S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4721
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             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:

   Section 1.  The tax law is amended by adding a new section 45 to  read
 as follows:
   §  45.  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.
   (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-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06781-01-1
              

 A. 4721                             2
 
 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.
   (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.

 A. 4721                             3
 
   (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.
   § 2. 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-ONE, ANY  ELIGIBLE  SMALL  BUSINESS,  AS  SUCH  TERM  IS
 DEFINED  PURSUANT TO SECTION FORTY-FIVE 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-FIVE 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-FIVE  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.
   § 3. Subsection (c) of section 612 of the tax law is amended by adding
 a new paragraph 43 to read as follows:
   (43) ANY QUALIFIED CONTRIBUTION TO AND ANY QUALIFIED DISTRIBUTION FROM
 A  SMALL BUSINESS SAVINGS ACCOUNT ESTABLISHED PURSUANT TO SECTION FORTY-
 FIVE 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-FIVE 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.
   §  4.  The  tax  law  is amended by adding a new section 46 to read as
 follows:
   § 46. EMERGENCY PRODUCTION SAVINGS  ACCOUNTS.  (A)  GENERAL.  (1)  THE
 COMMISSIONER   SHALL   ESTABLISH   A  PROGRAM  TO  ADMINISTER  EMERGENCY
 PRODUCTION SAVINGS ACCOUNTS UNDER THIS SECTION.
   (2) THE COMMISSIONER SHALL ESTABLISH MINIMUM STANDARDS  FOR  EMERGENCY
 PRODUCTION SAVINGS ACCOUNTS AND SHALL ESTABLISH ACCOUNTS,  OR ENTER INTO
 AGREEMENTS  THAT  MEET  THESE  STANDARDS TO ADMINISTER SUCH ACCOUNTS. IN
 ESTABLISHING 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 BUSINESS MAY ESTABLISH AN EMER-
 GENCY PRODUCTION 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 "EMERGENCY
 PRODUCTION SAVINGS ACCOUNT" MEANS A TAX PREFERRED SAVINGS ACCOUNT  WHICH
 IS  DESIGNATED  AT THE TIME OF ESTABLISHMENT OF THE PLAN AS AN EMERGENCY
 PRODUCTION 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 AN EMERGENCY PRODUCTION SAVINGS ACCOUNT
 FOR THE TAXABLE YEAR.
   (2) THE AGGREGATE AMOUNT OF CONTRIBUTIONS FOR ANY TAXABLE YEAR TO  ALL
 EMERGENCY  PRODUCTION  SAVINGS  ACCOUNTS MAINTAINED FOR THE BENEFIT OF A
 BUSINESS SHALL NOT EXCEED AN AMOUNT EQUAL TO TEN PERCENT  OF  THE  GROSS
 PROFITS OF THE BUSINESS FOR THE PRECEDING TAXABLE YEAR.

 A. 4721                             4
 
   (D)  DISTRIBUTIONS.  (1)  ANY QUALIFIED DISTRIBUTION FROM AN EMERGENCY
 PRODUCTION SAVINGS ACCOUNT SHALL NOT BE INCLUDIBLE IN GROSS INCOME.
   (2)  ANY  AMOUNTS  DISTRIBUTED  OUT OF AN EMERGENCY PRODUCTION 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 AN EMERGENCY PRODUCTION SAVINGS ACCOUNT DURING A
 SPECIFIED PERIOD OF A DECLARED EMERGENCY OR DISASTER; AND
   (II) THE DISTRIBUTION OF WHICH IS CERTIFIED BY THE TAXPAYER AS PART OF
 A PLAN WHICH PROVIDES  FOR  THE  REINVESTMENT  OR  EXPENDITURE  OF  SUCH
 DISTRIBUTION  FOR  THE  PURPOSE  OF ALLOWING A BUSINESS OR ENTERPRISE TO
 PRODUCE ESSENTIAL PRODUCTS OR PROVIDE ESSENTIAL SERVICES DURING A PERIOD
 OF A STATE DECLARED EMERGENCY OR DISASTER THROUGH MODIFICATION OR RETRO-
 FITTING OF EXISTING FACILITIES, OR DEVELOPMENT OF  ADDITIONAL  RESOURCES
 OR FACILITIES NEEDED TO PRODUCE ESSENTIAL PRODUCTS OR SERVICES.
   (B) ESSENTIAL PRODUCTS OR SERVICES SHALL BE AS DETERMINED BY THE DIVI-
 SION OF HOMELAND SECURITY AND EMERGENCY SERVICES.
   (C)  THE COMMISSIONER MAY SPECIFY A PERIOD 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  DECLARED
 EMERGENCY  OR DISASTER ESTABLISH A DISTRIBUTION LIMITATION FOR QUALIFIED
 DISTRIBUTIONS FROM ELIGIBLE EMERGENCY PRODUCTION SAVINGS  ACCOUNTS  WITH
 RESPECT  TO  SUCH  PERIOD. THE AGGREGATE QUALIFIED DISTRIBUTIONS FOR ANY
 SUCH PERIOD FROM ALL ACCOUNTS WITH  RESPECT  TO  A  BUSINESS  SHALL  NOT
 EXCEED SUCH LIMITATION.
   (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 AN EMERGENCY PRODUCTION 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) EFFECT OF PLEDGING ACCOUNT AS SECURITY.  IF,  DURING  ANY  TAXABLE
 YEAR  OF  THE  TAXPAYER 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.
   § 5. Section 209 of the tax law is amended by adding a new subdivision
 14 to read as follows:
   14. FOR ANY TAXABLE YEAR BEGINNING ON  OR  AFTER  JANUARY  FIRST,  TWO
 THOUSAND TWENTY-ONE, ANY TAXPAYER SHALL BE EXEMPT FROM ALL TAXES IMPOSED
 PURSUANT  TO THIS ARTICLE FOR ANY CONTRIBUTION TO AND QUALIFIED DISTRIB-
 UTION FROM AN EMERGENCY PRODUCTION SAVINGS ACCOUNT ESTABLISHED  PURSUANT
 TO SECTION FORTY-SIX 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 SUBDI-
 VISION AND THE FUNDS WITHDRAWN, OR ANY PORTION THEREOF, ARE NOT EXPENDED
 FOR A QUALIFYING PURPOSE AS SET FORTH IN SECTION FORTY-SIX OF THIS CHAP-
 TER,  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.

 A. 4721                             5

   § 6. 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
 AN  EMERGENCY PRODUCTION SAVINGS ACCOUNT ESTABLISHED PURSUANT TO SECTION
 FORTY-SIX 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-SIX 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.
   § 7. This act shall take effect immediately and shall apply to taxable
 years beginning on and after such effective date.