STATE OF NEW YORK ________________________________________________________________________ 6706 2019-2020 Regular Sessions IN ASSEMBLY March 15, 2019 ___________ Introduced by M. of A. LAVINE -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law, in relation to establishing small business savings accounts The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "savings accounts for a variable economy (SAVE) for small businesses 3 act". 4 § 2. The tax law is amended by adding a new section 44 to read as 5 follows: 6 § 44. Small business savings accounts. (a) General. (1) The commis- 7 sioner shall establish a program to administer small business savings 8 accounts under this section. 9 (2) The commissioner shall establish minimum standards for small busi- 10 ness savings accounts and shall establish accounts, or enter into agree- 11 ments that meet these standards to administer such accounts. In estab- 12 lishing such standards and making such agreements the commissioner 13 shall, to the extent practicable, seek to minimize fees, minimize risk 14 of loss of principal, and ensure a range of investment risk options 15 available to account beneficiaries. Any eligible small business may 16 establish a small business savings account with respect to such business 17 under terms which meet the requirements of this section. 18 (b) Definition. For the purposes of this section, the term "small 19 business savings account" means a tax preferred savings account which is 20 designated at the time of establishment of the plan as a small business 21 savings account. Such designation shall be made in such manner as the 22 commissioner may by regulation prescribe. 23 (c) Contributions. (1) There shall be allowed as a deduction an amount 24 equal to the contributions to a small business savings account for the 25 taxable year. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09440-01-9

A. 6706 2 1 (2) The aggregate amount of contributions for any taxable year to all 2 small business savings accounts maintained for the benefit of an eligi- 3 ble small business shall not exceed an amount equal to ten percent of 4 the gross profits of the business for the preceding taxable year. 5 (d) Distributions. (1) Any qualified distribution from a small busi- 6 ness savings account shall not be includible in gross income. 7 (2) Any amounts distributed out of a small business savings account 8 that are not qualified distributions shall be included in gross income 9 for the taxable year of the distribution. 10 (3) For purposes of this section: 11 (A) The term "qualified distribution" means any amount: 12 (i) distributed from a small business savings account during a speci- 13 fied period of economic hardship; and 14 (ii) the distribution of which is certified by the taxpayer as part of 15 a plan which provides for the reinvestment of such distribution for the 16 funding of worker hiring or financial stabilization for the purposes of 17 job retention or creation. 18 (B) The term "specified period of economic hardship" means: 19 (i) any one-year period beginning immediately after the end of any two 20 consecutive quarters during which the annual rate of real gross domestic 21 product (as determined by the Bureau of Economic Analysis of the Depart- 22 ment of Commerce) decreases, or 23 (ii) any period, in no event shorter than one year, specified by the 24 commissioner for purposes of this section. 25 (C) The commissioner may specify a period under clause (ii) of subpar- 26 agraph (B) of this paragraph with respect to a specified area in the 27 case of an area determined by the governor to warrant assistance from 28 the Federal Government under the Robert T. Stafford Disaster Relief and 29 Emergency Assistance Act. 30 (D) The commissioner shall, for each specified period of economic 31 hardship establish a distribution limitation for qualified distributions 32 from eligible small business accounts with respect to such period. The 33 aggregate qualified distributions for any such period from all accounts 34 with respect to an eligible small business shall not exceed such limita- 35 tion. 36 (E) Any distribution not used in the manner certified under subpara- 37 graph (A) of this paragraph shall be treated as a distribution other 38 than a qualified distribution in the taxable year of such distribution. 39 (F) Any amount contributed to a small business savings account (and 40 any earnings attributable thereto), once distributed, shall not be 41 treated as a qualified distribution unless such distribution is made not 42 later than eight years after the date of such contribution. For purposes 43 of this subparagraph, amounts (and the earnings attributable thereto) 44 shall be treated as distributed on a first-in first-out basis. 45 (e) Eligible small business. For purposes of this section: 46 (1) The term "eligible small business" means, with respect to any 47 calendar year, any person if the annual average number of full-time 48 employees employed by such person during the preceding calendar year was 49 fifty or fewer. For purposes of this paragraph, a preceding calendar 50 year may be taken into account only if the person was in existence 51 throughout the year. 52 (2)(A) The term "full-time employee" means, with respect to any year, 53 an employee who is employed on average at least forty hours of service 54 per week. 55 (B) The commissioner shall prescribe such regulations, rules, and 56 guidance as may be necessary to determine the hours of service of an

A. 6706 3 1 employee, including rules for the application of this subdivision to 2 employees who are not compensated on an hourly basis. 3 (f) Effect of pledging account as security. If, during any taxable 4 year of the eligible small business for whose benefit an account is 5 established, the account or any portion thereof is pledged as security 6 for a loan, the portion so pledged shall be treated as distributed in a 7 distribution other than a qualified distribution. 8 § 3. Section 209 of the tax law is amended by adding a new subdivision 9 13 to read as follows: 10 13. For any taxable year beginning on or after January first, two 11 thousand nineteen, any eligible small business, as such term is defined 12 pursuant to section forty-four of this chapter, shall be exempt from all 13 taxes imposed pursuant to this article for any contribution to and qual- 14 ified distribution from a small business savings account established 15 pursuant to section forty-four of this chapter, subject to the limits 16 set forth in such section. If a taxpayer files for and receives an 17 exemption from the tax imposed under this section pursuant to the 18 provisions of this subdivision and the funds withdrawn, or any portion 19 thereof, are not expended for a qualifying purpose as set forth in 20 section forty-four of this chapter, then the amount of such exemption 21 claimed by the taxpayer shall be added back to tax in the next succeed- 22 ing taxable year or in the year in which the exemption is disallowed. 23 § 4. Subsection (c) of section 612 of the tax law is amended by adding 24 a new paragraph 44 to read as follows: 25 (44) Any qualified contribution to and any qualified distribution from 26 a small business savings account established pursuant to section forty- 27 four of this chapter. If a taxpayer files for and receives an exemption 28 from the tax imposed under this section pursuant to the provisions of 29 this paragraph and are not a qualifying contribution or distribution as 30 set forth in section forty-four of this chapter, then the amount of any 31 such exemption claimed by the taxpayer shall be added back to tax in the 32 next succeeding taxable year. 33 § 5. This act shall take effect immediately and shall apply to taxable 34 years beginning after such date.

Relates to small business savings accounts

What's Happening

Why It Matters