Veteran Entrepreneurs Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 446 To amend the Internal Revenue Code of 1986 to allow tax credits to veterans for the establishment of franchises. IN THE HOUSE OF REPRESENTATIVES JANUARY 10, 2019 Ms. BROWNLEY of California (for herself and Mrs. WALORSKI) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to allow tax credits to veterans for the establishment of franchises. 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 ‘‘Veteran Entrepreneurs 4 Act of 2019’’. 5 SEC. 2. VETERANS FRANCHISING CREDIT. 6 (a) IN GENERAL.—Subpart D of part IV of sub- 7 chapter A of chapter 1 of the Internal Revenue Code of 8 1986 is amended by adding at the end the following new 9 section: 10 VerDate Sep 11 2014 22:31 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H446.IH H446 pbinns on DSK79D2C42PROD with BILLS 2 •HR 446 IH ‘‘SEC. 45T. VETERANS FRANCHISING CREDIT. 1 ‘‘(a) VETERANS FRANCHISE FEE CREDIT.— 2 ‘‘(1) IN GENERAL.—For purposes of section 38 3 and subject to the limitation set forth in paragraph 4 (2), in the case of an eligible veteran or business 5 owned by an eligible veteran, the veterans franchise 6 fee credit determined under this section for the tax- 7 able year is an amount equal to 25 percent of the 8 qualified franchise fee paid or incurred by an eligible 9 veteran in connection with the purchase of a fran- 10 chise. 11 ‘‘(2) LIMITATION.—The amount of qualified 12 franchise fee taken into account under paragraph 13 (1) shall not exceed $400,000. 14 ‘‘(b) REDUCTION WHERE FRANCHISE NOT 100-PER- 15 CENT VETERAN OWNED.—In the case of any franchise in 16 which veterans do not own 100 percent of the stock or 17 the capital or profits interests of the franchisee, the vet- 18 erans franchise fee credit under subsection (a) shall be the 19 amount which bears the same ration to the amount deter- 20 mined under subsection (a) (without regard to this sub- 21 section) as— 22 ‘‘(1) the stock or capital or profits interests of 23 the franchise held by veterans, bears to 24 ‘‘(2) the total stock or capital or profits inter- 25 ests of the franchisee. 26 VerDate Sep 11 2014 22:31 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H446.IH H446 pbinns on DSK79D2C42PROD with BILLS 3 •HR 446 IH For purposes of this subsection, the spouse of a veteran 1 shall be treated as a veteran. 2 ‘‘(c) QUALIFIED FRANCHISE FEE.—For purposes of 3 this section, the term ‘qualified franchise fee’ means any 4 one-time fee required by the franchisor when entering into 5 a franchise agreement with a veteran as the franchisee. 6 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 7 section, the terms ‘franchise’, ‘franchisee’, ‘franchisor’, 8 and ‘franchise fee’ have the meanings given such terms 9 in part 436 of title 16, Code of Federal Regulations. 10 ‘‘(e) ELIGIBLE VETERAN.—For purposes of this sec- 11 tion, the term ‘eligible veteran’ means a person who served 12 in the active military, naval, or air service, and who was 13 discharged or released therefrom under conditions other 14 than dishonorable who pays or incurs a ‘qualified franchise 15 fee’ in connection with a franchise agreement with a 16 franchisor. 17 ‘‘(f) TRANSFER OF CREDIT.—With respect to the 18 credit under subsection (a) for any taxable year, an eligi- 19 ble veteran may elect to transfer the credit to an eligible 20 franchisor in exchange for a discount in the franchise fee 21 commensurate with the value of the credit. In such case, 22 the franchisor specified in such election shall be treated 23 as the taxpayer for purposes of this title with respect to 24 such credit (or such portion thereof). 25 VerDate Sep 11 2014 22:31 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H446.IH H446 pbinns on DSK79D2C42PROD with BILLS 4 •HR 446 IH For purposes of this subsection, the term ‘eligible 1 franchisor’ means the person who grants a franchise to 2 the eligible veteran and participates in the franchise agree- 3 ment. 4 ‘‘(g) ELECTION.—This section shall not apply to a 5 taxpayer for any taxable year if such taxpayer elects to 6 have this section not apply for such taxable year.’’. 7 (b) CREDIT TO BE PART OF GENERAL BUSINESS 8 CREDIT.—Section 38(b) of such Code is amended by strik- 9 ing ‘‘plus’’ at the end of paragraph (36), by striking the 10 period at the end of paragraph (37) and inserting ‘‘, plus’’, 11 and by adding at the end the following new paragraph: 12 ‘‘(38) the veterans franchise fee credit deter- 13 mined under section 45T(a).’’. 14 (c) CLERICAL AMENDMENT.—The table of sections 15 for subpart D of part IV of subchapter A of chapter 1 16 of such Code is amended by adding at the end the fol- 17 lowing new item: 18 ‘‘Sec. 45T. Veterans franchising credit.’’. (d) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to taxable years beginning after 20 December 31, 2019. 21 VerDate Sep 11 2014 22:31 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H446.IH H446 pbinns on DSK79D2C42PROD with BILLS 5 •HR 446 IH SEC. 3. PUBLICATION OF INFORMATION BY DEPARTMENT 1 OF VETERANS AFFAIRS AND SMALL BUSI- 2 NESS ADMINISTRATION. 3 The Administrator of the Small Business Administra- 4 tion and the Secretary of Veterans Affairs shall publicize 5 in mailings and brochures sent to veterans service organi- 6 zations and veteran advocacy groups information regard- 7 ing discounted franchise fees under section 45T of the In- 8 ternal Revenue Code of 1986 and other information about 9 the program established under amendments made by this 10 Act. 11 Æ VerDate Sep 11 2014 22:31 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H446.IH H446 pbinns on DSK79D2C42PROD with BILLS