Senate Bill S2412A

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2412
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 24, 2019
                                ___________
 
 Introduced  by  Sen.  KAPLAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Commerce, Economic  Devel-
   opment and Small Business
 
 AN  ACT  to  amend  the  economic  development  law  and the tax law, in
   relation to authorizing the creation of  small  business  tax-deferred
   savings accounts

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The economic development law is amended  by  adding  a  new
 section 138-a to read as follows:
   §  138-A.  SMALL  BUSINESS TAX-DEFERRED SAVINGS ACCOUNTS.  1. A "SMALL
 BUSINESS TAXPAYER" OR "SMALL BUSINESS" SHALL HAVE THE  SAME  MEANING  AS
 DEFINED IN SECTION ONE HUNDRED THIRTY-ONE OF THIS ARTICLE AND SHALL MEET
 THE  REQUIREMENTS  OF  PARAGRAPH  (F)  OF SUBDIVISION ONE OF SECTION TWO
 HUNDRED TEN OF THE TAX LAW.
   2. ANY SMALL BUSINESS SHALL BE AUTHORIZED  TO  ESTABLISH  AND  DEPOSIT
 PROFITS INTO A SMALL BUSINESS TAX-DEFERRED SAVINGS ACCOUNT.
   3.  THE  MONIES IN SUCH TAX-DEFERRED SAVINGS ACCOUNTS MAY BE DEPOSITED
 OR WITHDRAWN TAX FREE WHEN THEY ARE EXPENDED FOR EXPANSION OF SUCH SMALL
 BUSINESS FOR THE PURPOSE OF CREATING OR PRESERVING FULL TIME JOBS.
   4. FOR THE PURPOSES OF THIS ACT, A QUALIFYING  PURPOSE  SHALL  INCLUDE
 SMALL  BUSINESS  TAXPAYER  EXPENDITURES  THAT  RESULT IN THE CREATION OR
 RETENTION OF FULL-TIME JOBS. IN ADDITION, WORKING CAPITAL USED FOR OTHER
 ACTIVITIES, DEEMED APPROPRIATE BY THE DEPARTMENT, WHICH WILL IMPROVE THE
 COMPETITIVENESS AND PRODUCTIVITY OF A SMALL BUSINESS AND RESULTS IN  THE
 CREATION OR RETENTION OF FULL-TIME JOBS SHALL BE CONSIDERED A QUALIFYING
 BUSINESS  EXPENDITURE.  QUALIFYING  SMALL BUSINESS TAXPAYER EXPENDITURES
 FOR THE PURPOSE OF THIS SECTION SHALL INCLUDE, BUT NOT  BE  LIMITED  TO,
 NEW CONSTRUCTION, RENOVATION OR LEASEHOLD IMPROVEMENTS, AND THE ACQUISI-
 TION OF LAND, BUILDINGS, MACHINERY AND EQUIPMENT.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08519-01-9
              

 S. 2412                             2
 
   5. THE MONIES ON DEPOSIT IN SUCH TAX-DEFERRED SAVINGS ACCOUNTS MAY NOT
 EXCEED MORE THAN FIVE THOUSAND DOLLARS IN ANY TAXABLE YEAR.
   6.  ON OR BEFORE APRIL FIRST, AND ANNUALLY THEREAFTER, THE DEPARTMENT,
 IN CONSULTATION WITH THE  DEPARTMENT  OF  TAXATION  AND  FINANCE,  SHALL
 REPORT ON THE NUMBER OF SMALL BUSINESS TAXPAYERS UTILIZING THIS PROGRAM,
 THE  AVERAGE  AGGREGATE  AMOUNT  ON  DEPOSIT,  THE  QUALIFYING  EXPENSES
 CLAIMED, ANY QUALIFYING EXPENSES DEEMED INAPPROPRIATE AND ANY OTHER SUCH
 DATA DEEMED NECESSARY AND APPROPRIATE BY THE DEPARTMENT.
   § 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 SMALL BUSINESS, AS SUCH TERM IS DEFINED PURSUANT TO
 SECTION  ONE  HUNDRED  THIRTY-EIGHT-A  OF  THE ECONOMIC DEVELOPMENT LAW,
 SHALL BE EXEMPT FROM ALL STATE INCOME TAXES  IMPOSED  PURSUANT  TO  THIS
 ARTICLE FOR ANY DEPOSIT OR WITHDRAWAL FROM A SMALL BUSINESS TAX-DEFERRED
 SAVINGS  ACCOUNT  ESTABLISHED  PURSUANT  TO  SECTION ONE HUNDRED THIRTY-
 EIGHT-A OF THE ECONOMIC DEVELOPMENT LAW AND USED FOR  THE  EXPANSION  OF
 SUCH  SMALL BUSINESS FOR THE PURPOSE OF CREATING OR PRESERVING FULL TIME
 JOBS. IF A SMALL BUSINESS TAXPAYER FILES FOR AND RECEIVES  AN  EXEMPTION
 FROM  THE  STATE  INCOME  TAX IMPOSED UNDER THIS SECTION PURSUANT TO THE
 PROVISIONS OF THIS SUBDIVISION AND THE FUNDS DEPOSITED OR WITHDRAWN,  OR
 ANY  PORTION  THEREOF,  ARE NOT EXPENDED FOR A QUALIFYING PURPOSE AS SET
 FORTH IN SECTION ONE HUNDRED THIRTY-EIGHT-A OF THE ECONOMIC  DEVELOPMENT
 LAW,  THEN  THE  AMOUNT  OF SUCH EXEMPTION CLAIMED BY THE SMALL BUSINESS
 TAXPAYER SHALL BE ADDED BACK TO THE AMOUNT OF STATE INCOME LIABILITY TAX
 IN THE NEXT SUCCEEDING  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  DEPOSIT  OR  WITHDRAWAL  FROM A SMALL BUSINESS TAX-DEFERRED
 SAVINGS ACCOUNT ESTABLISHED PURSUANT  TO  SECTION  ONE  HUNDRED  THIRTY-
 EIGHT-A  OF  THE  ECONOMIC DEVELOPMENT LAW AND USED FOR THE EXPANSION OF
 SUCH SMALL BUSINESS FOR THE PURPOSE OF CREATING OR PRESERVING FULL  TIME
 JOBS.  IF  A SMALL BUSINESS TAXPAYER FILES FOR AND RECEIVES AN EXEMPTION
 FROM THE STATE INCOME TAX IMPOSED UNDER THIS  SECTION  PURSUANT  TO  THE
 PROVISIONS  OF  THIS  PARAGRAPH AND THE FUNDS DEPOSITED OR WITHDRAWN, OR
 ANY PORTION THEREOF, ARE NOT EXPENDED FOR A QUALIFYING  PURPOSE  AS  SET
 FORTH  IN SECTION ONE HUNDRED THIRTY-EIGHT-A OF THE ECONOMIC DEVELOPMENT
 LAW, THEN THE AMOUNT OF SUCH EXEMPTION CLAIMED  BY  THE  SMALL  BUSINESS
 TAXPAYER  SHALL BE ADDED BACK TO STATE INCOME TAX IN THE NEXT SUCCEEDING
 TAXABLE YEAR OR IN THE YEAR IN WHICH THE EXEMPTION IS DISALLOWED.
   § 4. The department of taxation and finance, in consultation with  the
 department of economic development, shall review and analyze all statis-
 tical  data  available for such purposes of determining the economic and
 revenue impact associated with this act. Such data shall be included  in
 an  annual  report  that  shall also include, but not be limited to, the
 number of small business taxpayers utilizing this program,  the  average
 aggregate amount on deposit, the qualifying expenses claimed, any quali-
 fying  expenses  deemed  inappropriate  and  any  other such data deemed
 necessary and appropriate by the department. Such annual report shall be
 posted on the websites of the department of taxation and finance and the
 department of economic development, and transmitted to the governor, the
 temporary president of the  senate,  the  senate  minority  leader,  the
 speaker of the assembly and the assembly minority leader.
   §  5. Rules and regulations. The department of taxation and finance in
 consultation with the department  of  economic  development,  is  hereby

 S. 2412                             3
 
 authorized  to  promulgate  rules and regulations in accordance with the
 state administrative procedure act that are  necessary  to  fulfill  the
 purposes  of this act. Such regulations shall include but not be limited
 to  deadlines  for  establishing  a  small business tax deferred savings
 account, standard procedures and forms to be utilized  in  the  program,
 and  any  other  such  regulations  deemed necessary to promote the full
 utilization of  this  program.  Such  rules  and  regulations  shall  be
 completed within 180 days after the effective date of this act.
   § 6. This act shall take effect immediately.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  2412--B
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 24, 2019
                                ___________
 
 Introduced  by  Sens. KAPLAN, SANDERS -- read twice and ordered printed,
   and when printed to be committed to the Committee on Commerce, Econom-
   ic Development and Small Business -- recommitted to the  Committee  on
   Commerce,  Economic  Development and Small Business in accordance with
   Senate Rule 6, sec. 8 -- committee discharged, bill  amended,  ordered
   reprinted  as  amended  and  recommitted to said committee -- reported
   favorably from said  committee  and  committed  to  the  Committee  on
   Finance  --  committee  discharged, bill amended, ordered reprinted as
   amended and recommitted to said committee
 
 AN ACT to amend the  economic  development  law  and  the  tax  law,  in
   relation  to  authorizing  the creation of small business tax-deferred
   savings accounts
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  economic  development law is amended by adding a new
 section 138-a to read as follows:
   § 138-A. SMALL BUSINESS TAX-DEFERRED SAVINGS ACCOUNTS.   1.  A  "SMALL
 BUSINESS  TAXPAYER"  OR  "SMALL BUSINESS" SHALL HAVE THE SAME MEANING AS
 DEFINED IN SECTION ONE HUNDRED THIRTY-ONE OF THIS ARTICLE AND SHALL MEET
 THE REQUIREMENTS OF PARAGRAPH (F) OF  SUBDIVISION  ONE  OF  SECTION  TWO
 HUNDRED TEN OF THE TAX LAW.
   2. ANY SMALL BUSINESS SHALL BE AUTHORIZED TO ESTABLISH WITH ANY FINAN-
 CIAL  ORGANIZATION  A SMALL BUSINESS TAX-DEFERRED SAVINGS ACCOUNT AND TO
 MAKE DEPOSITS INTO AND WITHDRAWALS FROM SUCH ACCOUNT.  FOR  PURPOSES  OF
 THIS  SECTION,  "FINANCIAL  ORGANIZATION"  SHALL  MEAN  AN  ORGANIZATION
 AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW  YORK  AND  (A)  WHICH  IS
 LICENSED  OR  CHARTERED  BY THE DEPARTMENT OF FINANCIAL SERVICES, (B) IS
 CHARTERED BY AN AGENCY OF THE FEDERAL GOVERNMENT, OR (C) IS  SUBJECT  TO
 THE  JURISDICTION  AND REGULATION OF THE SECURITIES AND EXCHANGE COMMIS-
 SION OF THE FEDERAL GOVERNMENT.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08519-04-0
              

 S. 2412--B                          2
 
   3. THE AMOUNT DEPOSITED INTO SUCH TAX-DEFERRED  SAVINGS  ACCOUNTS  AND
 ANY  INTEREST EARNED ON SUCH DEPOSITS SHALL BE SUBJECT TO THE PROVISIONS
 OF SUBPARAGRAPH TWENTY-ONE OF  PARAGRAPH  (A)  OF  SUBDIVISION  NINE  OF
 SECTION TWO HUNDRED EIGHT AND PARAGRAPH FORTY-THREE OF SUBSECTION (C) OF
 SECTION SIX HUNDRED TWELVE OF THE TAX LAW, UNLESS SUCH AMOUNTS ARE WITH-
 DRAWN AND EXPENDED FOR A PURPOSE OTHER THAN A QUALIFYING PURPOSE.
   4.  FOR  THE  PURPOSES OF THIS ACT, A QUALIFYING PURPOSE SHALL INCLUDE
 SMALL BUSINESS TAXPAYER EXPENDITURES (A) FOR TANGIBLE PERSONAL  PROPERTY
 OR     OTHER  TANGIBLE  PROPERTY, INCLUDING BUT NOT LIMITED TO BUILDINGS
 AND STRUCTURAL COMPONENTS OF BUILDINGS, THAT ARE PRINCIPALLY USED IN THE
 ORDINARY COURSE OF THE  TAXPAYER'S  TRADE  OR  BUSINESS  AND  (B)  OTHER
 EXPENDITURES  DEEMED  APPROPRIATE  BY THE DEPARTMENT, WHICH WILL IMPROVE
 THE COMPETITIVENESS AND PRODUCTIVITY OF A SMALL BUSINESS AND RESULTS  IN
 THE CREATION OR RETENTION OF FULL-TIME JOBS.
   5. THE MONIES DEPOSITED INTO SUCH TAX-DEFERRED SAVINGS ACCOUNTS DURING
 ANY TAXABLE YEAR MAY NOT EXCEED FIVE THOUSAND DOLLARS.
   6.  ON  OR  BEFORE  APRIL  FIRST, TWO THOUSAND TWENTY-TWO AND ANNUALLY
 THEREAFTER, THE DEPARTMENT, IN CONSULTATION WITH THE DEPARTMENT OF TAXA-
 TION AND FINANCE, SHALL REPORT ON THE NUMBER OF SMALL BUSINESS TAXPAYERS
 UTILIZING THIS PROGRAM, THE AGGREGATE AMOUNT DEPOSITED FOR WHICH  A  TAX
 CREDIT  WAS  CLAIMED,  THE  AVERAGE AGGREGATE AMOUNT ON DEPOSIT IN SMALL
 BUSINESS SAVINGS ACCOUNTS, THE AMOUNT OF QUALIFYING  AND  NON-QUALIFYING
 WITHDRAWALS, AND ANY OTHER SUCH DATA DEEMED NECESSARY AND APPROPRIATE BY
 THE DEPARTMENT.
   §  2.  Paragraph (a) of subdivision 9 of section 208 of the tax law is
 amended by adding a new subparagraph 21 to read as follows:
   (21) ANY AMOUNT DEPOSITED INTO A SMALL BUSINESS  TAX-DEFERRED  SAVINGS
 ACCOUNT  CREATED   PURSUANT TO SECTION ONE HUNDRED THIRTY-EIGHT-A OF THE
 ECONOMIC DEVELOPMENT LAW, AND ANY  INTEREST  EARNED  ON  SUCH  DEPOSITS,
 PROVIDED THAT ANY AMOUNT WITHDRAWN FOR A NON-QUALIFYING PURPOSE SHALL BE
 INCLUDED  IN  THE  ENTIRE NET INCOME FOR THE TAX YEAR IN WHICH THE WITH-
 DRAWAL WAS MADE.
   § 3. Subsection (c) of section 612 of the tax law is amended by adding
 a new paragraph 43 to read as follows:
   (43) ANY AMOUNT DEPOSITED INTO A SMALL BUSINESS  TAX-DEFERRED  SAVINGS
 ACCOUNT  CREATED   PURSUANT TO SECTION ONE HUNDRED THIRTY-EIGHT-A OF THE
 ECONOMIC DEVELOPMENT LAW, AND ANY  INTEREST  EARNED  ON  SUCH  DEPOSITS,
 PROVIDED THAT ANY AMOUNT WITHDRAWN FOR A NON-QUALIFYING PURPOSE SHALL BE
 INCLUDED  IN  THE  ENTIRE NET INCOME FOR THE TAX YEAR IN WHICH THE WITH-
 DRAWAL WAS MADE.
   § 4. The department of taxation and finance, in consultation with  the
 department of economic development, shall review and analyze all statis-
 tical  data  available for such purposes of determining the economic and
 revenue impact associated with this act. Such data shall be included  in
 an  annual  report  that  shall also include, but not be limited to, the
 number of small business taxpayers utilizing this program,  the  average
 aggregate amount on deposit, the qualifying expenses claimed, any quali-
 fying  expenses  deemed  inappropriate  and  any  other such data deemed
 necessary and appropriate by the department. Such annual report shall be
 posted on the websites of the department of taxation and finance and the
 department of economic development, and transmitted to the governor, the
 temporary president of the  senate,  the  senate  minority  leader,  the
 speaker of the assembly and the assembly minority leader.
   §  5. Rules and regulations. The department of taxation and finance in
 consultation with the department  of  economic  development,  is  hereby
 authorized  to  promulgate  rules and regulations in accordance with the

 S. 2412--B                          3
 
 state administrative procedure act that are  necessary  to  fulfill  the
 purposes  of this act. Such regulations shall include but not be limited
 to deadlines for establishing a  small  business  tax  deferred  savings
 account,  standard  procedures  and forms to be utilized in the program,
 and any other such regulations deemed  necessary  to  promote  the  full
 utilization  of  this  program.  Such  rules  and  regulations  shall be
 completed within 180 days after the effective date of this act.
   § 6. This act shall take effect immediately.