Bill Text: NY S03163 | 2019-2020 | General Assembly | Introduced

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

Spectrum: Moderate Partisan Bill (Democrat 4-1)

Status: (Engrossed) 2019-03-07 - referred to ways and means [S03163 Detail]

Download: New_York-2019-S03163-Introduced.html

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                    IN SENATE
                                    February 4, 2019
        Introduced by Sens. KAPLAN, BOYLE -- read twice and ordered printed, and
          when  printed  to  be committed to the Committee on Investigations and
          Government Operations
        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.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 3163                             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  fifty or fewer. For purposes of this  paragraph,  a  preceding  calendar
    53  year  may  be  taken  into  account  only if the person was in existence
    54  throughout the year.

        S. 3163                             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    § 3. Section 209 of the tax law is amended by adding a new subdivision
    14  13 to read as follows:
    15    13. For any taxable year beginning on  or  after  January  first,  two
    16  thousand  nineteen, any eligible small business, as such term is defined
    17  pursuant to section forty-four of this chapter, shall be exempt from all
    18  taxes imposed pursuant to this article for any contribution to and qual-
    19  ified distribution from a small  business  savings  account  established
    20  pursuant  to  section  forty-four of this chapter, subject to the limits
    21  set forth in such section. If a  taxpayer  files  for  and  receives  an
    22  exemption  from  the  tax  imposed  under  this  section pursuant to the
    23  provisions of this subdivision and the funds withdrawn, or  any  portion
    24  thereof,  are  not  expended  for  a  qualifying purpose as set forth in
    25  section forty-four of this chapter, then the amount  of  such  exemption
    26  claimed  by the taxpayer shall be added back to tax in the next succeed-
    27  ing taxable year or in the year in which the exemption is disallowed.
    28    § 4. Subsection (c) of section 612 of the tax law is amended by adding
    29  a new paragraph 44 to read as follows:
    30    (44) Any qualified contribution to and any qualified distribution from
    31  a small business savings account established pursuant to section  forty-
    32  four of this chapter.  If a taxpayer files for and receives an exemption
    33  from  the  tax  imposed under this section pursuant to the provisions of
    34  this paragraph and are not a qualifying contribution or distribution  as
    35  set  forth in section forty-four of this chapter, then the amount of any
    36  such exemption claimed by the taxpayer shall be added back to tax in the
    37  next succeeding taxable year.
    38    § 5. This act shall take effect immediately and shall apply to taxable
    39  years beginning after such date.