S T A T E   O F   N E W   Y O R K
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                                 4376--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             March 17, 2015
                               ___________

Introduced  by  Sens.  MARTINS,  CARLUCCI,  MARCHIONE  -- read twice and
  ordered printed, and when printed to be committed to the Committee  on
  Investigations and Government Operations -- recommitted to the Commit-
  tee  on  Investigations  and  Government Operations in accordance with
  Senate Rule 6, sec. 8 -- committee discharged, bill  amended,  ordered
  reprinted as amended and recommitted to said committee

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".
  S 2. The tax law is amended by adding a new  section  42  to  read  as
follows:
  S  42.  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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09675-02-6

              

S. 4376--A                          2

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.
  (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. 4376--A                          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.
  S 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  SIXTEEN,  ANY ELIGIBLE SMALL BUSINESS, AS SUCH TERM IS DEFINED
PURSUANT TO SECTION FORTY-TWO 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-TWO 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-TWO
OF  THIS  CHAPTER,  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.
  S 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-
TWO 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-TWO 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.
  S 5. This act shall take effect immediately and shall apply to taxable
years beginning after such date.