II 111th CONGRESS 2d Session S. 3818 IN THE SENATE OF THE UNITED STATES September 22, 2010 Mr. Casey introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to allow credits for the establishment of franchises with veterans.

1.

Short title

This Act may be cited as the Help Veterans Own Franchises Act.

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 (relating to business related credits) is amended by adding at the end the following new section:

45S.

Veterans franchising

(a)

Franchisor veterans discount credit

(1)

In general

For purposes of section 38, the franchisor veterans discount credit determined under this section for the taxable year is an amount equal to 50 percent of the qualified franchise fee discount provided by the taxpayer during the taxable year. (2)

Limitation

The amount allowed as a credit under paragraph (1) with respect to the purchase of any franchise shall not exceed $25,000. (b)

Veterans franchise fee credit

(1)

In general

For purposes of section 38, 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 the taxpayer in connection with the purchase of a franchise in which a qualified franchise fee discount is offered by the franchisor. (2)

Limitation

For purposes of paragraph (1), the amount of franchise fees taken into account under paragraph (1) in connection with a franchise shall not exceed $100,000. (c)

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 of the capital or profits interests of the franchisee, the credits under subsections (a) and (b) shall be the credit amount determined under each such subsection, multiplied by the same ratio as— (1)the stock or capital or profits interests of the franchise held by veterans, bears (2)to 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.(d)

Qualified franchise fee discount

For purposes of this section, the term qualified franchise fee discount means with respect to a franchise arrangement— (1)the amount of the franchise fee offer listed in the most recent franchise disclosure document of the franchisor, over (2)the qualified franchise fee actually paid. (e)

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 with a qualified veteran. (f)

Other definitions

For purposes of this section, the terms franchise, franchisee, franchisor, franchise fee, and franchise disclosure document have the meanings given such terms in part 436 of title 16, Code of Federal Regulations (as in effect on January 1, 2010). (g)

Veteran

The term veteran has the meaning given such term by section 101 of title 38, United States Code. (h)

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 the Internal Revenue Code of 1986 is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting a comma, and by adding at the end the following new paragraphs: (37)the franchisor veterans discount credit determined under section 45S(a), plus (38)the veterans franchise fee credit determined under section 45S(b). . (c)

Clerical amendment

The table of sections for 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 item: Sec. 45S. Veterans franchising. . (d)

Effective date

The amendments made by this section shall apply to taxable years ending after December 31, 2009.

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 45S of the Internal Revenue Code of 1986 and other information about the program established under amendments made by this Act.