Researching and developing new products and services for your business can be exciting. It can also be extremely expensive. Certain Florida companies may qualify for an important benefit: the Florida Research and Development Tax Credit Program (“Research and Development Tax Credit”). Understanding the program is the first step toward potentially taking advantage of a much-needed tax credit.
Qualifying for the Research and Development Tax Credit Program
Only C-Corporations can apply for this tax credit. However, C-corporations that own part of a limited liability company or partnership might apply on their own behalf.
Also, only corporations in certain industries are eligible, including:
- Aviation and aerospace
- Cloud information technology
- Homeland security & defense
- Information technology
- Life sciences
- Manufacturing
- Marine sciences
- Materials science
- Nanotechnology
Finally, Florida corporations must also apply for and receive the federal research and development tax credit under Internal Revenue Code Section 241.
If your company meets the criteria mentioned above, you might continue by applying for the tax credit. Since there is a cap on the amount of credits available, it’s best to apply as soon as the State begins accepting applications.
Applying for the Research and Development Tax Credit
There is an extremely narrow window within which you can apply. In 2020, the window extended from midnight, March 20th, to 11:59 on March 26th. Applications could be made for Qualified Research Expenses (QRE) only, as defined by 26 U.S.C. s. 41. QREs include:
- In-house research expenses, like wages and supplies; and
- Contract research expenses including up to 65 percent of the money paid to a non-employee for qualified research.
Also, please note that QREs must have been incurred within the State of Florida.
Before applying, talk to your tax professionals about whether you qualify. Make sure that you obtain a copy of your Florida Department of Economic Opportunity certification letter because this letter will need to be attached to your application.
Companies can apply for 2020 qualified research expenses beginning March 20, 2021. For more information about applying, check the Florida Department of Revenue site.
Learn More About Business Torts and How They Affect Your Business
We recommend that you contact your financial adviser or CPA about tax credits that apply to your business. For other business-related legal problems, please feel free to give us a call.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.