Veteran Entrepreneurs Act of 2021
Bill: H.R.5920 | Sponsor: Rep. Brownley, Julia (D-CA)
Policy area: Taxation

Summary:
Veteran Entrepreneurs Act of 2021
This bill allows a business-related tax credit of 25% of up to $400,000 of the franchise fees paid or incurred by an eligible veteran for the purchase of a franchise. The bill reduces the amount of such credit if the veteran does not own 100% of the stock or capital or profits interest of the franchisee.
An eligible veteran is a person who served in the active military, naval, or air service; was discharged or released under conditions other than dishonorable; and who pays or incurs a franchise fee in connection with a franchise agreement with a franchisor.
The veteran may elect to transfer the credit to an eligible franchisor in exchange for a discount in the franchise fee commensurate with the value of the credit.
The Small Business Administration and the Department of Veterans Affairs must provide information about the tax credit allowed by this bill to veterans service organizations and veteran advocacy groups.

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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veteran Entrepreneurs Act of 2021''.

SEC. 2. VETERANS FRANCHISING CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45U. VETERANS FRANCHISING CREDIT.

    ``(a) Veterans Franchise Fee Credit.--
            ``(1) In general.--For purposes of section 38 and subject 
        to the limitation set forth in paragraph (2), in the case of an 
        eligible veteran or business owned by an eligible veteran, the 
        veterans franchise fee credit determined under this section for 
        the taxable year is an amount equal to 25 percent of the 
        qualified franchise fee paid or incurred by an eligible veteran 
        in connection with the purchase of a franchise.
            ``(2) Limitation.--The amount of qualified franchise fee 
        taken into account under paragraph (1) shall not exceed 
        $400,000.
    ``(b) Reduction Where Franchise Not 100-Percent Veteran Owned.--In 
the case of any franchise in which veterans do not own 100 percent of 
the stock or the capital or profits interests of the franchisee, the 
veterans franchise fee credit under subsection (a) shall be the amount 
which bears the same ration to the amount determined under subsection 
(a) (without regard to this subsection) as--
            ``(1) the stock or capital or profits interests of the 
        franchise held by veterans, bears to
            ``(2) the total stock or capital or profits interests of 
        the franchisee.
For purposes of this subsection, the spouse of a veteran shall be 
treated as a veteran.
    ``(c) Qualified Franchise Fee.--For purposes of this section, the 
term `qualified franchise fee' means any one-time fee required by the 
franchisor when entering into a franchise agreement with a veteran as 
the franchisee.
    ``(d) Other Definitions.--For purposes of this section, the terms 
`franchise', `franchisee', `franchisor', and `franchise fee' have the 
meanings given such terms in part 436 of title 16, Code of Federal 
Regulations.
    ``(e) Eligible Veteran.--For purposes of this section, the term 
`eligible veteran' means a person who served in the active military, 
naval, or air service, and who was discharged or released therefrom 
under conditions other than dishonorable who pays or incurs a 
`qualified franchise fee' in connection with a franchise agreement with 
a franchisor.
    ``(f) Transfer of Credit.--With respect to the credit under 
subsection (a) for any taxable year, an eligible veteran may elect to 
transfer the credit to an eligible franchisor in exchange for a 
discount in the franchise fee commensurate with the value of the 
credit. In such case, the franchisor specified in such election shall 
be treated as the taxpayer for purposes of this title with respect to 
such credit (or such portion thereof).
For purposes of this subsection, the term `eligible franchisor' means 
the person who grants a franchise to the eligible veteran and 
participates in the franchise agreement.
    ``(g) Election.--This section shall not apply to a taxpayer for any 
taxable year if such taxpayer elects to have this section not apply for 
such taxable year.''.
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
such Code is amended by striking ``plus'' at the end of paragraph (32), 
by striking the period at the end of paragraph (33) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(34) the veterans franchise fee credit determined under 
        section 45U(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 45U. Veterans franchising credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2020.

SEC. 3. PUBLICATION OF INFORMATION BY DEPARTMENT OF VETERANS AFFAIRS 
              AND SMALL BUSINESS ADMINISTRATION.

    The Administrator of the Small Business Administration and the 
Secretary of Veterans Affairs shall publicize in mailings and brochures 
sent to veterans service organizations and veteran advocacy groups 
information regarding discounted franchise fees under section 45U of 
the Internal Revenue Code of 1986 and other information about the 
program established under amendments made by this Act.
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