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New Worlds Reading Initiative – Tax Credit

Florida’s New Worlds Reading Initiative was established in 2021 under the Florida Department of Education to improve literacy skills and promote a love of reading by providing high-quality, free books to students in kindergarten through fifth grade who are reading below grade level.

Under the initiative, taxpayers can make private monetary contributions to the administrator of the initiative and receive a dollar-for-dollar credit against the following Florida taxes:

  • corporate income tax;
  • excise tax on liquor, wine, and malt beverages;
  • gas and oil production tax;
  • insurance premium tax; and,
  • use tax due under a direct pay permit.

The administrator is designated by the Florida Department of Education and must be a state university that is registered as a Scholarship Funding Organization. The designated administrator is listed on the Florida Department of Education – Scholarship Funding Organizations webpage.

Taxpayers who wish to participate must apply to the Department of Revenue for an allocation of tax credit.

References: Sections 211.0252, 212.1833, 220.02, 220.13, 220.1876, 561.1212, 624.51056, and 1003.485, Florida Statutes; and Emergency Rules 12ER21-19 and 12ER21-20, Florida Administrative Code.

Applying for a Tax Credit Allocation

The fastest and easiest way to apply for a tax credit allocation is the Department’s online Multi-Tax Credits application. Here you can:

  • create a secure, online account;
  • complete and submit your application and receive a confirmation number with the date and time of submission;
  • view the status of your application(s) from your account dashboard; and,
  • complete and submit tax credit applications for multiple taxes.

Taxpayers required to file and pay electronically must apply online. Taxpayers not obligated to file and pay electronically may apply by submitting the paper New World’s Reading Initiative – Application for Tax Credit Allocation for Contributions to the Administrator (Form DR-336000PDF Icon).

You will need the following information to apply:

  • your federal identification number;
  • the name of the administrator you plan to contribute to;
  • the total amount you plan to contribute;
  • the amount you plan to contribute for each specific tax; and,
  • if you file your Florida corporate income/franchise tax return on a consolidated basis, the name and federal identification number of the parent company.

The Department will send notification of approval or denial. Taxpayers who create an account and apply online can also view their application status from their account dashboard.

Approval of a credit allocation does not authorize the credit to be claimed. See “Claiming a Tax Credit” for more information.

Claiming a Tax Credit

If your credit allocation is approved, you must make a monetary contribution to the administrator selected in your application before claiming a credit against tax due. The administrator receiving your contribution will issue you a Certificate of Contribution containing the amount of the contribution and the date received.

Please refer to the tax sections below for tax credit information specific to each tax.

Rescinding a Previously Approved Tax Credit Allocation

You may apply to the Department to rescind all or part of a previously approved credit allocation under the New Worlds Reading Initiative Tax Credit program by visiting the Department’s online Multi-Tax Credits application. Rescinding a tax credit allocation allows credit allocations that will not be used by you to be made available to other taxpayers wishing to apply for an allocation. A separate application is required to rescind each previously approved credit allocation.

Taxpayers required to file and pay electronically must apply online for a rescindment. Taxpayers who create an online account and apply online can view the status of the rescindment from their account dashboard.

Taxpayers not obligated to file and pay electronically may apply by submitting the paper New Worlds Reading Initiative ─ Application for Rescindment of Previous Allocation of Tax Credit (Form DR-336100PDF Icon).

You will need the following information to apply for a rescindment:

  • the confirmation number from your original application for an allocation of credit;
  • the amount you wish to rescind in total and by tax type;
  • your federal identification number;
  • the name of the administrator which you originally intended to make your contribution to; and,
  • if you file your Florida corporate income/franchise tax return on a consolidated basis, the federal identification number of the parent company.

The Department will send notification of approval or denial.

Transferring a Tax Credit

The tax credit may be conveyed, assigned, or transferred only:

  • if all the assets of a taxpayer/entity are conveyed, transferred, or assigned in the same transaction; or
  • from one taxpayer/entity (transferor) to another taxpayer/entity (transferee) when the transferee is a member of the transferor’s affiliated group.

You can apply for a transfer from one member to another member of your affiliated group by submitting the paper New Worlds Reading Initiative – Notice of Intent to Transfer a Tax Credit (Form DR-336200PDF Icon).

The Department will send notification of approval or denial. If the transfer is approved, a copy of the approval letter will be sent to both the transferor and transferee. The approval letter will include instructions on how the transferee may claim the tax credit on a tax return. Transfers must be approved before a transferee may claim a tax credit on a tax return.

Corporate Income Tax

One hundred percent of an eligible contribution is allowed as a credit against any tax due for a taxable year. The amount of the tax credit for a tax year must be taken in the order of the credits provided against the corporate income tax in section 220.02(8), F.S. The credit granted must be reduced by the resulting decrease in federal income tax, if any, when considering the credit and the overall impact it has on the federal income tax due. The amount of credit taken for the taxable year must be added back to taxable income only once. A copy of the Certificate of Contribution issued by the administrator must be attached to the return when claiming the credit.

For taxable years beginning on or after January 1, 2022, applications may be submitted beginning on the first business day in January for contributions to be made for taxable years that begin in the same calendar year through the day before the due date, or if extended, the day before the extended due date of the Florida Corporate Income/Franchise tax return (Form F-1120). The allocation of each state fiscal year's allotted credit cap amount begins on the first business day in January. The Department will accept applications for an allocation of credit against corporate income tax until the allotted credit cap amount is reached or until the day before the due date, or if the due date is extended, the day before the extended due date of the return for the applicable tax year, whichever occurs first.

For estimated tax purposes, all contributions that earn a credit for the taxable year will apply to the first installment due for that taxable year under the prior year exception. However, estimated tax penalty and interest may still be imposed under certain circumstances when the request for an allocation of credit is made during the period in which an extension of time to file the tax return has been granted.

If you cannot use the full amount of the tax credit in the given year, you may carry forward the amount of unused tax credit for up to 10 years.

Example 1 - A corporate income tax taxpayer applying for a credit allocation for its taxable year beginning January 1, 2022, and ending December 31, 2022, may submit an application on January 3, 2022, through April 30, 2023. If the return is validly extended, the application may be submitted through October 30, 2023, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between January 1, 2022, and May 1, 2023, unless the return is validly extended, in which case the contribution must be made by November 1, 2023. If the credit is not fully used on this return, the unused credit can be carried forward up to 10 years.

Example 2 - A corporate income tax taxpayer applying for a credit allocation for its taxable year beginning December 1, 2022, and ending November 30, 2023, may submit an application on January 3, 2022, through March 31, 2024. If the return is validly extended, the application may be submitted through September 30, 2024, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between December 1, 2022, and April 1, 2024, unless the return is validly extended, in which case the contribution must be made by October 1, 2024. If the credit is not fully used on this return, the unused credit can be carried forward up to 10 years.

References: ss. 220.02, 220.13, 220.1876 and 1003.485, F.S.

Excise Tax on Liquor, Wine, and Malt Beverages

Upon approval of the Division of Alcoholic Beverages and Tobacco of the Florida Department of Business and Professional Regulation, a credit is allowed against any excise tax due, except excise taxes imposed on wine produced by manufacturers in this state from products grown in this state, for eligible contributions paid to an administrator. The amount of credit taken may not exceed 90% of the tax due on the return the credit is claimed. A copy of the Certificate of Contribution issued by the administrator must be attached to the return when claiming the credit.

Applications may be submitted beginning on the first business day in January for contributions to be made in the state fiscal year beginning the following July 1. The Department will accept applications for an allocation of credit against these excise taxes until the allotted credit cap amount is reached or until the end of the applicable state fiscal year, whichever occurs first.

If you cannot use the full amount of the tax credit in the given year, you may carry forward the amount of unused tax credit for up to 10 years.

Example 1 – For state fiscal year 2021-2022, excise taxpayers of liquor, wine and malt beverages applying for a credit allocation may submit an application between October 1, 2021, and June 30, 2022, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between January 1, 2022, and June 30, 2022. The credit can be claimed after the contribution is made and before June 30, 2022. If the credit is not fully used before June 30, 2022, the unused credit can be carried forward up to 10 years.

Example 2 – For state fiscal year 2022-2023, excise taxpayers of liquor, wine and malt beverages applying for a credit allocation may submit an application between January 3, 2022, and June 30, 2023, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between July 1, 2022, and June 30, 2023. The credit can be claimed after the contribution is made and before June 30, 2023. If the credit is not fully used before June 30, 2023, the unused credit can be carried forward up to 10 years.

References: ss. 561.1212 and 1003.485, F.S.

Insurance Premium Tax

One hundred percent of an eligible contribution is allowed as a credit against any tax due for a taxable year after deducting from such tax:

  1. Deductions for assessments made pursuant to section 440.51, Florida Statutes (F.S.) ─ Workers' Compensation Administrative Assessments;
  2. Credits for taxes paid under Sections 175.101 and 185.08, F.S. ─ Firefighters' and Police Officers' Pension Trust Funds; and,
  3. Credits for income tax paid under Chapter 220, F.S., and credit allowed under section 624.509(5), F.S., as such credit is limited by section 624.509(6), F.S., the 65% limitation.

A copy of the Certificate of Contribution issued by the administrator must be attached to your tax return when claiming the credit. Credits earned for contributions made for a taxable year decrease the amount that must be paid to meet the prior year exception for installment penalty and interest purposes.

Applications may be submitted beginning on the first business day in January for contributions to be made in tax years that begin in the same calendar year. The Department will accept applications for an allocation of credit against that insurance premium tax year until the allotted credit cap amount is reached or until the day before the due date of the return for the applicable insurance premium tax year, whichever occurs first.

If you cannot use the full amount of the tax credit in the given year, you may carry forward the amount of unused tax credit for up to 10 years.

Example – An insurance premium taxpayer applying for a credit allocation for its 2022 tax year, may submit an application between January 3, 2022, and February 28, 2023, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between January 1, 2022, and March 1, 2023. If the credit is not fully on its 2022 insurance premium return, the unused credit can be carried forward up to 10 years.

References: ss. 624.51056 and 1003.485, F.S.

Use Tax Due Under a Direct Pay Permit

One hundred percent of an eligible contribution is allowed as a credit against the use tax due from a direct pay permit holder. Claiming this credit will not reduce your collection allowance.

Before a credit can be claimed on a Sales and Use Tax Return (Form DR-15), you must submit a copy of the Certificate of Contribution from the eligible charitable organization to:

Florida Department of Revenue
Revenue Accounting
PO Box 6609
Tallahassee, Fl. 32314-6609
Or Fax 850 921-1171

The Department will respond with specific instructions on how to claim the credit on your return. You cannot claim the credit until you receive these instructions.

Applications may be submitted beginning on the first business day in January for contributions to be made in the state fiscal year beginning the following July 1. The Department will accept applications for an allocation of credit against the use tax from a direct pay permit holder until the allotted credit cap is reached or until the end of the applicable state fiscal year, whichever occurs first.

If you cannot use the full amount of the tax credit in the given year, you may carry forward the amount of unused tax credit for up to 10 years.

Example 1 - For state fiscal year 2021-2022, direct pay permit holders applying for a credit allocation may submit an application between October 1, 2021, and June 30, 2022, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between January 1, 2022, and June 30, 2022. The credit can be claimed after the contribution is made and before June 30, 2022. If the credit amount is not fully used before June 30, 2022, the unused credit can be carried forward up to 10 years.

Example 2 – For state fiscal year 2022-2023, direct pay permit holders applying for a credit allocation may submit an application between January 1, 2022, and June 30, 2023, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between July 1, 2022, and June 30, 2023. The credit can be claimed after the contribution is made and before June 30, 2023. If the credit amount is not fully used before June 30, 2023, the unused credit can be carried forward up to 10 years.

References: ss. 212.1834 and 1003.485, F.S.

Severance Tax – Gas and Oil Production

One hundred percent of an eligible contribution is allowed as a credit against the severance tax on oil and gas production. However, the total amount of credit claimed on each return must not exceed 50% of the tax due. If the Strong Families, Florida Tax Scholarship, or New Worlds Reading Initiative tax credits are combined and exceed 50% of the tax due on a return, the credits must be taken in the following order:

  1. Florida Tax Scholarship Tax Credit
  2. Strong Families Tax Credit
  3. New Worlds Reading Initiative Tax Credit

A copy of the Certificate of Contribution from each administrator must be attached to your tax return when claiming the credit.

Applications may be submitted beginning on the first business day in January for contributions to be made in the state fiscal year beginning the following July 1. The Department will accept applications for an allocation of credit against the severance tax until the allotted credit cap amount is reached or until the end of the applicable state fiscal year, whichever occurs first.

If you cannot use the full amount of the tax credit in the given year, you may carry forward the amount of unused tax credit for up to 10 years.

Example 1 – For state fiscal year 2021-2022, oil and gas production taxpayers applying for a credit allocation may submit an application between October 1, 2021, and June 30, 2022, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between January 1, 2022, and June 30, 2022. The credit can be claimed after the contribution is made and before June 30, 2022. If the credit amount is not fully used before June 30, 2022, the unused credit can be carried forward up to 10 years.

Example 2 – For state fiscal year 2022-2023, oil and gas production taxpayers applying for a credit allocation may submit an application between January 3, 2022, and June 30, 2023, assuming the annual allocation is not exhausted before the time of application. In this example, the taxpayer must contribute to the administrator between July 1, 2022, and June 30, 2023. The credit can be claimed after the contribution is made and before June 30, 2023. If the credit amount is not fully used before June 30, 2023, the unused credit can be carried forward up to 10 years.

References: Sections 211.0252 and 1003.485, F.S.