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Corporate income and franchise taxes

Taxable income

How is taxable income determined in your state? To what extent is the state income tax base aligned with the federal income tax base?

Florida corporate income is computed using federal taxable income, modified by certain Florida adjustments, additions, and subtractions to determine the adjusted federal income.

  • Key adjustments include: Florida additions (Section. 220.13(1)(a), F.S.); and
  • Florida subtractions (Section 220.13(1)(b), F.S.).

“Taxable income,” as defined by Section 220.13(2), F.S., is the starting point in determining what Florida corporate income tax is due. Itrelies on taxable income as defined in Section 63 of the Internal Revenue Code that is:

  • properly reportable for federal income tax; but
  • subject to additions and limitations in Section 220.13(1) relating to additions and deductions.

How is in-state income apportioned for multi-state businesses? Does your state regulate transfer pricing?

Adjusted federal income is usually apportioned to Florida using a three-factor formula.

For taxpayers doing business within and outside of the state, the formula is a weighted average, designating 25% each to factors for property and payroll, and 50% to sales. Therefore:

  • if the denominator for any two factors is zero or is insignificant, the weighted percentage for the remaining factor will be 100%;
  • if the denominator for the sales factor is zero or is insignificant, the weighted percentage for the property and payroll factors shall change from 25% to 50% respectively; and
  • if the denominator for either property or payroll is zero or is insignificant, the weighted percentage for the other will be 33.33% and the weighted percentage for sales factor will be 66.66%.

 

Nexus

How is nexus determined for corporate income tax purposes?

Even if a business is out of state, it may be required to register or file tax in Florida. Some common examples of activities that create a business connection (also called nexus) in Florida include, but are not limited to, businesses that:

  • have employees, agents, or independent contractors conducting sales or other business activities in Florida;
  • maintain an office or other place of business in Florida;
  • assemble, install, service, or repair products in Florida;
  • own, rent, or lease real property or tangible personal property in Florida; and
  • deliver goods to Florida customers using a company-owned or leased truck.

 

Is affiliate nexus recognized in your state? If so, to what extent? Has there been any notable case law in this area?

Florida does not recognize affiliate nexus. 

Rates

What are the applicable corporate income tax rates?

Standard corporate tax is 5.5% but exemptions often lower a corporation’s effective tax rate.

Exemptions, deductions and credits

What exemptions, deductions, and credits are available?

These include:

  • excess charitable contribution deductions which are allowed for federal income tax purposes are detailed under Section 170(d)(2) of the Internal Revenue Code (IRC);
  • certain dividends;
  • deductions based on Section 280C(a) of the IRC relating to credit for employment of certain new employees;
  • deductions on any amount of non-business income included; and
  • any amount of taxes of foreign countries allowable as credits.

 

Filing requirements

What filing requirements and procedures apply? Are there special filing requirements for groups of company?

Section 220.22, F.S. grants the Department of Revenue the ability to designate entities that would not be required to file a return, but there is no mention of special filing requirements.

Rule 12C-1.022 provides that the “Florida Income Tax Code does not specifically provide for an exception from the filing requirements for any organization, association, or legal entity.”

The burden rests with a corporation to show that it is not required to file unless a specific provision within the IRC or the Treasury Regulations exempts an entity.

Corporate franchise tax

Does your state impose a corporate franchise tax? If so, is it imposed in lieu of or in addition to corporate income tax?

A franchise tax of 5.5% of the franchise tax base is imposed on banks and savings associations.

If your state imposes a corporate franchise tax, please stipulate:

(a) The applicable tax base.

Florida does not impose a personal income tax. 

(b) Tax rates.

Florida does not impose a personal income tax. 

(c) Any exemptions or deductions.

Florida does not impose a personal income tax. 

(d) Filing formalities.

Florida does not impose a personal income tax. 

Personal income taxes

Taxable income

How is taxable personal income determined in your state?

Florida does not impose a personal income tax. 

Tax residence

Under what circumstances is an individual deemed resident in your state for personal income tax purposes?

Florida does not impose a personal income tax. 

Rates

What are the applicable personal income tax rates?

Florida does not impose a personal income tax. 

Exemptions, deductions and credits

What exemptions, deductions, and credits are available?

Florida does not impose a personal income tax. 

Filing requirements

What filing requirements and procedures apply?

Florida does not impose a personal income tax. 

Employer obligations

What obligations are imposed on the employer in relation to the collection and remittance of state personal income taxes (eg, withholding)?

Florida does not impose a personal income tax. 

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