Small Business Emergency Savings Accounts Act of 2023
This bill allows a new tax deduction from gross income for amounts paid into a small business emergency savings account. Such savings accounts are established exclusively to pay the qualified disaster and public health emergency expenses of the account beneficiary.
The bill defines qualified disaster and public health emergency expenses as disaster loss replacement expenses, disaster recovery operations expenses, and public health emergency expenses.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 313 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 313
To amend the Internal Revenue Code of 1986 to provide emergency savings
accounts for small businesses.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 12, 2023
Mr. Cloud 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 provide emergency savings
accounts for small businesses.
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 ``Small Business Emergency Savings
Accounts Act of 2023''.
SEC. 2. DEDUCTION FOR CONTRIBUTIONS TO SMALL BUSINESS EMERGENCY SAVINGS
ACCOUNTS.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to itemized deductions for
individuals and corporations) is amended by adding at the end the
following new section:
``SEC. 200. SMALL BUSINESS EMERGENCY SAVINGS ACCOUNTS.
``(a) Deduction Allowed.--In the case of a eligible business, there
shall be allowed as a deduction for the taxable year an amount equal to
the aggregate amount paid during such taxable year by such business to
a small business emergency savings account of such business.
``(b) Limitation.--The amount allowed as a deduction under
subsection (a) to any business for any taxable year shall not exceed
the lesser of--
``(1) 25 percent of the wages (as defined in section
3121(a)) paid by the eligible business during such taxable
year, or
``(2) the greater of--
``(A) zero, or
``(B) the maximum amount which when added to the
balance of such account (as determined at the end of
such taxable year but without regard to contributions
made during such taxable year) would not result in such
balance (as so determined) to exceed 150 percent of
wages (as defined in section 3121(a)) paid by the
eligible business during such taxable year.
``(c) Eligible Business.--For purposes of this section, the term
`eligible business' means any person if--
``(1) such person carries on any trade or business in the
United States (other than the trade or business of being an
employee), and
``(2) the average number of full-time employees (as
determined for purposes of determining whether an employer is
an applicable large employer for purposes of section
4980H(c)(2)) employed by such employer during the taxable year
does not exceed 500.
``(d) Small Business Emergency Savings Account.--For purposes of
this section--
``(1) In general.--The term `small business emergency
savings account' means a trust created or organized in the
United States as a small business emergency savings account
exclusively for the purpose of paying the qualified disaster
and public health emergency expenses of the account
beneficiary, but only if the written governing instrument
creating the trust meets the following requirements:
``(A) Except in the case of a rollover contribution
described in subsection (f)(5), no contribution will be
accepted unless it is in cash.
``(B) The trustee is a bank (as defined in section
408(n)), an insurance company (as defined in section
816), or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of account beneficiary in the
balance in the account is nonforfeitable.
``(2) Qualified disaster and public health emergency
expenses.--The term `qualified disaster and public health
emergency expenses' means--
``(A) disaster loss replacement expenses,
``(B) disaster recovery operations expenses, and
``(C) public health emergency expenses.
``(3) Disaster loss replacement expenses.--The term
`disaster loss replacement expenses' means any expense paid or
incurred in the ordinary course of a trade or business of the
eligible business to replace or repair casualty losses totaling
$3,000 or more resulting from a federally declared disaster.
``(4) Disaster recovery operations expenses.--The term
`disaster recovery operations expenses' means the following
amounts if paid or incurred in the ordinary course of a trade
or business of the eligible business while the declaration with
respect to a federally declared disaster is in effect:
``(A) Wages (as defined in section 3121(a)) and
taxes imposed under section 3111.
``(B) Unemployment insurance contributions.
``(C) Health care costs.
``(D) Rent, lease, or mortgage costs, including
property taxes.
``(E) Utilities.
``(5) Public health emergency expenses.--The term `public
health emergency expenses' means amounts described in
subparagraphs (A) through (E) of paragraph (4) if paid or
incurred in the ordinary course of a trade or business of the
eligible business while a public health emergency declaration
is in effect.
``(6) Federally declared disaster.--The term `federally
declared disaster' has the meaning given such term by section
165(i)(5).
``(7) Public health emergency declaration.--The term
`public health emergency declaration' means any declaration of
a public health emergency by the Secretary of Health and Human
Services under section 319 of the Public Health Service Act (42
U.S.C. 247d).
``(8) Account beneficiary.--The term `account beneficiary'
means the eligible business on whose behalf the small business
emergency savings account was established.
``(e) Treatment of Account.--
``(1) In general.--A small business emergency savings
account is exempt from taxation under this subtitle unless such
account has ceased to be a small business emergency 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).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to small
business emergency savings accounts, and any amount treated as
distributed under such rules shall be treated as not used to
pay qualified disaster and public health emergency expenses.
``(f) Tax Treatment of Distributions.--
``(1) Amounts used for qualified disaster and public health
emergency expenses.--Any amount paid or distributed out of a
small business emergency savings account which is used
exclusively to pay qualified disaster and public health
emergency expenses of any account beneficiary shall not be
includible in gross income.
``(2) Inclusion of amounts not used for qualified disaster
and public health emergency expenses.--Any amount paid or
distributed out of a small business emergency savings account
which is not used exclusively to pay the qualified disaster and
public health emergency expenses of the account beneficiary
shall be included in the gross income of such beneficiary.
``(3) Excess contributions returned before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any small business
emergency savings account of an eligible business,
paragraph (2) shall not apply to distributions from the
small business emergency savings accounts of such
eligible business (to the extent such distributions do
not exceed the aggregate excess contributions to all
such accounts of such eligible business for such year)
if--
``(i) such distribution is received by the
eligible business on or before the last day
prescribed by law (including extensions of
time) for filing such eligible business's
return for such taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in the gross income of the eligible business
for the taxable year in which it is received.
``(B) Excess contribution.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution (other than a rollover contribution
described in paragraph (5)) which is not deductible
under this section.
``(4) Additional tax on distributions not used for
qualified disaster and public health emergency expenses.--
``(A) In general.--The tax imposed by this chapter
on the account beneficiary for any taxable year in
which there is a payment or distribution from a small
business emergency savings account of such beneficiary
which is includible in gross income under paragraph (2)
shall be increased by 20 percent of the amount which is
so includible.
``(B) Exception for disability or death.--If the
eligible business is an individual, subparagraph (A)
shall not apply if the payment or distribution is made
after the account beneficiary becomes disabled within
the meaning of section 72(m)(7) or dies.
``(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
``(A) In general.--Paragraph (2) shall not apply to
any amount paid or distributed from a small business
emergency savings account to the account beneficiary to
the extent the amount received is paid into a small
business emergency savings account for the benefit of
such beneficiary not later than the 60th day after the
day on which the beneficiary receives the payment or
distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an eligible business from a small business emergency
savings account if, at any time during the 1-year
period ending on the day of such receipt, such eligible
business received any other amount described in
subparagraph (A) from a small business emergency
savings account which was not includible in the small
business's gross income because of the application of
this paragraph.
``(g) Cost-of-Living Adjustment.--
``(1) In general.--In the case of any taxable year
beginning in a calendar year after 2023, the $3,000 amount in
subsection (d)(3) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
such taxable year begins determined by substituting
`calendar year 2022' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
``(2) Rounding.--If any increase under paragraph (1) is not
a multiple of $50, such increase shall be rounded to the
nearest multiple of $50.
``(h) Special Rules.--
``(1) Denial of deduction to dependents.--No deduction
shall be allowed under this section to any individual with
respect to whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.
``(2) Taxable year must be full taxable year.--Except in
the case of a taxable year closed by reason of the death of an
individual who is an eligible business, no deduction shall be
allowed under this section in the case of a taxable year
covering a period of less than 12 months.
``(3) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(d)(2) (relating to no deduction
for rollovers).
``(B) Section 219(f)(3) (relating to time when
contributions deemed made).
``(C) Section 219(f)(5) (relating to employer
payments).
``(D) Section 408(g) (relating to community
property laws).
``(E) Section 408(h) (relating to custodial
accounts).
``(F) Section 223(f)(7) (relating to transfer of
account incident to divorce).
``(G) Section 223(f)(8) (relating to treatment
after death of account beneficiary).
``(4) Denial of double benefit.--No deduction shall be
allowed under this chapter for any qualified disaster and
public health emergency expenses with respect to which any
payment or distribution is excluded from gross income under
subsection (f)(1).
``(i) Reports.--The Secretary may require the trustee of a small
business emergency savings account to make such reports regarding such
account to the Secretary and to the account beneficiary with respect to
contributions, distributions, the return of excess contributions, and
such other matters as the Secretary determines appropriate.''.
(b) Deduction Allowed Whether or Not Individual Itemizes Other
Deductions.--Section 62(a) of such Code is amended by inserting after
paragraph (21) the following new paragraph:
``(22) Small business emergency savings accounts.--In the
case of an individual who is an eligible business, the
deduction allowed by section 200.''.
(c) Tax on Excess Contributions.--Section 4973 of such Code
(relating to tax on excess contributions to certain tax-favored
accounts and annuities) is amended--
(1) by striking ``or'' at the end of subsection (a)(5), by
inserting ``or'' at the end of subsection (a)(6), and by
inserting after subsection (a)(6) the following new paragraph:
``(7) a small business emergency savings account (within
the meaning of section 220(d)),''; and
(2) by adding at the end the following new subsection:
``(i) Excess Contributions to Small Business Emergency Savings
Accounts.--For purposes of this section, in the case of small business
emergency savings accounts (within the meaning of section 220(d)), the
term `excess contributions' means the sum of--
``(1) the aggregate amount contributed for the taxable year
to the accounts (other than a rollover contribution described
in section 220(f)(5)) which is not allowable as a deduction
under section 220 for such 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 which
were included in gross income under section 220(f)(2),
and
``(B) the excess (if any) of--
``(i) the maximum amount allowable as a
deduction under section 220(b) for the taxable
year, over
``(ii) the amount contributed to the
accounts for the taxable year.
For purposes of this subsection, any contribution which
is distributed out of the small business emergency
savings account in a distribution to which section
220(f)(3) applies shall be treated as an amount not
contributed.''.
(d) Failure To Provide Reports on Small Business Emergency Savings
Accounts.--Section 6693(a)(2) of such Code is amended by redesignating
subparagraphs (D), (E), and (F) as subparagraphs (E), (F), and (G),
respectively, and by inserting after subparagraph (C) the following new
subparagraph:
``(D) section 220(i) (relating to small business
emergency savings accounts),''.
(e) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 of such Code is amended by adding at the end
the following:
``Sec. 200. Small business emergency savings accounts.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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