The Franchise Tax Credit (CTC) has been implemented by the Internal Revenue Service (IRS) to provide a specified tax relief to those business people who wish to open new franchises in different states of the United States of America. With the help of the Florida Franchise Tax Credit (TFCC), an investor can protect his interest and thus the profits of the business with the help of this special tax break. There are many questions that are being asked by the agents of the government for the investors and/or franchisees. They are generally concerned about the capital gains and the income tax liability of the owner of the franchise. The following discussion below will highlight some of the important points relating to the FICPA Franchise Tax Credit.
There is no set criteria for qualifying for the FICPA Franchise Tax Credit; however, it has been observed that most of the applicants for the credit were not a resident of the specific state in which they were applying for the credit. For instance, an applicant who had opened a franchise in Florida might be eligible for this tax relief but would not be eligible for the same if he had opened a similar franchise in another state. It has also been observed that the FICPA Franchise Tax Credit has been implemented keeping in mind the income tax liability of both the owner of the franchise and of the franchisee who receive the benefits under the program. The audit defense to the claim of the state government cannot be relied upon as the FICPA makes it clear that the owner of the franchise can raise audit defense only if the application forms provided by the applicant are false and do not mention any relevant facts.
An important point for which the FICPA Tax Credit is criticized is the concept of the double taxation. Under the terms of the plan, the owner of the franchise may be required to pay the amount of tax levied on the basis of income derived in Florida from the sale of an existing trade or from acquiring a new franchise. If this tax levy on the basis of income is not paid, then the claim for the unpaid tax debt is decided by the tax authority of the concerned state.