TAA 21C1-011 Determination of Income
QUESTION: Taxpayer requests the prior TAA be revised to include a newly created LLC in the project.
ANSWER: The Department is inclined to include LLC in the project. However, Taxpayer was reminded that should the facts provided in its request be determined to be substantially different, this TAA would not apply, and the methodology may be deemed inappropriate.
December 13, 2021
Technical Assistance Advisement – 21C1-011
Revision to include XXXXXXX (“LLC”)
Sections 220.11, 220.13, 220.15, 220.191, Florida Statutes (“F.S.”)
Rule 12C-1.0191, Florida Administrative Code (“F.A.C.”)
XXXXX (“Taxpayer”)
FEIN: XXXXX
Project ID: XXXXX
Florida Department of Economic Opportunity (“DEO”)
Enterprise Florida, Inc. (“EFI”)
Dear XXXXX:
This is in response to your request dated XXXXX, for a Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the inclusion of XXXXXX in the qualifying Capital Investment Tax Credit (“CITC”) project for the purposes of determining project income.
Section 220.191(5), F.S., addresses applications for CITC. That statute provides:
Applications shall be reviewed and certified pursuant to s. 288.061. The Department of Economic Opportunity, upon recommendation by Enterprise Florida, Inc., shall first certify a business as eligible to receive tax credits pursuant to this section prior to the commencement of operations of a qualifying project, and such certification shall be transmitted to the Department of Revenue. Upon receipt of the certification, the Department of Revenue shall enter into a written agreement with the qualifying business specifying, at a minimum, the method by which income generated by or arising out of the qualifying project will be determined.
Pursuant to Rule 12C-1.0191, F.A.C., the Department of Revenue has adopted TAAs as the method for entering into such written agreements.
On XXXXX, DEO certified Taxpayer as eligible to receive tax credits under s. 220.191, F.S. DEO issued an Amended and Restated Capital Investment Tax Credit (“CITC”) Certification to include LLC in the project’s capital investment on XXXXX. The Department of Revenue, having received said certification, has examined your letter and has established that you have complied with the statutory and regulatory requirements for issuance of a TAA. Therefore, the Department of Revenue is hereby granting your request for a TAA. The Department of Revenue, in issuing this TAA, has relied on the representations of Taxpayer and the certification of the Department of Economic Opportunity. This response to your request constitutes a Technical Assistance Advisement under Chapter 12-11, F.A.C., and is issued to you under authority of s. 213.22, F.S.
ISSUE PRESENTED
In its letter dated XXXXX, Taxpayer requests that TAA 20C1-005 be revised to include XXXXX, in the project.
FACTS SUPPLIED BY TAXPAYER
Taxpayer states that on XXXXX, LLC, a XXXXX Limited Liability Company, was created. Taxpayer is the sole member. The LLC was formed XXXXX the project. LLC is a disregarded single-member limited liability company for federal purposes. Therefore, the LLC is treated as a branch or division of Taxpayer for Florida purposes.
The LLC will XXXXX (the project). Additionally, LLC will XXXXX. The LLC will not have any independent income associated with the implementation of the qualifying project. All income arising from the project will flow directly through Taxpayer. All payroll, property, and income, if any, associated with LLC will flow through to Taxpayer.
LEGAL AUTHORITY
Section 220.11, F.S., states in part:
(1) A tax measured by net income is hereby imposed on every taxpayer for each taxable year commencing on or after January 1, 1972, and for each taxable year which begins before and ends after January 1, 1972, for the privilege of conducting business, earning or receiving income in this state, or being a resident or citizen of this state. Such tax shall be in addition to all other occupation, excise, privilege, and property taxes imposed by this state or by any political subdivision thereof, including any municipality or other district, jurisdiction, or authority of this state….
Section 220.191, F.S., states in part:
(f) “Qualifying business” means a business which establishes a qualifying project in this state and which is certified by the Department of Economic Opportunity to receive tax credits pursuant to this section.
Rule 12C-1.022(1)(b)2., F.A.C., provides:
2. A single member limited liability company or qualified subchapter S corporation that is disregarded for Florida and Federal tax purposes is not required to file a separate Florida corporate income tax return. However, the income of the company is not exempt from tax. If it is owned by a corporation, whether directly or indirectly, the corporation is required to file Form F-1120 reporting its own income, together with the income of the single member limited liability company.
DISCUSSION
Given that LLC is a single-member limited liability company with Taxpayer as its sole member and Florida’s treatment of single-member limited liability companies (Rule 12C-1.022(1)(b)2., F.A.C.), the Department recognizes LLC as a branch or division of Taxpayer and therefore, is included in the project.
The Department maintains its position regarding the methodology to determine project income as provided in TAA 20C1-005.
CONCLUSION
Given the specific circumstances involved in this case, and based on the representation of the Taxpayer, the Department concurs with Taxpayer’s request to include LLC in the qualifying project based upon s. 220.191, F.S., and Rule 12C-1.0191, F.A.C. However, Taxpayer is reminded that should the facts provided in its request of XXXXX, be determined to be incorrect or changed, the computation for the income generated by or arising out of the project could be substantially different from what has been agreed upon in this TAA.
This response constitutes a Technical Assistance Advisement under section 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice as specified in section 213.22, F.S. Our response is based on those facts and specific situation summarized above. You are advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon this advice is based may subject future transactions to a different treatment than expressed in this response.
You are further advised that this response, your request and related backup documents are public records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of section 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your response should be received by the Department within 15 days of the date of this letter.
Susan R Coxwell
Tax Law Specialist
Technical Assistance and Dispute Resolution
