taximize (tak/suh/myse) verb: to optimize your Florida corporate tax liability by investing in K-12 education scholarships for underprivileged schoolchildren in exchange for a dollar-for-dollar tax credit.
It’s a made-up word with a real meaning, and companies have been “taximizing” in Florida for nearly 20 years.
Tax liabilities that are eligible for the Florida Tax Credit (FTC) Scholarship Program include corporate income, insurance premium, alcohol beverage excise, direct pay sales and use, commercial lease sales tax, and oil and gas severance. And there is roughly $200 million in available tax credits remaining for 2018.
Corporations are eligible to receive a 100 percent tax credit for their contributions to Step Up For Students, a state-approved scholarship funding organization which funds scholarships for economically disadvantaged schoolchildren in grades K-12. It’s SIMPLE and FREE to participate.
Since 2001, the corporate community has committed more than $3.9 billion, which has funded over 785,000 scholarships. The program currently serves more than 100,000 children who come from families with household income averaging $25,000 for a family of four. Over 70% of the scholarship children are minorities.
Studies show that the scholarship makes a dramatic impact to the student recipients. The average scholarship students are among the lowest performers in their prior school and, once on scholarship, students see similar learning gains to all students nationally, regardless of income. Last fall, the Urban Institute issued a report showing that if a student is on the scholarship four years or longer, he or she is 43 percent more likely to attend public Florida college and up to 29 percent more likely to earn associate degrees.
By law, Step Up must distribute 97 percent of every dollar it takes in to scholarships. Through the nonprofit’s dedication to accountability and fiscal transparency, Step Up has earned a 4-star rating from Charity Navigator and is recognized as a Platinum GuideStar member. Step Up is also ranked 26th by Forbes and 42nd by The Chronicle of Philanthropy in the publications’ listings of largest nonprofits in the United States.
New Program Enhancements for Companies
Recent Florida legislative changes provide greater flexibility to companies making corporate income tax-credited contributions. For tax years starting on or after Jan. 1, 2018, contributions count toward any installment payment and can be made up to the filing of the return, including filing an extension. Combined, these options allow companies to float their Florida corporate income tax liability and contribute a lump-sum payment to Step Up. Companies can maximize the time value of money by participating in this option. To avoid potential penalties associated with the failure to pay the required tentative taxes, tax credits should be reserved within the corporation’s fiscal year before requesting an extension of time to file the return.
Now Including Commercial Lease Sales Tax
The newest tax credit category for the program – commercial lease sales tax – went into effect on Oct. 1, 2018. This means that companies can now contribute up to 100 percent of their monthly business rent tax to fund K-12 scholarships for low-income and foster children. For the 2018-2019 state fiscal year, the Florida Legislature has allocated up to $57.5 million in commercial lease sales tax credits for this program.
All credits are approved on a first-come, first-serve basis with the Florida Department of Revenue.
For more information on how you can benefit schoolchildren while paying your Florida corporate taxes, please visit the Step Up for Students website.