Bill Text: NY A07693 | 2019-2020 | General Assembly | Introduced

Bill Title: Relates to small business savings accounts; provides tax incentives for contributions and distributions.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2019-05-16 - referred to ways and means [A07693 Detail]

Download: New_York-2019-A07693-Introduced.html

                STATE OF NEW YORK


                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                      May 16, 2019

        Introduced  by M. of A. STERN -- 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.

        A. 7693                             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. 7693                             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.