Spotlight Program:  Florida's Qualified Target Industry Tax Refund (QTI)

Florida is a complex state to evaluate from a business perspective. On one hand, there is no state personal income tax, a growing population base and access to markets in Central and Southern America. On the other hand, there are hurricanes, escalating insurance premiums and increasing real estate costs.

Florida's economic development programs can also be challenging to evaluate. While Florida is aggressive in its efforts to attract and retain business, incentive programs are carefully targeted to specific industries and have clearly defined limits and requirements.

The Qualified Target Industry Tax Refund (QTI) is a program for companies that create high paying jobs in targeted, high value industries. A very specific list of qualifying targeted industries is available at www.eflorida.com. Broadly, the targeted industries include:

• Life Sciences
• Information Technology
• Aerospace & Aviation
• Homeland Security/Defense
• Financial/Professional Services
• Manufacturing
• Emerging Technologies (alternative energy, materials science, nanotechnology, marine science)

QTI, as it is commonly called, may include refunds on taxes such as corporate income, sales, ad valorem, intangible personal property, insurance premium and certain other taxes. This wide range of taxes which may be refunded means that nearly any company that qualifies can actually take advantage of the refund. The refund is $3,000 per new full-time job created. This increases to $6,000 per new full-time job created in an Enterprise Zone or rural county.

The program is designed to encourage wealth creation and has a strict wage requirement. To qualify, the new jobs must pay at least 115% of the average private sector wage in the area. For jobs paying 150% of the county average annual wage, an additional refund of $1,000 per job is offered. For jobs paying 200% of the average wage, an additional $2,000 per job is available. (A list of wages by county can be found at www.eflorida.com.)

As an example, a company in a targeted industry that creates 100 new jobs paying 200% of the county average in a rural county can receive a refund of $8,000 per job - or $800,000.

There are a number of criteria that must be met to obtain approval for the credit. First, there is a very strict "but for" requirement. This type of requirement means that "but for these incentives, the company would not have created the new jobs." The QTI application process and approval must be completed before a company makes a decision to create the new jobs in Florida. No real estate can be purchased and no public announcement can be made. Given the speed at which real estate transactions take place today, a 2-3 month approval process can be a very long time.

The local community must provide 20% of the tax refund. Before a commitment can be obtained from the state, the local community must complete its application and approval process. This adds more time to the process and can be frustrating if a company has an immediate need to create the new jobs.

QTI does have a clawback, or penalty for non-compliance, if the job creation and wage requirements are not met. A business must achieve at least 80% of the employment goal and 90% of the wage goal committed to in the original QTI agreement. If these minimum levels are met, the business may receive a prorated refund, less a 5% penalty. In no case may the wages paid be less than 115% of the average private sector wage in the area.

The overall refund is capped at $5 million ($7.5 million in an Enterprise Zone) for a single qualified applicant in all years. No more than 25% of the total refund may be taken in a single year. To claim the credit, a company must submit a claim by January 31st for the previous year refund.

QTI is an attractive program and can be of great value if a company meets all the requirements and files the proper paperwork each year. Please contact Suzanne Davis at sdavis@binghameda.com if you have questions or would like more information.