Questions and Answers

1. When is the application time period for the research and development tax credit?

   Beginning at midnight (EST), Wednesday, March 20th, 2024, and ending at 11:59 p.m. (EST), Tuesday, March 26th, 2024, qualified target industry businesses subject to the Florida corporate income tax may apply online for an allocation of Florida research and development tax credit for expenses incurred during the 2023 calendar year.

2. How much credit is available for the March 2024 application period?

   $9 million.

3. Do I need a certification letter from the Florida Department of Commerce?

   Yes. As part of the application for an allocation of credit from the Department of Revenue, you will attach a copy of your certification letter issued by the Florida Department of Commerce. Certification letters are valid for a period of up to three years. Therefore, certification letters issued by the Florida Department of Commerce in 2023, 2024, or 2025 may be attached to the request for credit made in 2025 for expenses incurred in the 2024 calendar year.

   See the Florida Department of Commerce website to obtain a certification letter.

4. Are applicants required to be a target industry business?

   Yes. However, only qualified target industry businesses in the manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology industries may qualify for a tax credit.

5. Are partnerships and limited liability companies eligible for the research and development credit?

   Businesses that are partnerships, limited liability companies taxed as partnerships, or disregarded single member limited liability companies, are not corporations under Section 220.03, F.S., and, therefore, may not apply for an allocation of credit. However, each corporate partner of a partnership may apply separately for an allocation of credit based on the corporation’s separate research expenses, including allocated partnership research expenses, if the corporate partner is a qualified target industry business. For disregarded entities, the corporation that owns the single member limited liability company must apply separately for an allocation of credit based on the corporation’s separate research expenses, including those of the disregarded single member limited liability company, if the corporate owner is a qualified target industry business. For purposes of 26 U.S.C. s. 41, the research expenses are apportioned among the partners during the taxable year and are treated as paid or incurred directly by the partners rather than by the partnership.

6. What happens if I am unable to obtain a certification letter from the Florida Department of Commerce before the end of the Research and Development Tax Credit application period?

   You will not be able to apply for an allocation of credit from the Department of Revenue during this application time‑period.

   However, if before the application time‑period ends, you have already exercised your rights to challenge the Florida Department of Commerce’s determination that you do not qualify for a certification letter, you may still apply for an allocation of credit. Along with your application, you must attach documentation of your timely protest to the Florida Department of Commerce. The Department of Revenue will consider your request for an allocation of credit and will reserve an amount of credit for you as if a certification letter had been received.

   If you receive a certification letter in response to your appeal, the Department of Revenue will send you a letter indicating the amount of credit allocated to you. If you do not receive the certification letter from the Florida Department of Commerce in response to your appeal, you will receive a letter from the Department of Revenue confirming no certification letter was received and no credit is being allocated to you.

7. When a business loses its timely challenge and is not a qualified target industry business, what happens to the credit that was reserved pending the outcome of the challenge?

   After all appeals related to that year’s allocation of research and development credit have been resolved by the Florida Department of Commerce, the Department will recompute the original allocation for all approved applicants, without any reserve for the denied applicants. To the extent a business enterprise’s new allocation of credit is at least $1 greater than the original allocation for that tax year, the Department will provide a new letter stating the updated allocation amount.

8. What happens if I overstated my original request for an allocation of research and development tax credit?

   The percentage of your original allocation of credit that the Department provided to you is applied to the lesser amount of credit that should have been requested. For example, Taxpayer A requested an allocation of credit for 2022 of $800,000, and the Department prorated the request and issued a letter allocating Taxpayer A $368,000 in research and development credit. Later, it was determined Taxpayer A should have only applied for an allocation of $400,000 in credit because its qualifying Florida expenditures were less than originally computed. Taxpayer A is only entitled to a credit allocation of $184,000 ($400,000 x $368,000/$800,000).

9. What happens if I understated my original request for an allocation of research and development tax credit?

   If the amount of credit requested is later determined to be understated, the taxpayer may not claim more credit on its Florida corporate income/franchise tax return than it was allocated because of the annual cap on credit allocations. For example, Taxpayer Z requested an allocation of credit for 2022 of $700,000, and the Department prorated the request and issued a letter allocating Taxpayer Z $322,000 in research and development tax credit. Later, Taxpayer Z determined its allocation request should have been for $950,000, because its qualifying Florida expenditures were more than originally computed. Taxpayer Z is limited to a Florida research and development credit of $322,000 when it files its Florida corporate income/franchise tax return.

10. What are the statute and rule references for the research and development tax credit?

    Section 220.196, Florida Statutes, and Rule 12C‑1.0196, Florida Administrative Code. Form F‑1196 is adopted in Rule 12C‑1.051, Florida Administrative Code.