The Qualified Target Industry Tax Refund

By: Zachary Brown

A tax incentive is a way that the government can encourage or attract certain economic activities to a particular area. Tax incentives typically are aimed at attracting investment as a way of increasing employment, economic output, research and technology development, and improving infrastructure to surrounding areas. Tax incentives are offered at the federal, state, and local level through a variety of different means and mechanisms. The Qualified Target Industry Tax Refund (QTITR) is one type of incentive offered by the State of Florida

The QTITR is a tool the State of Florida offers to communities to encourage job growth in industries that the state has prioritized because of the types of jobs those industries create or the services they offer to surrounding communities. The Qualified Target Industry Tax Refund allows a company to recoup some of the taxes it pays based on certain economic activity the company creates. Some of these taxes include corporate income, sales, ad valorem, intangible personal property, and other various taxes levied by the government. The program’s rules state that no more than 25 percent of the total refund approved may be taken for a single fiscal year and that a qualified business may receive no more than $1.5 million in tax refunds for a single fiscal year.

So how does a business qualify for the QTITR? Well, a business must first be a Qualified Target Industry (QTI). QTIs are the businesses that Florida is looking to attract to the state. Broadly speaking, QTIS are in certain industries that include cleantech (such as sustainability and biomass technology companies), life sciences, infotech (such as digital media and software companies), aviation and aerospace, homeland security and other defense companies, and financial/professional services. While some businesses may consider themselves on the edge of one of those categories, it should be noted that Florida Statutes expressly provide that a QTI is not “any business subject to regulation by the Division of Hotels and Restaurants or the Department of Business and Professional Regulation.”

All business ventures are evaluated on an individual basis, so don’t assume by operating in one of the above mentioned QTIs automatically indicates eligibility. To determine eligibility, an application is submitted to Enterprise Florida (EFI). EFI is a public-private partnership between Florida’s business and government leaders. It is the principal economic development organization for the State of Florida and the Chairman of the EFI board is Governor Ron DeSantis. EFI will evaluate a certain project or business venture based upon how many full-time jobs are created and the annual wages those jobs pay. There are several other minor economic factors that EFI evaluates before pre-approving the application and sending it off to the Department of Economic Opportunity (DEO).

The DEO is the Florida agency that gives a final decision on whether a business will receive the QTITR. The amount of the tax refund provided by the DEO varies depending on each situation. The DEO provides the applicant with a letter of certification approving or denying the applicant’s request. The applicant and DEO then work to sign a written tax refund agreement that includes the specifications of what kind of refund the applicant will receive.

There are many rules and regulations when applying and attempting to receive the QTITR, so it is important to navigate the process as carefully as possible. As always, seeking the help of counsel to navigate this process is a good idea.

Zach Brown is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland. Questions can be submitted to thelaw@cclmlaw.com.

Zach Brown