TALLAHASSEE — Florida corporations are facing a tough choice — if they take advantage of a federal income tax break, their state taxes will go up.
That could happen because of a glitch in a state law that "piggybacks" Florida's tax code onto federal law, but an administrative rule adopted Tuesday is expected to provide a temporary fix.
Business groups issued a statement saying the rule passed by Gov. Charlie Crist and the Florida Cabinet averted a financial crisis that would have further depressed the state's sagging economy.
Last month, state revenue director Linda Echeverri told the panel, which oversees her department, she planned to solve the problem, which affects depreciation deductions, by waiving penalties that might result if the Legislature doesn't change the law next year as its leaders have promised.
She told the panel she later learned her plan still would not prevent corporations from suffering losses because they must decide by Dec. 31 how they will handle depreciation.
The Legislature annually passes a piggyback bill to add changes in federal tax laws to Florida's books.
Facing growing revenue shortfalls, the Legislature this year excluded a provision in the federal Economic Stimulus Act that allows corporations to accelerate the normal depreciation of certain assets.
Putting that provision in Florida's tax code would have cost the state $146-million, Echeverri said. The emergency rule, though, would not result in any losses to the state, she said.
The law was written in a way that caused an unintended consequence. If a corporation takes the 50 percent federal bonus depreciation, it would permanently lose half of its state depreciation deduction. The rule would let corporations use the same depreciation deductions they have in the past.
It's "a temporary stopgap and further legislative action must be taken," the business groups said in their statement.
Associated Industries of Florida, the Florida Chamber of Commerce and Florida Retail Federation participated in the statement along with Florida TaxWatch, a state budget watchdog group.
House Speaker Ray Sansom, R-Destin, and Senate President Jeff Atwater, R-North Palm Beach, wrote in a letter to Echeverri that they would push for early passage a bill to fix the glitch. The Legislature will convene in March for its regular annual session, but a special session may be called before then to deal with a $2-billion budget deficit.