S T A T E O F N E W Y O R K
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3163
2019-2020 Regular Sessions
I N S E N A T E
February 4, 2019
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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:
Section 1. Short title. This act shall be known and may be cited as
the "savings accounts for a variable economy (SAVE) for small businesses
act".
§ 2. The tax law is amended by adding a new section 44 to read as
follows:
§ 44. 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.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09440-01-9
S. 3163 2
(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.
(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.
S. 3163 3
(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
FOR A LOAN, THE PORTION SO PLEDGED SHALL BE TREATED AS DISTRIBUTED IN A
DISTRIBUTION OTHER THAN A QUALIFIED DISTRIBUTION.
§ 3. 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 NINETEEN, ANY ELIGIBLE SMALL BUSINESS, AS SUCH TERM IS DEFINED
PURSUANT TO SECTION FORTY-FOUR 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-FOUR 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-FOUR 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.
§ 4. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 44 to read as follows:
(44) ANY QUALIFIED CONTRIBUTION TO AND ANY QUALIFIED DISTRIBUTION FROM
A SMALL BUSINESS SAVINGS ACCOUNT ESTABLISHED PURSUANT TO SECTION FORTY-
FOUR 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-FOUR 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.
§ 5. This act shall take effect immediately and shall apply to taxable
years beginning after such date.
