Florida Corporate Income Taxpayers Must Separately Report Key TCJA Impacts

The Florida Legislature continues to grapple with the effects of the 2017 federal Tax Cuts and Jobs Act on Florida corporate income taxpayers.  Over the past two years, the Legislature decoupled Florida’s tax code from two significant TCJA provisions (bonus depreciation and global intangible low-taxed income (GILTI)),[1] but largely left the effects of other domestic and foreign TCJA changes to be tempered by Florida’s refund-and-rate reduction scheme.[2]  2019 legislation now requires Florida corporate taxpayers to separately report to the Department of Revenue the impacts of specific TCJA provisions on their 2018 and 2019 tax liabilities, allowing the Department to measure the discreet state impact of those changes.[3]  The Department recently issued guidance to corporate taxpayers on the mechanics of that separate reporting process.[4]       

Specific TCJA Impacts to be Separately Reported

The goal of this separate reporting process is to measure the effects of federal TCJA changes on Florida corporate taxpayers in the following areas:  GILTI; foreign-derived intangible income (FDII); interest expense limitations; net operating losses (NOLs); and alternative minimum tax (AMT).  For taxable years beginning in 2018 and 2019, the substantive information required to be separately reported to the Department includes:

• GILTI: Amount included in federal taxable income under IRC §951A and amount of related deduction under IRC §250;
• FDII: Amount computed for federal return for the tax year, including related deduction under IRC §250;
• Interest Expense: Amount of business interest expense deducted on federal return under IRC §163, including any carryover amounts and limitations imposed by IRC §163(j);
• NOLs:  Amount of NOLs deducted on federal return under IRC §172, including any carryover amount due to limitations imposed by IRC §172(a)(2), and the amount of state NOL carryover available after return filed for the tax year; and
• AMT: Amount of state AMT credit carryover available after return filed for the tax year.  

Reporting Mechanics and Timing

This information must be separately reported to the Department through a portal on the Department’s website.[5]  The information is due by the earlier of 10 days after the extended due date of the Florida return or 10 days after the return is filed.  If that deadline was prior to October 27, 2019, the information must be submitted by October 27, 2019 in order to be considered timely.[6]

Noncompliance Penalties

Failure to timely report this information subjects a taxpayer to a penalty of $1,000 or 1% of the tax due for the taxable year, whichever is greater.  The Department may compromise this penalty if noncompliance was due to reasonable cause, and not due to willful negligence, willful neglect or fraud. 

We expect the Department to exercise leniency in assessing penalties against taxpayers who may miss the extended October 27, 2019 deadline for previously due information, given its acknowledgement that Hurricane Dorian might adversely impact timely compliance.  The Department’s commitment to “work with taxpayers in a fair and efficient manner that achieves the highest levels of voluntary compliance”[7] should be the guiding principle extended to all corporate taxpayers required to comply with this separate information reporting requirement, weather-related or not.   

Conclusion

Florida continues to address the TCJA’s effect on Florida corporate taxpayers, and this information reporting requirement plays an important role in the Legislature’s ability to accurately assess those impacts.  If we can assist you with this or other state and local tax matters, please contact a member of our State and Local Tax Team.

[1] https://www.deanmead.com/2018/02/legislative-update-federal-tax-cuts-jobs-act-risk-florida-corporate-taxpayers/. https://www.deanmead.com/2018/05/florida-department-of-revenue-to-study-impacts-of-federal-tax-reform-seeking-taxpayer-input/

The Florida corporate income tax code fundamentally “piggybacks” the Internal Revenue Code.  See Section 220.02(3), Fla. Stat.

[2] https://www.deanmead.com/2019/08/increased-florida-corporate-tax-collections-trigger-540m-in-refunds/

[3] Section 220.27, Fla. Stat. (2019).

[4] TIP 19C01-03 (Aug. 26, 2019), updated Sept. 5, 2019, and available at: https://revenuelaw.floridarevenue.com/LawLibraryDocuments/2019/09/TIP-122684_TIP_19C01-03_%20FINAL3_RLL.pdf.

[5] https://floridarevenue.com/taxes/taxesfees/Pages/corp_submit_info.aspx

[6] This deadline was originally September 3, 2019, but was extended due to the effects of Hurricane Dorian.  See Governor’s Executive Order No. 19-190 and DOR Emergency Order No. 19-002.

[7] TIP 19C01-03, amended Aug. 29, 2019.