[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4608 Introduced in House (IH)]
<DOC>
114th CONGRESS
2d Session
H. R. 4608
To amend the Internal Revenue Code of 1986 to establish small business
savings accounts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 24, 2016
Mr. Israel introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish small business
savings accounts.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``SAVE for Small Businesses Act'' or
the ``Savings Accounts for a Variable Economy for Small Businesses
Act''.
SEC. 2. SMALL BUSINESS SAVINGS ACCOUNTS.
(a) In General.--Chapter 77 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new section:
``SEC. 7529. SMALL BUSINESS SAVINGS ACCOUNTS.
``(a) In General.--Any eligible small business may enter into an
agreement with the Secretary under this section to establish a small
business savings account with respect to such business under terms
which meet the requirements of this section.
``(b) Small Business Savings Accounts.--For 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 Secretary may by
regulation prescribe.
``(c) Contributions.--
``(1) Deduction.--There shall be allowed as a deduction an
amount equal to the contributions to a small business savings
account for the taxable year.
``(2) Limitation.--The aggregate amount of contributions
for any taxable year to all small business savings accounts
maintained for the benefit of an eligible small business shall
not exceed an amount equal to 10 percent of the gross profits
of the business for the preceding taxable year.
``(d) Distributions.--
``(1) In general.--Any qualified distribution from a small
business savings account shall not be includible in gross
income.
``(2) Inclusion of nonqualified distributions.--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) Qualified distribution.--For purposes of this
subsection--
``(A) In general.--The term `qualified
distribution' means any amount--
``(i) distributed from a small business
savings account during a specified 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) Specified period of economic hardship.--The
term `specified period of economic hardship' means--
``(i) any 1-year period beginning
immediately after the end of any 3 consecutive
quarters during which the annual rate of real
gross domestic product (as determined by the
Bureau of Economic Analysis of the Department
of Commerce) decreases, or
``(ii) any period, in no event shorter than
1 year, specified by the Administrator of the
Small Business Administration for purposes of
this section.
``(C) Federally declared disaster areas.--The
Administrator of the Small Business Administration may
specify a period under subparagraph (B)(ii) with
respect to a specified area in the case of an area
determined by the President to warrant assistance from
the Federal Government under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (as in
effect on the date of the enactment of the SAVE for
Small Businesses Act).
``(D) Limitation.--The Administrator of the Small
Business Administration shall, in consultation with the
Secretary, 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 limitation.
``(E) Amounts not used for reinvestment.--Any
distribution not used in the manner certified under
subparagraph (A)(ii) shall be treated as a distribution
other than a qualified distribution in the taxable year
of such distribution.
``(F) Eight-year rule.--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 8 years after the
date of such contribution. For purposes of the
preceding sentence, amounts (and the earnings
attributable thereto) shall be treated as distributed
on a first-in first-out basis.
``(e) Tax Treatment of Account.--Any small business savings account
is exempt from taxation under this subtitle A unless such account has
ceased to be a small business savings account. Notwithstanding the
preceding sentence, any such account is subject to the taxes imposed by
section 511 (relating to imposition of tax on unrelated business income
of charitable, etc. organizations).
``(f) Eligible Small Business.--For purposes of this section--
``(1) In general.--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 50 or fewer. For
purposes of the preceding sentence, a preceding calendar year
may be taken into account only if the person was in existence
throughout the year.
``(2) Full-time employees.--
``(A) In general.--The term `full-time employee'
means, with respect to any year, an employee who is
employed on average at least 40 hours of service per
week.
``(B) Hours of service.--The Secretary, in
consultation with the Secretary of Labor, 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
paragraph to employees who are not compensated on an
hourly basis.
``(3) Startups, controlled groups, and predecessors.--Rules
similar to the rules of subparagraphs (B) and (D) of section
220(c)(4) shall apply for purposes of this subsection.
``(g) 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.''.
(b) Small Business Savings Account Programs.--
(1) In general.--The Secretary of the Treasury shall
establish a program to administer small business savings
accounts under section 7529 of the Internal Revenue Code of
1986.
(2) Account standards.--The Secretary shall establish
minimum standards for small business savings accounts and shall
establish accounts within the Department of the Treasury or
enter into agreements with trustees that meet these standards
to administer such accounts. In establishing such standards and
making such agreements the Secretary 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.
(c) Excess Contributions.--Section 4973 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subsection:
``(i) Excess Contributions to Small Business Savings Accounts.--For
purposes of this section, in the case of contributions to all small
business savings accounts (within the meaning of section 7529(b))
maintained for the benefit of an individual, the term `excess
contributions' means the sum of--
``(1) the excess (if any) of--
``(A) the amount contributed to such accounts for
the taxable year, over
``(B) the amount allowable as a contribution under
section 7529(c)(2) for such taxable year, and
``(2) the amount determined under this subsection for the
preceding taxable year, reduced by the sum of--
``(A) the distributions out of the accounts for the
taxable year, and
``(B) the excess (if any) of--
``(i) the maximum amount allowable as a
contribution under section 7529(c)(2) for such
taxable year, over
``(ii) the amount contributed to such
accounts for such taxable year.''.
(d) Clerical Amendment.--The table of sections for chapter 77 of
the Internal Revenue Code of 1986 is amended by adding at the end the
following new item:
``Sec. 7529. Small Business Savings Accounts.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
<all>