This is the fourth article in a series related to Florida’s implementation of the Federal Tax Cuts and Jobs Act (“TCJA”) for corporate income taxpayers. The previous articles include:
- Eyes on the Legislature: The Federal Tax Cuts and Jobs Act and the Risk for Florida Corporate Taxpayers written by Michael B. Dobson & Robert S. Goldman provided an overview and preview of the Florida legislative discussions related to the TCJA.
- Legislative Update: The Federal Tax Cuts and Jobs Act and the Risk for Florida Corporate Taxpayers outlined the potential fiscal impact of Florida’s implementation of the TCJA.
- 2018 Florida Legislature Enacts Numerous State and Local Tax Changes discussed many of the 2018 legislative changes including the Corporate Income Tax “Piggyback” bill (House Bill 7093)
The 2018 Legislature recognized the TCJA made changes to the federal base of taxable income, which will have significant effects on Florida’s corporate income tax (“CIT”). However, there was insufficient time to fully determine the effects in the 2018 session. Therefore, the Legislature directed the Department of Revenue to:
- Examine the TCJA’s affects in Florida;
- Monitor guidance provided by the IRS and other advisory groups; and
- Prepare a report to the Governor, President of the Senate, and Speaker of the House by February 1, 2019.
The 2019 Report must include options for future legislative changes, including estimated fiscal impacts.
For example, the 2018 CIT “Piggyback” legislation fully adopted the TCJA, except for decoupling from the TCJA’s bonus depreciation provisions and requiring a seven-year straight depreciation. Decoupling watered down the bonus depreciation benefits for Florida tax purposes, and Florida’s adoption of the new federal interest deduction limitation in section 163(j) will further increase taxable income. The additional bonus depreciation benefits contained in the TCJA help mitigate the negative impacts of the federal interest deduction limitation. Therefore, it seems obvious that a potential future legislative option would be for Florida to also decouple from the interest deduction limitation. Georgia took a similar approach in March by adopting section 163(j) as it existed before the TCJA.
The Report must also include a compilation of the public comments received by the Department. The Department is required to hold at least two (2) public workshops to elicit input. The workshops have not been scheduled at this time. Additionally, the Department will collect public comments via email (CITReview@floridarevenue.com) and mail. All comments received by the Department will be publicly posted on the Department’s website. Taxpayers seeing anonymity may avoid being directly identified by submitting comments through organizations or practitioners.
Information regarding the Department’s review and the public workshops may be found at http://floridarevenue.com/taxes/Pages/cit_review.aspx
Interested parties and Florida CIT taxpayers should engage the Department to ensure that their input is included and considered in the 2019 Report. Now is the time to proactively engage in future legislation to minimize the negative effects the Tax Cuts and Jobs Act had on Florida’s Corporate Income Tax.
About the Authors:
H. French Brown, IV focuses on state and local taxation, governmental relations and lobbying, and administrative law. Prior to joining Dean Mead, Mr. Brown was in private practice at another Tallahassee law firm. He began his legal career at the Florida Department of Revenue, where he quickly rose to the position of Deputy Director of Technical Assistance and Dispute Resolution. Mr. Brown also assists businesses with Florida tax planning and controversies. He may be reached at email@example.com.
Robert S. Goldman offers clients over 30 years of experience practicing in state and local taxation. He represents clients in audits, protests, litigation, rulemaking, tax planning, and legislation. His experience includes all the major state and local taxes (sales taxes, property taxes, corporate income taxes, communications service taxes, gross receipts taxes, insurance premium taxes, documentary stamp taxes). Mr. Goldman’s range of experience spans diverse industries including retail, manufacturing, energy, leasing, hospitality, telecommunications, government contracting, health care, transportation, and the service sector. He may be reached at firstname.lastname@example.org.
Mark Holcomb has more than 32 years of experience practicing in state and local taxation. He represents clients before the Florida Department of Revenue and local taxing authorities, and in litigation at the trial and appellate levels. Mr. Holcomb advises clients on a broad range of state and local taxes, including corporate income and franchise tax, sales and use tax, documentary stamp tax, communication services tax, insurance premium tax, ad valorem tax and motor fuels tax, in tax controversy work and in planning opportunities. He may be reached at email@example.com.