Capitalizing on the Florida Tax Credit Scholarship Program

If your business donates to an eligible Florida scholarship funding organization and is not receiving a tax credit, you may be leaving money on the table.

Under the Florida Tax Credit Scholarship Program, businesses that lease real property may receive a dollar-for-dollar credit against the state sales tax due on commercial rent payments for contributions paid to an eligible nonprofit scholarship funding organization. Eligible scholarship-funding organizations are available on the Florida Department of Education’s website. 

The process for receiving the tax credit is below. 

1. Apply for a Credit. Businesses considering making an eligible donation must first apply with the Florida Department of Revenue to receive an allocation of the available credits each fiscal year (July 1- June 30). Allocations are approved on a first-come, first-serve basis. Reserving credits does not obligate a business to make the donation. It merely allows the Department to monitor the allocation of available funds.
2. Receive Allocation. After making an application, you will receive a letter of approval or denial. If approved, the letter will indicate the amount of the credit.
3. Make Contribution. If you elect to make the contribution, it must be made to the organization identified in the application in the same fiscal year (July 1 – June 30) the credit allocation was issued. After you make your contribution, the organization receiving it will issue a certificate of contribution.
4. Provide Evidence of Credit to Landlord. In lieu of remitting sales tax to your landlord, provide a copy of the approval letter issued by the Department and the certificate of contribution issued by the organization. The credit may only be taken against state sales tax (currently 2.0%) and does not apply to discretionary sales surtax. When a tenant takes a credit allowed under the program, the landlord may take a corresponding credit against the sales tax due to the Department.

Note, the Florida Tax Credit Scholarship Program is not limited to sales tax on commercial rent. The program may also be used to offset obligations for corporate income tax; excise tax on liquor, wine, and malt beverages; gas and oil production tax; insurance premium tax; and certain other use taxes. However, sales tax on rent is the most widely applicable tax eligible for the credit. 

At Williams Parker, our team of experienced real estate and tax attorneys can help you navigate a wide range of legal issues surrounding commercial leases. 

Kyle practices in the area of commercial and residential real estate, with a focus on commercial leasing. Reach out to Kyle directly at kelliott@williamsparker.com or call him at 941-329-6618.