S T A T E O F N E W Y O R K
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10483
I N A S S E M B L Y
May 22, 2020
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Introduced by COMMITTEE ON RULES -- (at request of 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 and emergency production savings accounts
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The tax law is amended by adding a new section 45 to read
as follows:
§ 45. SMALL BUSINESS SAVINGS ACCOUNTS. (A) GENERAL. (1) THE COMMIS-
SIONER SHALL ESTABLISH A PROGRAM TO ADMINISTER SMALL BUSINESS SAVINGS
ACCOUNTS UNDER THIS SECTION.
(2) THE COMMISSIONER SHALL ESTABLISH MINIMUM STANDARDS FOR SMALL BUSI-
NESS SAVINGS ACCOUNTS AND SHALL ESTABLISH ACCOUNTS, OR ENTER INTO AGREE-
MENTS THAT MEET THESE STANDARDS TO ADMINISTER SUCH ACCOUNTS. IN ESTAB-
LISHING SUCH STANDARDS AND MAKING SUCH AGREEMENTS THE COMMISSIONER
SHALL, TO THE EXTENT PRACTICABLE, SEEK TO MINIMIZE FEES, MINIMIZE RISK
OF LOSS OF PRINCIPAL, AND ENSURE A RANGE OF INVESTMENT RISK OPTIONS
AVAILABLE TO ACCOUNT BENEFICIARIES. ANY ELIGIBLE SMALL BUSINESS MAY
ESTABLISH A SMALL BUSINESS SAVINGS ACCOUNT WITH RESPECT TO SUCH BUSINESS
UNDER TERMS WHICH MEET THE REQUIREMENTS OF THIS SECTION.
(B) DEFINITION. FOR THE PURPOSES OF THIS SECTION, THE TERM "SMALL
BUSINESS SAVINGS ACCOUNT" MEANS A TAX PREFERRED SAVINGS ACCOUNT WHICH IS
DESIGNATED AT THE TIME OF ESTABLISHMENT OF THE PLAN AS A SMALL BUSINESS
SAVINGS ACCOUNT. SUCH DESIGNATION SHALL BE MADE IN SUCH MANNER AS THE
COMMISSIONER MAY BY REGULATION PRESCRIBE.
(C) CONTRIBUTIONS. (1) THERE SHALL BE ALLOWED AS A DEDUCTION AN AMOUNT
EQUAL TO THE CONTRIBUTIONS TO A SMALL BUSINESS SAVINGS ACCOUNT FOR THE
TAXABLE YEAR.
(2) THE AGGREGATE AMOUNT OF CONTRIBUTIONS FOR ANY TAXABLE YEAR TO ALL
SMALL BUSINESS SAVINGS ACCOUNTS MAINTAINED FOR THE BENEFIT OF AN ELIGI-
BLE SMALL BUSINESS SHALL NOT EXCEED AN AMOUNT EQUAL TO TEN PERCENT OF
THE GROSS PROFITS OF THE BUSINESS FOR THE PRECEDING TAXABLE YEAR.
(D) DISTRIBUTIONS. (1) ANY QUALIFIED DISTRIBUTION FROM A SMALL BUSI-
NESS SAVINGS ACCOUNT SHALL NOT BE INCLUDIBLE IN GROSS INCOME.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD16173-01-0
A. 10483 2
(2) ANY AMOUNTS DISTRIBUTED OUT OF A SMALL BUSINESS SAVINGS ACCOUNT
THAT ARE NOT QUALIFIED DISTRIBUTIONS SHALL BE INCLUDED IN GROSS INCOME
FOR THE TAXABLE YEAR OF THE DISTRIBUTION.
(3) FOR PURPOSES OF THIS SECTION:
(A) THE TERM "QUALIFIED DISTRIBUTION" MEANS ANY AMOUNT:
(I) DISTRIBUTED FROM A SMALL BUSINESS SAVINGS ACCOUNT DURING A SPECI-
FIED PERIOD OF ECONOMIC HARDSHIP; AND
(II) THE DISTRIBUTION OF WHICH IS CERTIFIED BY THE TAXPAYER AS PART OF
A PLAN WHICH PROVIDES FOR THE REINVESTMENT OF SUCH DISTRIBUTION FOR THE
FUNDING OF WORKER HIRING OR FINANCIAL STABILIZATION FOR THE PURPOSES OF
JOB RETENTION OR CREATION.
(B) THE TERM "SPECIFIED PERIOD OF ECONOMIC HARDSHIP" MEANS:
(I) ANY ONE-YEAR PERIOD BEGINNING IMMEDIATELY AFTER THE END OF ANY TWO
CONSECUTIVE QUARTERS DURING WHICH THE ANNUAL RATE OF REAL GROSS DOMESTIC
PRODUCT (AS DETERMINED BY THE BUREAU OF ECONOMIC ANALYSIS OF THE DEPART-
MENT OF COMMERCE) DECREASES, OR
(II) ANY PERIOD, IN NO EVENT SHORTER THAN ONE YEAR, SPECIFIED BY THE
COMMISSIONER FOR PURPOSES OF THIS SECTION.
(C) THE COMMISSIONER MAY SPECIFY A PERIOD UNDER CLAUSE (II) OF SUBPAR-
AGRAPH (B) OF THIS PARAGRAPH WITH RESPECT TO A SPECIFIED AREA IN THE
CASE OF AN AREA DETERMINED BY THE GOVERNOR TO WARRANT ASSISTANCE FROM
THE FEDERAL GOVERNMENT UNDER THE ROBERT T. STAFFORD DISASTER RELIEF AND
EMERGENCY ASSISTANCE ACT.
(D) THE COMMISSIONER SHALL, FOR EACH SPECIFIED PERIOD OF ECONOMIC
HARDSHIP ESTABLISH A DISTRIBUTION LIMITATION FOR QUALIFIED DISTRIBUTIONS
FROM ELIGIBLE SMALL BUSINESS ACCOUNTS WITH RESPECT TO SUCH PERIOD. THE
AGGREGATE QUALIFIED DISTRIBUTIONS FOR ANY SUCH PERIOD FROM ALL ACCOUNTS
WITH RESPECT TO AN ELIGIBLE SMALL BUSINESS SHALL NOT EXCEED SUCH LIMITA-
TION.
(E) ANY DISTRIBUTION NOT USED IN THE MANNER CERTIFIED UNDER SUBPARA-
GRAPH (A) OF THIS PARAGRAPH SHALL BE TREATED AS A DISTRIBUTION OTHER
THAN A QUALIFIED DISTRIBUTION IN THE TAXABLE YEAR OF SUCH DISTRIBUTION.
(F) ANY AMOUNT CONTRIBUTED TO A SMALL BUSINESS SAVINGS ACCOUNT (AND
ANY EARNINGS ATTRIBUTABLE THERETO), ONCE DISTRIBUTED, SHALL NOT BE
TREATED AS A QUALIFIED DISTRIBUTION UNLESS SUCH DISTRIBUTION IS MADE NOT
LATER THAN EIGHT YEARS AFTER THE DATE OF SUCH CONTRIBUTION. FOR PURPOSES
OF THIS SUBPARAGRAPH, AMOUNTS (AND THE EARNINGS ATTRIBUTABLE THERETO)
SHALL BE TREATED AS DISTRIBUTED ON A FIRST-IN FIRST-OUT BASIS.
(E) ELIGIBLE SMALL BUSINESS. FOR PURPOSES OF THIS SECTION:
(1) THE TERM "ELIGIBLE SMALL BUSINESS" MEANS, WITH RESPECT TO ANY
CALENDAR YEAR, ANY PERSON IF THE ANNUAL AVERAGE NUMBER OF FULL-TIME
EMPLOYEES EMPLOYED BY SUCH PERSON DURING THE PRECEDING CALENDAR YEAR WAS
FIFTY OR FEWER. FOR PURPOSES OF THIS PARAGRAPH, A PRECEDING CALENDAR
YEAR MAY BE TAKEN INTO ACCOUNT ONLY IF THE PERSON WAS IN EXISTENCE
THROUGHOUT THE YEAR.
(2)(A) THE TERM "FULL-TIME EMPLOYEE" MEANS, WITH RESPECT TO ANY YEAR,
AN EMPLOYEE WHO IS EMPLOYED ON AVERAGE AT LEAST FORTY HOURS OF SERVICE
PER WEEK.
(B) THE COMMISSIONER SHALL PRESCRIBE SUCH REGULATIONS, RULES, AND
GUIDANCE AS MAY BE NECESSARY TO DETERMINE THE HOURS OF SERVICE OF AN
EMPLOYEE, INCLUDING RULES FOR THE APPLICATION OF THIS SUBDIVISION TO
EMPLOYEES WHO ARE NOT COMPENSATED ON AN HOURLY BASIS.
(F) EFFECT OF PLEDGING ACCOUNT AS SECURITY. IF, DURING ANY TAXABLE
YEAR OF THE ELIGIBLE SMALL BUSINESS FOR WHOSE BENEFIT AN ACCOUNT IS
ESTABLISHED, THE ACCOUNT OR ANY PORTION THEREOF IS PLEDGED AS SECURITY
A. 10483 3
FOR A LOAN, THE PORTION SO PLEDGED SHALL BE TREATED AS DISTRIBUTED IN A
DISTRIBUTION OTHER THAN A QUALIFIED DISTRIBUTION.
§ 2. Section 209 of the tax law is amended by adding a new subdivision
13 to read as follows:
13. FOR ANY TAXABLE YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO
THOUSAND TWENTY, ANY ELIGIBLE SMALL BUSINESS, AS SUCH TERM IS DEFINED
PURSUANT TO SECTION FORTY-FIVE OF THIS CHAPTER, SHALL BE EXEMPT FROM ALL
TAXES IMPOSED PURSUANT TO THIS ARTICLE FOR ANY CONTRIBUTION TO AND QUAL-
IFIED DISTRIBUTION FROM A SMALL BUSINESS SAVINGS ACCOUNT ESTABLISHED
PURSUANT TO SECTION FORTY-FIVE OF THIS CHAPTER, SUBJECT TO THE LIMITS
SET FORTH IN SUCH SECTION. IF A TAXPAYER FILES FOR AND RECEIVES AN
EXEMPTION FROM THE TAX IMPOSED UNDER THIS SECTION PURSUANT TO THE
PROVISIONS OF THIS SUBDIVISION AND THE FUNDS WITHDRAWN, OR ANY PORTION
THEREOF, ARE NOT EXPENDED FOR A QUALIFYING PURPOSE AS SET FORTH IN
SECTION FORTY-FIVE OF THIS CHAPTER, THEN THE AMOUNT OF SUCH EXEMPTION
CLAIMED BY THE TAXPAYER SHALL BE ADDED BACK TO TAX IN THE NEXT SUCCEED-
ING TAXABLE YEAR OR IN THE YEAR IN WHICH THE EXEMPTION IS DISALLOWED.
§ 3. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 43 to read as follows:
(43) ANY QUALIFIED CONTRIBUTION TO AND ANY QUALIFIED DISTRIBUTION FROM
A SMALL BUSINESS SAVINGS ACCOUNT ESTABLISHED PURSUANT TO SECTION FORTY-
FIVE OF THIS CHAPTER. IF A TAXPAYER FILES FOR AND RECEIVES AN EXEMPTION
FROM THE TAX IMPOSED UNDER THIS SECTION PURSUANT TO THE PROVISIONS OF
THIS PARAGRAPH AND ARE NOT A QUALIFYING CONTRIBUTION OR DISTRIBUTION AS
SET FORTH IN SECTION FORTY-FIVE OF THIS CHAPTER, THEN THE AMOUNT OF ANY
SUCH EXEMPTION CLAIMED BY THE TAXPAYER SHALL BE ADDED BACK TO TAX IN THE
NEXT SUCCEEDING TAXABLE YEAR.
§ 4. The tax law is amended by adding a new section 46 to read as
follows:
§ 46. EMERGENCY PRODUCTION SAVINGS ACCOUNTS. (A) GENERAL. (1) THE
COMMISSIONER SHALL ESTABLISH A PROGRAM TO ADMINISTER EMERGENCY
PRODUCTION SAVINGS ACCOUNTS UNDER THIS SECTION.
(2) THE COMMISSIONER SHALL ESTABLISH MINIMUM STANDARDS FOR EMERGENCY
PRODUCTION SAVINGS ACCOUNTS AND SHALL ESTABLISH ACCOUNTS, OR ENTER INTO
AGREEMENTS THAT MEET THESE STANDARDS TO ADMINISTER SUCH ACCOUNTS. IN
ESTABLISHING SUCH STANDARDS AND MAKING SUCH AGREEMENTS THE COMMISSIONER
SHALL, TO THE EXTENT PRACTICABLE, SEEK TO MINIMIZE FEES, MINIMIZE RISK
OF LOSS OF PRINCIPAL, AND ENSURE A RANGE OF INVESTMENT RISK OPTIONS
AVAILABLE TO ACCOUNT BENEFICIARIES. ANY BUSINESS MAY ESTABLISH AN EMER-
GENCY PRODUCTION SAVINGS ACCOUNT WITH RESPECT TO SUCH BUSINESS UNDER
TERMS WHICH MEET THE REQUIREMENTS OF THIS SECTION.
(B) DEFINITION. FOR THE PURPOSES OF THIS SECTION, THE TERM "EMERGENCY
PRODUCTION SAVINGS ACCOUNT" MEANS A TAX PREFERRED SAVINGS ACCOUNT WHICH
IS DESIGNATED AT THE TIME OF ESTABLISHMENT OF THE PLAN AS AN EMERGENCY
PRODUCTION SAVINGS ACCOUNT. SUCH DESIGNATION SHALL BE MADE IN SUCH
MANNER AS THE COMMISSIONER MAY BY REGULATION PRESCRIBE.
(C) CONTRIBUTIONS. (1) THERE SHALL BE ALLOWED AS A DEDUCTION AN AMOUNT
EQUAL TO THE CONTRIBUTIONS TO AN EMERGENCY PRODUCTION SAVINGS ACCOUNT
FOR THE TAXABLE YEAR.
(2) THE AGGREGATE AMOUNT OF CONTRIBUTIONS FOR ANY TAXABLE YEAR TO ALL
EMERGENCY PRODUCTION SAVINGS ACCOUNTS MAINTAINED FOR THE BENEFIT OF A
BUSINESS SHALL NOT EXCEED AN AMOUNT EQUAL TO TEN PERCENT OF THE GROSS
PROFITS OF THE BUSINESS FOR THE PRECEDING TAXABLE YEAR.
(D) DISTRIBUTIONS. (1) ANY QUALIFIED DISTRIBUTION FROM AN EMERGENCY
PRODUCTION SAVINGS ACCOUNT SHALL NOT BE INCLUDIBLE IN GROSS INCOME.
A. 10483 4
(2) ANY AMOUNTS DISTRIBUTED OUT OF AN EMERGENCY PRODUCTION SAVINGS
ACCOUNT THAT ARE NOT QUALIFIED DISTRIBUTIONS SHALL BE INCLUDED IN GROSS
INCOME FOR THE TAXABLE YEAR OF THE DISTRIBUTION.
(3) FOR PURPOSES OF THIS SECTION:
(A) THE TERM "QUALIFIED DISTRIBUTION" MEANS ANY AMOUNT:
(I) DISTRIBUTED FROM AN EMERGENCY PRODUCTION SAVINGS ACCOUNT DURING A
SPECIFIED PERIOD OF A DECLARED EMERGENCY OR DISASTER; AND
(II) THE DISTRIBUTION OF WHICH IS CERTIFIED BY THE TAXPAYER AS PART OF
A PLAN WHICH PROVIDES FOR THE REINVESTMENT OR EXPENDITURE OF SUCH
DISTRIBUTION FOR THE PURPOSE OF ALLOWING A BUSINESS OR ENTERPRISE TO
PRODUCE ESSENTIAL PRODUCTS OR PROVIDE ESSENTIAL SERVICES DURING A PERIOD
OF A STATE DECLARED EMERGENCY OR DISASTER THROUGH MODIFICATION OR RETRO-
FITTING OF EXISTING FACILITIES, OR DEVELOPMENT OF ADDITIONAL RESOURCES
OR FACILITIES NEEDED TO PRODUCE ESSENTIAL PRODUCTS OR SERVICES.
(B) ESSENTIAL PRODUCTS OR SERVICES SHALL BE AS DETERMINED BY THE DIVI-
SION OF HOMELAND SECURITY AND EMERGENCY SERVICES.
(C) THE COMMISSIONER MAY SPECIFY A PERIOD WITH RESPECT TO A SPECIFIED
AREA IN THE CASE OF AN AREA DETERMINED BY THE GOVERNOR TO WARRANT
ASSISTANCE FROM THE FEDERAL GOVERNMENT UNDER THE ROBERT T. STAFFORD
DISASTER RELIEF AND EMERGENCY ASSISTANCE ACT.
(D) THE COMMISSIONER SHALL, FOR EACH SPECIFIED PERIOD OF DECLARED
EMERGENCY OR DISASTER ESTABLISH A DISTRIBUTION LIMITATION FOR QUALIFIED
DISTRIBUTIONS FROM ELIGIBLE EMERGENCY PRODUCTION SAVINGS ACCOUNTS WITH
RESPECT TO SUCH PERIOD. THE AGGREGATE QUALIFIED DISTRIBUTIONS FOR ANY
SUCH PERIOD FROM ALL ACCOUNTS WITH RESPECT TO A BUSINESS SHALL NOT
EXCEED SUCH LIMITATION.
(E) ANY DISTRIBUTION NOT USED IN THE MANNER CERTIFIED UNDER SUBPARA-
GRAPH (A) OF THIS PARAGRAPH SHALL BE TREATED AS A DISTRIBUTION OTHER
THAN A QUALIFIED DISTRIBUTION IN THE TAXABLE YEAR OF SUCH DISTRIBUTION.
(F) ANY AMOUNT CONTRIBUTED TO AN EMERGENCY PRODUCTION SAVINGS ACCOUNT
(AND ANY EARNINGS ATTRIBUTABLE THERETO), ONCE DISTRIBUTED, SHALL NOT BE
TREATED AS A QUALIFIED DISTRIBUTION UNLESS SUCH DISTRIBUTION IS MADE NOT
LATER THAN EIGHT YEARS AFTER THE DATE OF SUCH CONTRIBUTION. FOR PURPOSES
OF THIS SUBPARAGRAPH, AMOUNTS (AND THE EARNINGS ATTRIBUTABLE THERETO)
SHALL BE TREATED AS DISTRIBUTED ON A FIRST-IN FIRST-OUT BASIS.
(E) EFFECT OF PLEDGING ACCOUNT AS SECURITY. IF, DURING ANY TAXABLE
YEAR OF THE TAXPAYER FOR WHOSE BENEFIT AN ACCOUNT IS ESTABLISHED, THE
ACCOUNT OR ANY PORTION THEREOF IS PLEDGED AS SECURITY FOR A LOAN, THE
PORTION SO PLEDGED SHALL BE TREATED AS DISTRIBUTED IN A DISTRIBUTION
OTHER THAN A QUALIFIED DISTRIBUTION.
§ 5. Section 209 of the tax law is amended by adding a new subdivision
14 to read as follows:
14. FOR ANY TAXABLE YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO
THOUSAND TWENTY, ANY TAXPAYER SHALL BE EXEMPT FROM ALL TAXES IMPOSED
PURSUANT TO THIS ARTICLE FOR ANY CONTRIBUTION TO AND QUALIFIED DISTRIB-
UTION FROM AN EMERGENCY PRODUCTION SAVINGS ACCOUNT ESTABLISHED PURSUANT
TO SECTION FORTY-SIX OF THIS CHAPTER, SUBJECT TO THE LIMITS SET FORTH IN
SUCH SECTION. IF A TAXPAYER FILES FOR AND RECEIVES AN EXEMPTION FROM THE
TAX IMPOSED UNDER THIS SECTION PURSUANT TO THE PROVISIONS OF THIS SUBDI-
VISION AND THE FUNDS WITHDRAWN, OR ANY PORTION THEREOF, ARE NOT EXPENDED
FOR A QUALIFYING PURPOSE AS SET FORTH IN SECTION FORTY-SIX OF THIS CHAP-
TER, THEN THE AMOUNT OF SUCH EXEMPTION CLAIMED BY THE TAXPAYER SHALL BE
ADDED BACK TO TAX IN THE NEXT SUCCEEDING TAXABLE YEAR OR IN THE YEAR IN
WHICH THE EXEMPTION IS DISALLOWED.
§ 6. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 44 to read as follows:
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(44) ANY QUALIFIED CONTRIBUTION TO AND ANY QUALIFIED DISTRIBUTION FROM
AN EMERGENCY PRODUCTION SAVINGS ACCOUNT ESTABLISHED PURSUANT TO SECTION
FORTY-SIX OF THIS CHAPTER. IF A TAXPAYER FILES FOR AND RECEIVES AN
EXEMPTION FROM THE TAX IMPOSED UNDER THIS SECTION PURSUANT TO THE
PROVISIONS OF THIS PARAGRAPH AND ARE NOT A QUALIFYING CONTRIBUTION OR
DISTRIBUTION AS SET FORTH IN SECTION FORTY-SIX OF THIS CHAPTER, THEN THE
AMOUNT OF ANY SUCH EXEMPTION CLAIMED BY THE TAXPAYER SHALL BE ADDED BACK
TO TAX IN THE NEXT SUCCEEDING TAXABLE YEAR.
§ 7. This act shall take effect immediately and shall apply to taxable
years beginning on and after such effective date.