Small Business Succession Planning Act

I 117TH CONGRESS 1ST SESSION H. R. 971 To require the Administrator of the Small Business Administration to estab- lish a program to encourage small business concerns to make business succession plans, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 11, 2021 Mrs. BUSTOS (for herself, Mr. GARBARINO, Mr. CROW, Mr. RICE of South Carolina, Ms. NORTON, Ms. CRAIG, and Mr. SAN NICOLAS) introduced the following bill; which was referred to the Committee on Small Busi- ness, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consider- ation of such provisions as fall within the jurisdiction of the committee concerned A BILL To require the Administrator of the Small Business Adminis- tration to establish a program to encourage small busi- ness concerns to make business succession plans, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Small Business Succes- 4 sion Planning Act’’. 5 VerDate Sep 11 2014 02:59 Mar 08, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H971.IH H971 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 971 IH SEC. 2. BUSINESS SUCCESSION PLANS FOR SMALL BUSI- 1 NESS CONCERNS. 2 (a) IN GENERAL.—The Administrator of the Small 3 Business Administration shall establish a program to help 4 small business concerns develop and implement business 5 succession plans. 6 (b) TOOLKIT.—The Administrator, in consultation 7 with resource partners, shall develop a toolkit to assist 8 small business concerns in establishing a business succes- 9 sion plan. Such toolkit shall be made available on a public 10 website of the Administration. 11 (c) PROGRAM COMPONENTS.—The Administrator— 12 (1) shall train resource partners on using the 13 toolkit described in subsection (b) with small busi- 14 ness concerns; 15 (2) shall educate small business concerns about 16 the program established under this section; 17 (3) shall ensure that each district office of the 18 Administration and each resource partner described 19 in subparagraphs (B) through (E) has an employee 20 with the specific job responsibility of providing coun- 21 seling, in person or virtually, to small business con- 22 cerns on use of the toolkit described in subsection 23 (b); and 24 (4) may hold workshops or events on business 25 succession planning. 26 VerDate Sep 11 2014 02:59 Mar 08, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H971.IH H971 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 971 IH (d) PLAN.—Not later than 120 days after the date 1 of the enactment of this Act, the Administrator shall sub- 2 mit to the appropriate committees a plan for increasing 3 the amount of small business concerns that have business 4 succession plans. Such plan shall include a description of 5 methods to increase the frequency and use of business suc- 6 cession plans by small business concerns owned and con- 7 trolled by socially and economically disadvantaged individ- 8 uals (as defined in section 8(d)(3)(C) of the Small Busi- 9 ness Act (15 U.S.C. 637(d)(3)(C))). 10 (e) TAX CREDIT FOR SMALL BUSINESS CONCERNS 11 WHICH COMPLETE A BUSINESS SUCCESSION PLAN.— 12 (1) IN GENERAL.—Subpart D of part IV of 13 subchapter A of chapter 1 of the Internal Revenue 14 Code of 1986 is amended by adding at the end the 15 following new section: 16 ‘‘SEC. 45U. BUSINESS SUCCESSION PLAN CREDIT. 17 ‘‘(a) IN GENERAL.—For purposes of section 38, the 18 business succession plan credit determined under this sec- 19 tion is— 20 ‘‘(1) $250 for the first taxable year during 21 which the Administrator of the Small Business Ad- 22 ministration certifies that the taxpayer has estab- 23 lished a business succession plan, that the taxpayer 24 is a small business concern at the time that such 25 VerDate Sep 11 2014 02:59 Mar 08, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H971.IH H971 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 971 IH plan is established, and that such plan does not pro- 1 vide for substantially all of the interests or assets of 2 small business concern to be acquired by one or 3 more entities which are not small business concerns, 4 and 5 ‘‘(2) $250 for the first taxable year during 6 which such Administrator certifies that the taxpayer 7 has successfully completed a succession of respon- 8 sibilities pursuant to a business succession plan 9 which was certified under paragraph (1), that the 10 taxpayer is a small business concern immediately 11 after such succession, and that the business with re- 12 spect to which such business succession plan relates 13 was a small business concern immediately prior to 14 such succession. 15 ‘‘(b) RECAPTURE OF CREDITS.— 16 ‘‘(1) RECAPTURE OF CREDIT FOR ESTABLISH- 17 MENT OF PLAN.—If, during the 3-year period begin- 18 ning on the date of the establishment of a business 19 succession plan described in subsection (a)(1), sub- 20 stantially all of the equity interests in the taxpayer 21 or substantially all of the assets of the taxpayer are 22 acquired by one or more entities which are not small 23 business concerns, the taxpayer’s tax imposed under 24 this chapter for the taxable year during which such 25 VerDate Sep 11 2014 02:59 Mar 08, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H971.IH H971 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 971 IH interest or assets are so acquired shall be increased 1 by amount of the credit allowed to the taxpayer 2 under subsection (a)(1) for such taxable year or any 3 prior taxable year. 4 ‘‘(2) RECAPTURE OF CREDIT FOR COMPLETION 5 OF SUCCESSION.—If, during the 3-year period begin- 6 ning on the date of the completion of a succession 7 of responsibilities described in subsection (a)(2), 8 substantially all of the equity interests in the tax- 9 payer or substantially all of the assets of the tax- 10 payer are acquired by one or more entities which are 11 not small business concerns, the taxpayer’s tax im- 12 posed under this chapter for the taxable year during 13 which such interests or assets are so acquired shall 14 be increased by amount of the credit allowed to the 15 taxpayer under subsection (a)(2) for such taxable 16 year or any prior taxable year. 17 ‘‘(c) DEFINITIONS.—For purposes of this section, the 18 terms ‘small business concern’ and ‘business succession 19 plan’ have the respective meanings given such terms under 20 section 2(g) of the Small Business Succession Planning 21 Act.’’. 22 (2) CREDIT ALLOWED AS PART OF GENERAL 23 BUSINESS CREDIT.—Section 38(b) is amended by 24 striking ‘‘plus’’ at the end of paragraph (32), by 25 VerDate Sep 11 2014 02:59 Mar 08, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H971.IH H971 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 971 IH striking the period at the end of paragraph (33) and 1 inserting ‘‘, plus’’, and by adding at the end the fol- 2 lowing new paragraph: 3 ‘‘(34) the business succession plan credit deter- 4 mined under section 45U(a).’’. 5 (3) CLERICAL AMENDMENT.—The table of sec- 6 tions for subpart D of part IV of subchapter A of 7 chapter 1 of such Code is amended by adding at the 8 end the following new item: 9 ‘‘Sec. 45U. Business succession plan credit.’’. (4) REPORT TO CONGRESS.—Not later than 90 10 days after the date of the enactment of this Act, the 11 Secretary of the Treasury (or the Secretary’s dele- 12 gate) shall submit a report to the Committee on 13 Ways and Means of the House of Representatives 14 and the Committee on Finance of the Senate de- 15 scribing the steps which will be taken to enforce the 16 recapture provisions of section 45U(b) of the Inter- 17 nal Revenue Code of 1986, as added by this section. 18 (5) EFFECTIVE DATE.—The amendments made 19 by this subsection shall apply to taxable years end- 20 ing after the date of the enactment of this Act. 21 (f) AUTHORIZATION OF APPROPRIATIONS.—There is 22 authorized to be appropriated to the Administrator such 23 sums as may be necessary for fiscal years 2021 through 24 2026 to carry out the requirements of this section. 25 VerDate Sep 11 2014 02:59 Mar 08, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H971.IH H971 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 971 IH (g) DEFINITIONS.—In this section: 1 (1) ADMINISTRATOR.—The term ‘‘Adminis- 2 trator’’ means the Administrator of the Small Busi- 3 ness Administration. 4 (2) ADMINISTRATION.—The term ‘‘Administra- 5 tion’’ means the Small Business Administration. 6 (3) APPROPRIATE COMMITTEES.—The term 7 ‘‘appropriate committees’’ means— 8 (A) the Committee on Small Business and 9 Entrepreneurship and the Committee on Appro- 10 priations of the Senate; and 11 (B) the Committee on Small Business and 12 the Committee on Appropriations of the House 13 of Representatives. 14 (4) BUSINESS SUCCESSION PLAN.—The term 15 ‘‘business succession plan’’ means a document 16 that— 17 (A) identifies an individual who will as- 18 sume the responsibilities of the owner to a 19 small business concern upon the death or retire- 20 ment of such owner, along with the legal docu- 21 ments necessary; and 22 (B) includes an operational description of 23 the small business concern to ensure the con- 24 tinuation of operations of such concern. 25 VerDate Sep 11 2014 20:40 Mar 08, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H971.IH H971 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 971 IH (5) RESOURCE PARTNERS.—The term ‘‘re- 1 source partners’’ means— 2 (A) any office of the Administration; 3 (B) small business development centers 4 (defined in section 3 of the Small Business Act 5 (15 U.S.C. 632)); 6 (C) women’s business centers (described 7 under section 29 of such Act (15 U.S.C. 656)); 8 (D) chapters of the Service Corps of Re- 9 tired Executives (established under section 10 8(b)(1)(B) of such Act (15 U.S.C. 11 637(b)(1)(B))); 12 (E) Veteran Business Outreach Centers 13 (described under section 32 of such Act (15 14 U.S.C. 657b)); and 15 (F) any other entity, as determined by the 16 Administrator. 17 (6) SMALL BUSINESS CONCERN.—The term 18 ‘‘small business concern’’ has the meaning given 19 under section 3 of the Small Business Act (15 20 U.S.C. 632). 21 Æ VerDate Sep 11 2014 20:40 Mar 08, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H971.IH H971 pbinns on DSKJLVW7X2PROD with BILLS