Bill Text: NY A02087 | 2023-2024 | General Assembly | Introduced
Bill Title: Relates to small business savings accounts; provides tax incentives for contributions and distributions.
Spectrum: Bipartisan Bill
Status: (Introduced) 2024-01-03 - referred to ways and means [A02087 Detail]
Download: New_York-2023-A02087-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 2087 2023-2024 Regular Sessions IN ASSEMBLY January 23, 2023 ___________ Introduced by M. of A. STERN, THIELE, SILLITTI, DARLING, SEAWRIGHT, GUNTHER, JACOBSON, WOERNER, GALLAGHER, COLTON, DeSTEFANO, GANDOLFO, RA, BUTTENSCHON, BRABENEC, SIMPSON, ANGELINO, LUNSFORD, J. A. GIGLIO -- Multi-Sponsored by -- M. of A. BLANKENBUSH, MILLER, TAGUE -- 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 48 to read as 5 follows: 6 § 48. 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. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD02395-01-3A. 2087 2 1 (c) Contributions. (1) There shall be allowed as a deduction an amount 2 equal to the contributions to a small business savings account for the 3 taxable year. 4 (2) The aggregate amount of contributions for any taxable year to all 5 small business savings accounts maintained for the benefit of an eligi- 6 ble small business shall not exceed an amount equal to ten percent of 7 the gross profits of the business for the preceding taxable year. 8 (d) Distributions. (1) Any qualified distribution from a small busi- 9 ness savings account shall not be includible in gross income. 10 (2) Any amounts distributed out of a small business savings account 11 that are not qualified distributions shall be included in gross income 12 for the taxable year of the distribution. 13 (3) For purposes of this section: 14 (A) The term "qualified distribution" means any amount: 15 (i) distributed from a small business savings account during a speci- 16 fied period of economic hardship; and 17 (ii) the distribution of which is certified by the taxpayer as part of 18 a plan which provides for the reinvestment of such distribution for the 19 funding of worker hiring or financial stabilization for the purposes of 20 job retention or creation. 21 (B) The term "specified period of economic hardship" means: 22 (i) any one-year period beginning immediately after the end of any two 23 consecutive quarters during which the annual rate of real gross domestic 24 product (as determined by the Bureau of Economic Analysis of the Depart- 25 ment of Commerce) decreases, or 26 (ii) any period, in no event shorter than one year, specified by the 27 commissioner for purposes of this section. 28 (C) The commissioner may specify a period under clause (ii) of subpar- 29 agraph (B) of this paragraph with respect to a specified area in the 30 case of an area determined by the governor to warrant assistance from 31 the Federal Government under the Robert T. Stafford Disaster Relief and 32 Emergency Assistance Act. 33 (D) The commissioner shall, for each specified period of economic 34 hardship establish a distribution limitation for qualified distributions 35 from eligible small business accounts with respect to such period. The 36 aggregate qualified distributions for any such period from all accounts 37 with respect to an eligible small business shall not exceed such limita- 38 tion. 39 (E) Any distribution not used in the manner certified under subpara- 40 graph (A) of this paragraph shall be treated as a distribution other 41 than a qualified distribution in the taxable year of such distribution. 42 (F) Any amount contributed to a small business savings account (and 43 any earnings attributable thereto), once distributed, shall not be 44 treated as a qualified distribution unless such distribution is made not 45 later than eight years after the date of such contribution. For purposes 46 of this subparagraph, amounts (and the earnings attributable thereto) 47 shall be treated as distributed on a first-in first-out basis. 48 (e) Eligible small business. For purposes of this section: 49 (1) The term "eligible small business" means, with respect to any 50 calendar year, any person if the annual average number of full-time 51 employees employed by such person during the preceding calendar year was 52 twenty-five or fewer and such person has an annual net income of less 53 than two hundred fifty thousand dollars. For purposes of this paragraph, 54 a preceding calendar year may be taken into account only if the person 55 was in existence throughout the year.A. 2087 3 1 (2)(A) The term "full-time employee" means, with respect to any year, 2 an employee who is employed on average at least forty hours of service 3 per week. 4 (B) The commissioner shall prescribe such regulations, rules, and 5 guidance as may be necessary to determine the hours of service of an 6 employee, including rules for the application of this subdivision to 7 employees who are not compensated on an hourly basis. 8 (f) Effect of pledging account as security. If, during any taxable 9 year of the eligible small business for whose benefit an account is 10 established, the account or any portion thereof is pledged as security 11 for a loan, the portion so pledged shall be treated as distributed in a 12 distribution other than a qualified distribution. 13 (g) Annual report. The commissioner shall prepare and deliver an annu- 14 al report on the efficacy of small business savings accounts to the 15 temporary president of the senate and the speaker of the assembly. Such 16 report shall include, but not be limited to, an evaluation as to whether 17 small business savings accounts contribute to financial stabilization of 18 the small business during times of economic hardship, job retention or 19 creation. 20 § 3. Section 209 of the tax law is amended by adding a new subdivision 21 13 to read as follows: 22 13. For any taxable year beginning on or after January first, two 23 thousand twenty-three, any eligible small business, as such term is 24 defined pursuant to section forty-eight of this chapter, shall be exempt 25 from all taxes imposed pursuant to this article for any contribution to 26 and qualified distribution from a small business savings account estab- 27 lished pursuant to section forty-eight of this chapter, subject to the 28 limits set forth in such section. If a taxpayer files for and receives 29 an exemption from the tax imposed under this section pursuant to the 30 provisions of this subdivision and the funds withdrawn, or any portion 31 thereof, are not expended for a qualifying purpose as set forth in 32 section forty-eight of this chapter, then the amount of such exemption 33 claimed by the taxpayer shall be added back to tax in the next succeed- 34 ing taxable year or in the year in which the exemption is disallowed. 35 § 4. Subsection (c) of section 612 of the tax law is amended by adding 36 a new paragraph 47 to read as follows: 37 (47) Any qualified contribution to and any qualified distribution from 38 a small business savings account established pursuant to section forty- 39 eight of this chapter. If a taxpayer files for and receives an 40 exemption from the tax imposed under this section pursuant to the 41 provisions of this paragraph and are not a qualifying contribution or 42 distribution as set forth in section forty-eight of this chapter, then 43 the amount of any such exemption claimed by the taxpayer shall be added 44 back to tax in the next succeeding taxable year. 45 § 5. This act shall take effect immediately and shall apply to taxable 46 years beginning after such date.
