year of the water’s edge group on the basis of the 568 number of months falling within the taxable year of the water’s 569 edge group. For example, if the taxable year of the water’s edge 570 group is a calendar year and a member operates on a fiscal year 571 ending on April 30, the income of the member must include 8/12 572 of the income from the current taxable year and 4/12 of the 573 income from the preceding taxable year.

This method to determine 574 the income of a member may be used only if the return can be 575 timely filed after the end of the taxable year of the water’s 576 edge group. 577 c. The taxable income of the member during its taxable year 578 that ends within the taxable year of the water’s edge group. 579 2. The method of determining the income of a member of a 580

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 21 of 35 CODING: Words stricken are deletions; words underlined are additions. water’s edge group whose taxable year does not correspond to the 581 taxable year of the water’s edge group may not change as long as 582 the member remains a member of the water’s edge group. The 583 apportionment factors for the member must be applied to the 584 income of the member for the taxable year of the water’s edge 585 group. 586 (4)(

a) A water’s edge group return must include a 587 computational

schedule that: 588 1. Combines the federal income of all members of the 589 water’s edge group; 590 2. Shows all intercompany eliminations; 591 3. Shows Florida additions and subtractions under s. 592 220.13; and 593 4. Shows the calculation of the combined apportionment 594 factors. 595 (

b) In addition to its return, a water’s edge group shall 596 also file a domestic disclosure spreadsheet. The spreadsheet 597 must fully disclose: 598 1. The income reported to each state; 599 2. The state tax liability; 600 3. The method used for apportioning or allocating income to 601 the various states; and 602 4. Other information required by department rule in order 603 to determine the proper amount of tax due to each state and to 604 identify the water’s edge group. 605

(5) The department may adopt rules and forms to administer 606 this section. The Legislature intends to grant the department 607 extensive authority to adopt rules and forms describing and 608 defining principles for determining the existence of a water’s 609

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 22 of 35 CODING: Words stricken are deletions; words underlined are additions. edge business,

definitions of common control, methods of 610 reporting, and related forms, principles, and other

definitions. 611

Section

Section 220.14, Florida Statutes, is amended to 612 read: 613 220.14 Exemption.— 614

(1) In computing a taxpayer’s liability for tax under this 615 code, there shall be exempt from the tax $50,000 of net income 616 as defined in s. 220.12 or such lesser amount as will, without 617 increasing the taxpayer’s federal income tax liability, provide 618 the state with an amount under this code which is equal to the 619 maximum federal income tax credit which may be available from 620 time to time under federal law. 621

(2) In the case of a taxable year for a period of less than 622 12 months, the exemption allowed by this

section must shall be 623 prorated on the basis of the number of days in such year to 365 624 days or, in a leap year, 366 days. 625

(3) Only one exemption shall be allowed to taxpayers filing 626 a water’s edge group consolidated return under this code. 627

(4) Notwithstanding any other provision of this code, not 628 more than one exemption under this

section may be allowed to the 629 Florida members of a controlled group of corporations, as 630 defined in s. 1563 of the Internal Revenue Code with respect to 631 taxable years ending on or after December 31, 1970, filing 632 separate returns under this code. The exemption described in 633 this

section shall be divided equally among such Florida members 634 of the group, unless all of such members consent, at such time 635 and in such manner as the department shall by regulation 636 prescribe, to an apportionment plan providing for an unequal 637 allocation of such exemption. 638

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 23 of 35 CODING: Words stricken are deletions; words underlined are additions.

Section 7. Paragraph (

c) of subsection (5) of

section 639 220.15, Florida Statutes, is amended to read: 640 220.15 Apportionment of adjusted federal income.— 641

(5) The sales factor is a fraction the numerator of which 642 is the total sales of the taxpayer in this state during the 643 taxable year or period and the denominator of which is the total 644 sales of the taxpayer everywhere during the taxable year or 645 period. 646 (

c) Sales of a financial organization, including, but not 647 limited to, banking and savings institutions, investment 648 companies, real estate investment trusts, and brokerage 649 companies, occur in this state if derived from: 650 1. Fees, commissions, or other compensation for financial 651 services rendered within this state; 652 2. Gross profits from trading in stocks, bonds, or other 653 securities managed within this state; 654 3.

Interest received within this state, other than interest 655 from loans secured by mortgages, deeds of trust, or other liens 656 upon real or tangible personal property located without this 657 state, and dividends received within this state; 658 4. Interest charged to customers at places of business 659 maintained within this state for carrying debit balances of 660 margin accounts, without deduction of any costs incurred in 661 carrying such accounts; 662 5.

Interest, fees, commissions, or other charges or gains 663 from loans secured by mortgages, deeds of trust, or other liens 664 upon real or tangible personal property located in this state or 665 from installment sale agreements originally executed by a 666 taxpayer or the taxpayer’s agent to sell real or tangible 667

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 24 of 35 CODING: Words stricken are deletions; words underlined are additions. personal property located in this state; 668 6. Rents from real or tangible personal property located in 669 this state; or 670 7. Any other gross income, including other interest, 671 resulting from the operation as a financial organization within 672 this state. 673 674 In computing the amounts under this paragraph, any amount 675 received by a member of an affiliated group (determined under s. 676 1504(

a) of the Internal Revenue Code, but without reference to 677 whether any such corporation is an “includable corporation” 678 under s. 1504(

b) of the Internal Revenue Code) from another 679 member of such group shall be included only to the extent such 680 amount exceeds expenses of the recipient directly related 681 thereto. 682

Section 8. Paragraph (

f) of subsection (1) of

section 683 220.183, Florida Statutes, is amended to read: 684 220.183 Community contribution tax credit.— 685

(1) AUTHORIZATION TO GRANT COMMUNITY CONTRIBUTION TAX 686 CREDITS; LIMITATIONS ON INDIVIDUAL CREDITS AND PROGRAM 687 SPENDING.— 688 (

f) A taxpayer who files a Florida consolidated return as a 689 member of an affiliated group pursuant to s. 220.131(1) may be 690 allowed the credit on a consolidated return basis. 691

Section 9. Paragraphs (b), (c), and (

d) of subsection (2) 692 of

section 220.1845, Florida Statutes, are amended to read: 693 220.1845 Contaminated site rehabilitation tax credit.— 694

(2) AUTHORIZATION FOR TAX CREDIT; LIMITATIONS.— 695 (

b) A tax credit applicant, or multiple tax credit 696

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 25 of 35 CODING: Words stricken are deletions; words underlined are additions. applicants working jointly to clean up a single site, may not be 697 granted more than $500,000 per year in tax credits for each site 698 voluntarily rehabilitated. Multiple tax credit applicants shall 699 be granted tax credits in the same proportion as their 700 contribution to payment of cleanup costs.

Subject to the same 701 conditions and limitations as provided in this section, a 702 municipality, county, or other tax credit applicant which 703 voluntarily rehabilitates a site may receive not more than 704 $500,000 per year in tax credits which it can subsequently 705 transfer subject to the provisions in paragraph (f) (g). 706 (

c) If the credit granted under this

section is not fully 707 used in any one year because of insufficient tax liability on 708 the part of the corporation, the unused amount may be carried 709 forward for up to 5 years. The carryover credit may be used in a 710 subsequent year if the tax imposed by this

chapter for that year 711 exceeds the credit for which the corporation is eligible in that 712 year after applying the other credits and unused carryovers in 713 the order provided by s. 220.02(8). If during the 5-year period 714 the credit is transferred, in whole or in part, pursuant to 715 paragraph (f) (g), each transferee has 5 years after the date of 716 transfer to use its credit. 717 (

d) A taxpayer that files a consolidated return in this 718 state as a member of an affiliated group under s. 220.131(1) may 719 be allowed the credit on a consolidated return basis up to the 720 amount of tax imposed upon the consolidated group. 721

Section 10. Subsection (2) of

section 220.1875, Florida 722 Statutes, is amended to read: 723 220.1875 Credit for contributions to eligible nonprofit 724 scholarship-funding organizations.— 725

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(2) A taxpayer who files a Florida consolidated return as a 726 member of an affiliated group pursuant to s. 220.131(1) may be 727 allowed the credit on a consolidated return basis; however, the 728 total credit taken by the affiliated group is subject to the 729 limitation established under subsection (1). 730

Section 11. Paragraphs (

a) and (

c) of subsection (3) of 731

section 220.191, Florida Statutes, are amended to read: 732 220.191 Capital investment tax credit.— 733 (3)(

a) Notwithstanding subsection (2), an annual credit 734 against the tax imposed by this

chapter shall be granted to a 735 qualifying business which establishes a qualifying project 736 pursuant to subparagraph (1)(g)3., in an amount equal to the 737 lesser of $15 million or 5 percent of the eligible capital costs 738 made in connection with a qualifying project, for a period not 739 to exceed 20 years beginning with the commencement of operations 740 of the project. The tax credit shall be granted against the 741 corporate income tax liability of the qualifying business and as 742 further provided in paragraph (c).

The total tax credit provided 743 pursuant to this subsection shall be equal to no more than 100 744 percent of the eligible capital costs of the qualifying project. 745 (

c) The credit granted under this subsection may be used in 746 whole or in part by the qualifying business or any corporation 747 that is either a member of that qualifying business’s affiliated 748 group of corporations, is a related entity taxable as a 749 cooperative under subchapter T of the Internal Revenue Code, or, 750 if the qualifying business is an entity taxable as a cooperative 751 under subchapter T of the Internal Revenue Code, is related to 752 the qualifying business. Any entity related to the qualifying 753 business may continue to file as a member of a Florida-nexus 754

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 27 of 35 CODING: Words stricken are deletions; words underlined are additions. consolidated group pursuant to a prior election made under s. 755 220.131(1), Florida Statutes (1985), even if the parent of the 756 group changes due to a direct or indirect acquisition of the 757 former common parent of the group. Any credit can be used by any 758 of the affiliated companies or related entities referenced in 759 this paragraph to the same extent as it could have been used by 760 the qualifying business.

However, any such use shall not operate 761 to increase the amount of the credit or extend the period within 762 which the credit must be used. 763

Section 12. Paragraphs (

c) and (

e) of subsection (3) of 764

section 220.193, Florida Statutes, are amended to read: 765 220.193 Florida renewable energy production credit.— 766

(3) An annual credit against the tax imposed by this 767

section shall be allowed to a taxpayer, based on the taxpayer’s 768 production and sale of electricity from a new or expanded 769 Florida renewable energy facility. For a new facility, the 770 credit shall be based on the taxpayer’s sale of the facility’s 771 entire electrical production. For an expanded facility, the 772 credit shall be based on the increases in the facility’s 773 electrical production that are achieved after May 1, 2012. 774 (

c) If the amount of credits applied for each year exceeds 775 the amount authorized in paragraph (f) (g), the Department of 776 Agriculture and Consumer Services shall allocate credits to 777 qualified applicants based on the following priority: 778 1. An applicant who places a new facility in operation 779 after May 1, 2012, shall be allocated credits first, up to a 780 maximum of $250,000 each, with any remaining credits to be 781 granted pursuant to subparagraph 3., but if the claims for 782 credits under this subparagraph exceed the state fiscal year cap 783

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 28 of 35 CODING: Words stricken are deletions; words underlined are additions. in paragraph (f) (g), credits shall be allocated pursuant to 784 this subparagraph on a prorated basis based upon each 785 applicant’s qualified production and sales as a percentage of 786 total production and sales for all applicants in this category 787 for the fiscal year. 788 2.

An applicant who does not qualify under subparagraph 1. 789 but who claims a credit of $50,000 or less shall be allocated 790 credits next, but if the claims for credits under this 791 subparagraph, combined with credits allocated in subparagraph 792 1., exceed the state fiscal year cap in paragraph (f) (g), 793 credits shall be allocated pursuant to this subparagraph on a 794 prorated basis based upon each applicant’s qualified production 795 and sales as a percentage of total qualified production and 796 sales for all applicants in this category for the fiscal year. 797 3.

An applicant who does not qualify under subparagraph 1. 798 or subparagraph 2. and an applicant whose credits have not been 799 fully allocated under subparagraph 1. shall be allocated credits 800 next.

If there is insufficient capacity within the amount 801 authorized for the state fiscal year in paragraph (f) (g), and 802 after allocations pursuant to subparagraphs 1. and 2., the 803 credits allocated under this subparagraph shall be prorated 804 based upon each applicant’s unallocated claims for qualified 805 production and sales as a percentage of total unallocated claims 806 for qualified production and sales of all applicants in this 807 category, up to a maximum of $1 million per taxpayer per state 808 fiscal year.

If, after application of this $1 million cap, there 809 is excess capacity under the state fiscal year cap in paragraph 810 (f) (

g) in any state fiscal year, that remaining capacity shall 811 be used to allocate additional credits with priority given in 812

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 29 of 35 CODING: Words stricken are deletions; words underlined are additions. the order set forth in this subparagraph and without regard to 813 the $1 million per taxpayer cap. 814 (

e) A taxpayer that files a consolidated return in this 815 state as a member of an affiliated group under s. 220.131(1) may 816 be allowed the credit on a consolidated return basis up to the 817 amount of tax imposed upon the consolidated group. 818

Section 13. Paragraph (

a) of subsection (1) of

section 819 220.27, Florida Statutes, is amended to read: 820 220.27 Additional required information.— 821 (1)(

a) Every taxpayer that is required to file a return 822 under s. 220.22(1) for a taxable year beginning during the 2018 823 or 2019 calendar years, must submit to the department the 824 following information for those taxable years using the 825 application form on the department’s website: 826 1. The taxpayer’s name, federal taxpayer identification 827 number, taxable year beginning date, taxable year ending date, 828 and, for taxable years beginning before January 1, 2021, only, 829 whether a consolidated return for the taxpayer is required or 830 elected under s. 220.131. 831 2.

The taxpayer’s NAICS code for business activity that 832 generates the greatest proportion of gross receipts of the 833 taxpayer. As used in this paragraph, the term “NAICS” means 834 those classifications contained in the North American Industry 835 Classification System, as published in 2007 by the Office of 836 Management and Budget, Executive Office of the President. 837 3. The taxpayer’s taxable income as that term is defined in 838 s. 220.13(2) and the taxpayer’s state apportionment fraction 839 pursuant to s. 220.15 for the taxable year. 840 4. The amount of global intangible low-taxed income 841

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 30 of 35 CODING: Words stricken are deletions; words underlined are additions. included in federal taxable income under s. 951A of the Internal 842 Revenue Code, and the amount of the related deduction under s. 843 250 of the Internal Revenue Code, as it pertains to s. 951A of 844 the Internal Revenue Code. 845 5.

The amount of foreign-derived intangible income computed 846 for the federal return for the taxable year and the amount of 847 the related deduction under s. 250 of the Internal Revenue Code, 848 as it pertains to foreign-derived intangible income. 849 6. The amount of business interest expense deducted on the 850 federal return under s. 163 of the Internal Revenue Code, 851 including any carryover; the amount of current year business 852 interest expense, including any carryover, which that was not 853 deducted due to the limitation in s. 163(

j) of the Internal 854 Revenue Code; and the amount of business interest expense 855 carried over from previous taxable years. 856 7. The amount of federal net operating loss deduction under 857 s. 172 of the Internal Revenue Code, applied in determining 858 federal taxable income and the amount of federal net operating 859 loss carryover that was not applied due to the limitation in s. 860 172(a)(2) of the Internal Revenue Code. 861 8. The total amount of state net operating loss carryover 862 available after the filing of the return for the taxable year. 863 9.

The total amount of the state alternative minimum tax 864 credit carryover available after the filing of the return for 865 the taxable year. 866

Section

Section 220.28, Florida Statutes, is created to 867 read: 868 220.28 Water’s edge group transitional rules.— 869

(1) For the first taxable year beginning on or after 870

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 31 of 35 CODING: Words stricken are deletions; words underlined are additions. January 1, 2021, a taxpayer that filed a Florida corporate 871 income tax return in the preceding taxable year and that is a 872 member of a water’s edge group shall compute its income together 873 with all members of its water’s edge group and file a combined 874 Florida corporate income tax return with all members of its 875 water’s edge group. 876

(2) An affiliated group of corporations which filed a 877 Florida consolidated corporate income tax return pursuant to an 878 election provided in former s. 220.131 shall cease filing a 879 Florida consolidated return for taxable years beginning on or 880 after January 1, 2021, and shall file a combined Florida 881 corporate income tax return with all members of its water’s edge 882 group. 883

(3) An affiliated group of corporations which filed a 884 Florida consolidated corporate income tax return pursuant to the 885 election in former s. 220.131(1) (1985), which allowed the 886 affiliated group to make an election within 90 days after 887 December 20, 1984, or upon filing the taxpayer’s first return 888 after December 20, 1984, whichever was later, shall cease filing 889 a Florida consolidated corporate income tax return using that 890 method for taxable years beginning on or after January 1, 2021, 891 and shall file a combined Florida corporate income tax return 892 with all members of its water’s edge group. 893

(4) A taxpayer that is not a member of a water’s edge group 894 remains subject to this

chapter and shall file a separate 895 Florida corporate income tax return as previously required. 896

(5) For taxable years beginning on or after January 1, 897 2021, a tax return for a member of a water’s edge group must be 898 a combined Florida corporate income tax return that includes tax 899

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 32 of 35 CODING: Words stricken are deletions; words underlined are additions. information for all members of the water’s edge group. The tax 900 return must be filed by a member that has a nexus with this 901 state. 902

Section

Section 220.51, Florida Statutes, is amended to 903 read: 904 220.51 Adoption Promulgation of rules and regulations.—In 905 accordance with the Administrative Procedure Act,

chapter 120, 906 the department is authorized to make, adopt promulgate, and 907 enforce such reasonable rules and regulations, and to prescribe 908 such forms relating to the administration and enforcement of the 909 provisions of this code, as it may deem appropriate, including: 910

(1) Rules for initial implementation of this code and for 911 taxpayers’ transitional taxable years commencing before and 912 ending after January 1, 1972; and 913

(2) Rules or regulations to clarify whether certain groups, 914 organizations, or associations formed under the laws of this 915 state or any other state, country, or jurisdiction shall be 916 deemed “taxpayers” for the purposes of this code, in accordance 917 with the legislative declarations of intent in s. 220.02; and 918

(3) Regulations relating to consolidated reporting for 919 affiliated groups of corporations, in order to provide for an 920 equitable and just administration of this code with respect to 921 multicorporate taxpayers. 922

Section

Section 220.64, Florida Statutes, is amended to 923 read: 924 220.64 Other provisions applicable to franchise tax.—To the 925 extent that they are not manifestly incompatible with the 926 provisions of this part, parts I, III, IV, V, VI, VIII, IX, and 927 X of this code and ss. 220.12, 220.13, 220.136, 220.1363, 928

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 33 of 35 CODING: Words stricken are deletions; words underlined are additions. 220.15, and 220.16 apply to the franchise tax imposed by this 929 part. Under rules prescribed by the department in s. 220.131, a 930 consolidated return may be filed by any affiliated group of 931 corporations consisting composed of one or more banks or savings 932 associations, its or their Florida parent corporations 933 corporation, and any nonbank or nonsavings subsidiaries of such 934 parent corporations corporation. 935

Section 17. Paragraph (

f) of subsection (4) and paragraph 936 (

a) of subsection (5) of

section 288.1254, Florida Statutes, are 937 amended to read: 938 288.1254 Entertainment industry financial incentive 939 program.— 940

(4) TAX CREDIT ELIGIBILITY; TAX CREDIT AWARDS; QUEUES; 941 ELECTION AND DISTRIBUTION; CARRYFORWARD; CONSOLIDATED RETURNS; 942 PARTNERSHIP AND NONCORPORATE DISTRIBUTIONS; MERGERS AND 943 ACQUISITIONS.— 944 (

f) Consolidated returns.—A certified production company 945 that files a Florida consolidated return as a member of an 946 affiliated group under s. 220.131(1) may be allowed the credit 947 on a consolidated return basis up to the amount of the tax 948 imposed upon the consolidated group under

chapter 220. 949

(5) TRANSFER OF TAX CREDITS.— 950 (

a) Authorization.—Upon application to the Office of Film 951 and Entertainment and approval by the department, a certified 952 production company, or a partner or member that has received a 953 distribution under paragraph (4)(f) (4)(g), may elect to 954 transfer, in whole or in part, any unused credit amount granted 955 under this section. An election to transfer any unused tax 956 credit amount under

chapter 212 or

chapter 220 must be made no 957

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 34 of 35 CODING: Words stricken are deletions; words underlined are additions. later than 5 years after the date the credit is awarded, after 958 which period the credit expires and may not be used. The 959 department shall notify the Department of Revenue of the 960 election and transfer. 961

Section 18. Subsections (9) and (10) of

section 376.30781, 962 Florida Statutes, are amended to read: 963 376.30781 Tax credits for rehabilitation of drycleaning-964 solvent-contaminated sites and brownfield sites in designated 965 brownfield areas; application process; rulemaking authority; 966 revocation authority.— 967

(9) On or before May 1, the Department of Environmental 968 Protection shall inform each tax credit applicant that is 969 subject to the January 31 annual application deadline of the 970 applicant’s eligibility status and the amount of any tax credit 971 due. The department shall provide each eligible tax credit 972 applicant with a tax credit certificate that must be submitted 973 with its tax return to the Department of Revenue to claim the 974 tax credit or be transferred pursuant to s. 220.1845(2)(

f) s. 975 220.1845(2)(g). The May 1 deadline for annual site 976 rehabilitation tax credit certificate awards shall not apply to 977 any tax credit application for which the department has issued a 978 notice of deficiency pursuant to subsection (8). The department 979 shall respond within 90 days after receiving a response from the 980 tax credit applicant to such a notice of deficiency. Credits may 981 not result in the payment of refunds if total credits exceed the 982 amount of tax owed. 983

(10) For solid waste removal, new health care facility or 984 health care provider, and affordable housing tax credit 985 applications, the Department of Environmental Protection shall 986

Florida Senate - 2020 SB 1596 37-00418-20 20201596__ Page 35 of 35 CODING: Words stricken are deletions; words underlined are additions. inform the applicant of the department’s determination within 90 987 days after the application is deemed complete. Each eligible tax 988 credit applicant shall be informed of the amount of its tax 989 credit and provided with a tax credit certificate that must be 990 submitted with its tax return to the Department of Revenue to 991 claim the tax credit or be transferred pursuant to s. 992 220.1845(2)(

f) s. 220.1845(2)(g). Credits may not result in the 993 payment of refunds if total credits exceed the amount of tax 994 owed. 995

Section 19. Funds recaptured pursuant to this act must be 996 appropriated in the General Appropriations Act to the various 997 school districts to reduce the required local effort millage. 998

Section 20. This act shall take effect July 1, 2020. 999