Senate Bill S6697

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6697
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                                May 5, 2023
                                ___________
 
 Introduced  by  Sen.  RYAN  --  read twice and ordered printed, and when
   printed to be committed to the Committee on Investigations and Govern-
   ment 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 48 to read as
 follows:
   § 48. 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.
                                                            LBD02395-01-3
 S. 6697                             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
 TWENTY-FIVE OR FEWER AND SUCH PERSON HAS AN ANNUAL NET  INCOME  OF  LESS
 THAN TWO HUNDRED FIFTY THOUSAND DOLLARS. 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. 6697                             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.
   (G) ANNUAL REPORT. THE COMMISSIONER SHALL PREPARE AND DELIVER AN ANNU-
 AL REPORT ON THE EFFICACY OF SMALL  BUSINESS  SAVINGS  ACCOUNTS  TO  THE
 TEMPORARY  PRESIDENT OF THE SENATE AND THE SPEAKER OF THE ASSEMBLY. SUCH
 REPORT SHALL INCLUDE, BUT NOT BE LIMITED TO, AN EVALUATION AS TO WHETHER
 SMALL BUSINESS SAVINGS ACCOUNTS CONTRIBUTE TO FINANCIAL STABILIZATION OF
 THE SMALL BUSINESS DURING TIMES OF ECONOMIC HARDSHIP, JOB  RETENTION  OR
 CREATION.
   § 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 TWENTY-THREE, ANY ELIGIBLE SMALL  BUSINESS,  AS  SUCH  TERM  IS
 DEFINED PURSUANT TO SECTION FORTY-EIGHT OF THIS CHAPTER, SHALL BE EXEMPT
 FROM  ALL TAXES IMPOSED PURSUANT TO THIS ARTICLE FOR ANY CONTRIBUTION TO
 AND QUALIFIED DISTRIBUTION FROM A SMALL BUSINESS SAVINGS ACCOUNT  ESTAB-
 LISHED  PURSUANT  TO SECTION FORTY-EIGHT 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-EIGHT 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 47 to read as follows:
   (47) ANY QUALIFIED CONTRIBUTION TO AND ANY QUALIFIED DISTRIBUTION FROM
 A SMALL BUSINESS SAVINGS ACCOUNT ESTABLISHED PURSUANT TO SECTION  FORTY-
 EIGHT  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-EIGHT 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.