S T A T E   O F   N E W   Y O R K
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                                   3434
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 27, 2017
                                ___________
 
 Introduced  by  M.  of  A. LAVINE, M. G. MILLER, BENEDETTO, BLAKE, OTIS,
   COOK, THIELE, JAFFEE, GUNTHER, SIMANOWITZ, MOSLEY, ZEBROWSKI,  BRINDI-
   SI,  GJONAJ, MONTESANO, MURRAY, PALUMBO, RA, SKARTADOS, COLTON, BRABE-
   NEC, PICHARDO, SALADINO, ENGLEBRIGHT,  HOOPER,  RAIA,  JEAN-PIERRE  --
   Multi-Sponsored  by  -- M. of A. BARCLAY, SOLAGES, WALKER -- 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
 
   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 43 to read as
 follows:
   § 43. 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.
                                                            LBD06746-01-7
              

 A. 3434                             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.

 A. 3434                             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 SEVENTEEN, ANY ELIGIBLE SMALL BUSINESS, AS SUCH TERM IS DEFINED
 PURSUANT  TO  SECTION  FORTY-THREE 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 ESTABLISHED
 PURSUANT  TO  SECTION FORTY-THREE 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-THREE 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-
 THREE  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-THREE 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.