Florida-based businesses have a unique opportunity to receive a tax credit or a sales tax refund of up to $200,000 per tax year when they donate money, property or other goods toward a community development or housing project that benefits the state’s low-income residents.
Under the Community Contribution Tax Credit Program, businesses that contribute to a community-based organization approved by the Department of Economic Opportunity (DEO) may receive a tax credit of up to 50 percent of the value of their donation. Businesses may apply the credit against their Florida corporate income tax or insurance premium tax. Alternatively, if the business is registered to collect and remit sales tax with the state’s Department of Revenue, it may apply for a sales tax refund of up to 50 percent of the value of the donation to an eligible organization. Unused portions of the maximum corporate tax credit ($200,000 per year) may be carried forward for up to five tax years; unused sales tax refunds may be claimed for no more than three years.
Businesses expecting to receive a credit, must first confirm that their donations are made to qualifying organizations and projects that have applied for and received approval from the Department of Economic Opportunity. Furthermore, their donations must be applied to cover a housing project’s development impact and management fees; a down payment or closing costs; housing counseling and marketing fees (not to exceed 10 percent of the donation); removal of liens recorded against residential property by municipal, county or special-district local governments.
To claim a Florida corporate income tax or insurance premium tax credit, businesses must send to the DEO the following:
A completed Application for a Community Tax Credit (Form 8E-17TCA#01), which can be found at www.floridajobs.org
A copy of the donation check or appraisal of the donated property
A copy of the sponsoring organization’s certification
A copy of the sponsor acknowledgment letter or other proof that the donation was received
In addition, businesses claiming the tax credit must submit a copy of the donation approval letter when filing their Florida Corporate Income Tax Return or Insurance Premium Tax Return.
To claim a sales tax refund, eligible businesses must first confirm with the DEO, in writing, that their contribution indeed qualifies for a tax credit. Next they must submit the following items to the DEO:
A completed Application for a Community Tax Credit (Form 8E-17TCA#01), which can be found at www.floridajobs.org
A completed Application for Refund (Form DR-26S), which can be found at www.floridajobs.org
A copy of the DEO’s approval letter
Tax credit applications must be received by the DEO between July 1 and July 15 before they are processed and can be approved on a pro rata basis if requested applications exceed tax credit allocations. After July 15th, tax credit applications are processed on a first-come, first-served basis if tax credits are available.
About the Author: Dustin Grizzle is a senior manager in Berkowitz Pollack Brant’s Tax Services practice, where he provides tax planning and compliance services to businesses and high-net-worth individuals. He can be reached at the CPA firm’s Boca Raton, Fla., office at (561) 361-2000 or via email at info@bpbcpa.com.
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