STATE OF NEW YORK
________________________________________________________________________
4721
2021-2022 Regular Sessions
IN ASSEMBLY
February 5, 2021
___________
Introduced by 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:
1 Section 1. The tax law is amended by adding a new section 45 to read
2 as follows:
3 § 45. Small business savings accounts. (a) General. (1) The commis-
4 sioner shall establish a program to administer small business savings
5 accounts under this section.
6 (2) The commissioner shall establish minimum standards for small busi-
7 ness savings accounts and shall establish accounts, or enter into agree-
8 ments that meet these standards to administer such accounts. In estab-
9 lishing such standards and making such agreements the commissioner
10 shall, to the extent practicable, seek to minimize fees, minimize risk
11 of loss of principal, and ensure a range of investment risk options
12 available to account beneficiaries. Any eligible small business may
13 establish a small business savings account with respect to such business
14 under terms which meet the requirements of this section.
15 (b) Definition. For the purposes of this section, the term "small
16 business savings account" means a tax preferred savings account which is
17 designated at the time of establishment of the plan as a small business
18 savings account. Such designation shall be made in such manner as the
19 commissioner may by regulation prescribe.
20 (c) Contributions. (1) There shall be allowed as a deduction an amount
21 equal to the contributions to a small business savings account for the
22 taxable year.
23 (2) The aggregate amount of contributions for any taxable year to all
24 small business savings accounts maintained for the benefit of an eligi-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06781-01-1
A. 4721 2
1 ble small business shall not exceed an amount equal to ten percent of
2 the gross profits of the business for the preceding taxable year.
3 (d) Distributions. (1) Any qualified distribution from a small busi-
4 ness savings account shall not be includible in gross income.
5 (2) Any amounts distributed out of a small business savings account
6 that are not qualified distributions shall be included in gross income
7 for the taxable year of the distribution.
8 (3) For purposes of this section:
9 (A) The term "qualified distribution" means any amount:
10 (i) distributed from a small business savings account during a speci-
11 fied period of economic hardship; and
12 (ii) the distribution of which is certified by the taxpayer as part of
13 a plan which provides for the reinvestment of such distribution for the
14 funding of worker hiring or financial stabilization for the purposes of
15 job retention or creation.
16 (B) The term "specified period of economic hardship" means:
17 (i) any one-year period beginning immediately after the end of any two
18 consecutive quarters during which the annual rate of real gross domestic
19 product (as determined by the Bureau of Economic Analysis of the Depart-
20 ment of Commerce) decreases, or
21 (ii) any period, in no event shorter than one year, specified by the
22 commissioner for purposes of this section.
23 (C) The commissioner may specify a period under clause (ii) of subpar-
24 agraph (B) of this paragraph with respect to a specified area in the
25 case of an area determined by the governor to warrant assistance from
26 the Federal Government under the Robert T. Stafford Disaster Relief and
27 Emergency Assistance Act.
28 (D) The commissioner shall, for each specified period of economic
29 hardship establish a distribution limitation for qualified distributions
30 from eligible small business accounts with respect to such period. The
31 aggregate qualified distributions for any such period from all accounts
32 with respect to an eligible small business shall not exceed such limita-
33 tion.
34 (E) Any distribution not used in the manner certified under subpara-
35 graph (A) of this paragraph shall be treated as a distribution other
36 than a qualified distribution in the taxable year of such distribution.
37 (F) Any amount contributed to a small business savings account (and
38 any earnings attributable thereto), once distributed, shall not be
39 treated as a qualified distribution unless such distribution is made not
40 later than eight years after the date of such contribution. For purposes
41 of this subparagraph, amounts (and the earnings attributable thereto)
42 shall be treated as distributed on a first-in first-out basis.
43 (e) Eligible small business. For purposes of this section:
44 (1) The term "eligible small business" means, with respect to any
45 calendar year, any person if the annual average number of full-time
46 employees employed by such person during the preceding calendar year was
47 fifty or fewer. For purposes of this paragraph, a preceding calendar
48 year may be taken into account only if the person was in existence
49 throughout the year.
50 (2)(A) The term "full-time employee" means, with respect to any year,
51 an employee who is employed on average at least forty hours of service
52 per week.
53 (B) The commissioner shall prescribe such regulations, rules, and
54 guidance as may be necessary to determine the hours of service of an
55 employee, including rules for the application of this subdivision to
56 employees who are not compensated on an hourly basis.
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1 (f) Effect of pledging account as security. If, during any taxable
2 year of the eligible small business for whose benefit an account is
3 established, the account or any portion thereof is pledged as security
4 for a loan, the portion so pledged shall be treated as distributed in a
5 distribution other than a qualified distribution.
6 § 2. Section 209 of the tax law is amended by adding a new subdivision
7 13 to read as follows:
8 13. For any taxable year beginning on or after January first, two
9 thousand twenty-one, any eligible small business, as such term is
10 defined pursuant to section forty-five of this chapter, shall be exempt
11 from all taxes imposed pursuant to this article for any contribution to
12 and qualified distribution from a small business savings account estab-
13 lished pursuant to section forty-five of this chapter, subject to the
14 limits set forth in such section. If a taxpayer files for and receives
15 an exemption from the tax imposed under this section pursuant to the
16 provisions of this subdivision and the funds withdrawn, or any portion
17 thereof, are not expended for a qualifying purpose as set forth in
18 section forty-five of this chapter, then the amount of such exemption
19 claimed by the taxpayer shall be added back to tax in the next succeed-
20 ing taxable year or in the year in which the exemption is disallowed.
21 § 3. Subsection (c) of section 612 of the tax law is amended by adding
22 a new paragraph 43 to read as follows:
23 (43) Any qualified contribution to and any qualified distribution from
24 a small business savings account established pursuant to section forty-
25 five of this chapter. If a taxpayer files for and receives an exemption
26 from the tax imposed under this section pursuant to the provisions of
27 this paragraph and are not a qualifying contribution or distribution as
28 set forth in section forty-five of this chapter, then the amount of any
29 such exemption claimed by the taxpayer shall be added back to tax in the
30 next succeeding taxable year.
31 § 4. The tax law is amended by adding a new section 46 to read as
32 follows:
33 § 46. Emergency production savings accounts. (a) General. (1) The
34 commissioner shall establish a program to administer emergency
35 production savings accounts under this section.
36 (2) The commissioner shall establish minimum standards for emergency
37 production savings accounts and shall establish accounts, or enter into
38 agreements that meet these standards to administer such accounts. In
39 establishing such standards and making such agreements the commissioner
40 shall, to the extent practicable, seek to minimize fees, minimize risk
41 of loss of principal, and ensure a range of investment risk options
42 available to account beneficiaries. Any business may establish an emer-
43 gency production savings account with respect to such business under
44 terms which meet the requirements of this section.
45 (b) Definition. For the purposes of this section, the term "emergency
46 production savings account" means a tax preferred savings account which
47 is designated at the time of establishment of the plan as an emergency
48 production savings account. Such designation shall be made in such
49 manner as the commissioner may by regulation prescribe.
50 (c) Contributions. (1) There shall be allowed as a deduction an amount
51 equal to the contributions to an emergency production savings account
52 for the taxable year.
53 (2) The aggregate amount of contributions for any taxable year to all
54 emergency production savings accounts maintained for the benefit of a
55 business shall not exceed an amount equal to ten percent of the gross
56 profits of the business for the preceding taxable year.
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1 (d) Distributions. (1) Any qualified distribution from an emergency
2 production savings account shall not be includible in gross income.
3 (2) Any amounts distributed out of an emergency production savings
4 account that are not qualified distributions shall be included in gross
5 income for the taxable year of the distribution.
6 (3) For purposes of this section:
7 (A) The term "qualified distribution" means any amount:
8 (i) distributed from an emergency production savings account during a
9 specified period of a declared emergency or disaster; and
10 (ii) the distribution of which is certified by the taxpayer as part of
11 a plan which provides for the reinvestment or expenditure of such
12 distribution for the purpose of allowing a business or enterprise to
13 produce essential products or provide essential services during a period
14 of a state declared emergency or disaster through modification or retro-
15 fitting of existing facilities, or development of additional resources
16 or facilities needed to produce essential products or services.
17 (B) Essential products or services shall be as determined by the divi-
18 sion of homeland security and emergency services.
19 (C) The commissioner may specify a period with respect to a specified
20 area in the case of an area determined by the governor to warrant
21 assistance from the Federal Government under the Robert T. Stafford
22 Disaster Relief and Emergency Assistance Act.
23 (D) The commissioner shall, for each specified period of declared
24 emergency or disaster establish a distribution limitation for qualified
25 distributions from eligible emergency production savings accounts with
26 respect to such period. The aggregate qualified distributions for any
27 such period from all accounts with respect to a business shall not
28 exceed such limitation.
29 (E) Any distribution not used in the manner certified under subpara-
30 graph (A) of this paragraph shall be treated as a distribution other
31 than a qualified distribution in the taxable year of such distribution.
32 (F) Any amount contributed to an emergency production savings account
33 (and any earnings attributable thereto), once distributed, shall not be
34 treated as a qualified distribution unless such distribution is made not
35 later than eight years after the date of such contribution. For purposes
36 of this subparagraph, amounts (and the earnings attributable thereto)
37 shall be treated as distributed on a first-in first-out basis.
38 (e) Effect of pledging account as security. If, during any taxable
39 year of the taxpayer for whose benefit an account is established, the
40 account or any portion thereof is pledged as security for a loan, the
41 portion so pledged shall be treated as distributed in a distribution
42 other than a qualified distribution.
43 § 5. Section 209 of the tax law is amended by adding a new subdivision
44 14 to read as follows:
45 14. For any taxable year beginning on or after January first, two
46 thousand twenty-one, any taxpayer shall be exempt from all taxes imposed
47 pursuant to this article for any contribution to and qualified distrib-
48 ution from an emergency production savings account established pursuant
49 to section forty-six of this chapter, subject to the limits set forth in
50 such section. If a taxpayer files for and receives an exemption from the
51 tax imposed under this section pursuant to the provisions of this subdi-
52 vision and the funds withdrawn, or any portion thereof, are not expended
53 for a qualifying purpose as set forth in section forty-six of this chap-
54 ter, then the amount of such exemption claimed by the taxpayer shall be
55 added back to tax in the next succeeding taxable year or in the year in
56 which the exemption is disallowed.
A. 4721 5
1 § 6. Subsection (c) of section 612 of the tax law is amended by adding
2 a new paragraph 44 to read as follows:
3 (44) Any qualified contribution to and any qualified distribution from
4 an emergency production savings account established pursuant to section
5 forty-six of this chapter. If a taxpayer files for and receives an
6 exemption from the tax imposed under this section pursuant to the
7 provisions of this paragraph and are not a qualifying contribution or
8 distribution as set forth in section forty-six of this chapter, then the
9 amount of any such exemption claimed by the taxpayer shall be added back
10 to tax in the next succeeding taxable year.
11 § 7. This act shall take effect immediately and shall apply to taxable
12 years beginning on and after such effective date.
