,i #aafth ,,congress #b;d ,session ,h4 ,r4 #hfef ,,in ,,the ,,house ,,of ,,representatives ,october #bc1 #bjbj,mr4 ,cloud 7for himself1 ,mr4 ,weber of ,texas1 ,mr4 ,gohmert1 and ,mr4 ,king of ,iowa7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide emergency savings accounts for small businesses4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,emergency ,savings ,accounts ,act of #bjbj4 #b4 ,deduction for contributions to small business emergency savings accounts 7a7 ,in general ,part ,,vi of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf 7relating to itemized deductions for individuals and corporations7 is amended by adding at the end the following new section3 #bjj4 ,small business emergency savings accounts 7a7 ,deduction allowed ,in the case of a eligible business1 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 business4 7b7 ,limitation ,the amount allowed as a deduction under subsection 7a7 to any business for any taxable year shall not exceed the lesser of-- 7#a7 #be percent of the wages 7as defined in section #caba7;a77 paid by the eligible business during such taxable year1 or 7#b7 the greater of-- 7,a7 zero1 or 7,b7 the maximum amount which when added to the balance of such account 7as determined at the end of such taxable year but without regard to contributions made during such taxable year7 would not result in such balance 7as so determined7 to exceed #aej percent of wages 7as defined in section #caba7;a77 paid by the eligible business during such taxable year4 7c7 ,eligible business ,for purposes of this section1 the term eligible business means any person if-- 7#a7 such person carries on any trade or business in the ,united ,states 7other than the trade or business of being an employee71 and 7#b7 the average number of full-time employees 7as determined for purposes of determining whether an employer is an applicable large employer for purposes of section #dihj;,h7c77#b77 employed by such employer during the taxable year does not exceed #ejj4 7d7 ,small business emergency savings account ,for purposes of this section-- 7#a7 ,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 beneficiary1 but only if the written governing instrument creating the trust meets the following requirements3 7,a7 ,except in the case of a rollover contribution described in subsection 7f77#e71 no contribution will be accepted unless it is in cash4 7,b7 ,the trustee is a bank 7as defined in section #djh7n771 an insurance company 7as defined in section #haf71 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 section4 7,c7 ,no part of the trust assets will be invested in life insurance contracts4 7,d7 ,the assets of the trust will not be commingled with other property except in a common trust fund or common investment fund4 7,e7 ,the interest of account beneficiary in the balance in the account is nonforfeitable4 7#b7 ,qualified disaster and public health emergency expenses ,the term qualified disaster and public health emergency expenses means-- 7,a7 disaster loss replacement expenses1 7,b7 disaster recovery operations expenses1 and 7,c7 public health emergency expenses4 7#c7 ,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 #c1jjj or more resulting from a federally declared disaster4 7#d7 ,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 effect3 7,a7 ,wages 7as defined in section #caba7;a77 and taxes imposed under section #caaa4 7,b7 ,unemployment insurance contributions4 7,c7 ,health care costs4 7,d7 ,rent1 lease1 or mortgage costs1 including property taxes4 7,e7 ,utilities4 7#e7 ,public health emergency expenses ,the term public health emergency expenses means amounts described in subparagraphs 7,a7 through 7,e7 of paragraph 7#d7 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 effect4 7#f7 ,federally declared disaster ,the term federally declared disaster has the meaning given such term by section #afe7;i77#e74 7#g7 ,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 #cai of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bdg;d74 7#h7 ,account beneficiary ,the term account beneficiary means the eligible business on whose behalf the small business emergency savings account was established4 7e7 ,treatment of account 7#a7 ,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 account4 ,notwithstanding the preceding sentence1 any such account is subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable1 etc4 organizations74 7#b7 ,account terminations ,rules similar to the rules of paragraphs 7#b7 and 7#d7 of section #djh7;e7 shall apply to small business emergency savings accounts1 and any amount treated as distributed under such rules shall be treated as not used to pay qualified disaster and public health emergency expenses4 7f7 ,tax treatment of distributions 7#a7 ,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 income4 7#b7 ,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 beneficiary4 7#c7 ,excess contributions returned before due date of return 7,a7 ,in general ,if any excess contribution is contributed for a taxable year to any small business emergency savings account of an eligible business1 paragraph 7#b7 shall not apply to distributions from the small business emergency savings accounts of such eligible business 7to the extent such distributions do not exceed the aggregate excess contributions to all such accounts of such eligible business for such year7 if-- 7i7 such distribution is received by the eligible business on or before the last day prescribed by law 7including extensions of time7 for filing such eligible business's return for such taxable year1 and 7ii7 such distribution is accompanied by the amount of net income attributable to such excess contribution4 ,any net income described in clause 7ii7 shall be included in the gross income of the eligible business for the taxable year in which it is received4 7,b7 ,excess contribution ,for purposes of subparagraph 7,a71 the term excess contribution means any contribution 7other than a rollover contribution described in paragraph 7#e77 which is not deductible under this section4 7#d7 ,additional tax on distributions not used for qualified disaster and public health emergency expenses 7,a7 ,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 7#b7 shall be increased by #bj percent of the amount which is so includible4 7,b7 ,exception for disability or death ,if the eligible business is an individual1 subparagraph 7,a7 shall not apply if the payment or distribution is made after the account beneficiary becomes disabled within the meaning of section #gb7m77#g7 or dies4 7#e7 ,rollover contribution ,an amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs 7,a7 and 7,b74 7,a7 ,in general ,paragraph 7#b7 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 #fjth day after the day on which the beneficiary receives the payment or distribution4 7,b7 ,limitation ,this paragraph shall not apply to any amount described in subparagraph 7,a7 received by an eligible business from a small business emergency savings account if1 at any time during the #a-year period ending on the day of such receipt1 such eligible business received any other amount described in subparagraph 7,a7 from a small business emergency savings account which was not includible in the small business's gross income because of the application of this paragraph4 7g7 ,cost-of-,living adjustment 7#a7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjbj1 the #c1jjj amount in subsection 7d77#c7 shall be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which such taxable year begins determined by substituting calendar year #bjai for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 7#b7 ,rounding ,if any increase under paragraph 7#a7 is not a multiple of #ej1 such increase shall be rounded to the nearest multiple of #ej4 7h7 ,special rules 7#a7 ,denial of deduction to dependents ,no deduction shall be allowed under this section to any individual with respect to whom a deduction under section #aea is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins4 7#b7 ,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 business1 no deduction shall be allowed under this section in the case of a taxable year covering a period of less than #ab months4 7#c7 ,certain rules to apply ,rules similar to the following rules shall apply for purposes of this section3 7,a7 ,section #bai7;d77#b7 7relating to no deduction for rollovers74 7,b7 ,section #bai7;f77#c7 7relating to time when contributions deemed made74 7,c7 ,section #bai7;f77#e7 7relating to employer payments74 7,d7 ,section #djh7;g7 7relating to community property laws74 7,e7 ,section #djh7;h7 7relating to custodial accounts74 7,f7 ,section #bbc7;f77#g7 7relating to transfer of account incident to divorce74 7,g7 ,section #bbc7;f77#h7 7relating to treatment after death of account beneficiary74 7#d7 ,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 7f77#a74 7i7 ,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 contributions1 distributions1 the return of excess contributions1 and such other matters as the ,secretary determines appropriate4 4 7b7 ,deduction allowed whether or not individual itemizes other deductions ,section #fb7;a7 of such ,code is amended by inserting after paragraph 7#ba7 the following new paragraph3 7#bb7 ,small business emergency savings accounts ,in the case of an individual who is an eligible business1 the deduction allowed by section #bjj4 4 7c7 ,tax on excess contributions ,section #digc of such ,code 7relating to tax on excess contributions to certain tax-favored accounts and annuities7 is amended-- 7#a7 by striking or at the end of subsection 7a77#e71 by inserting or at the end of subsection 7a77#f71 and by inserting after subsection 7a77#f7 the following new paragraph3 7#g7 a small business emergency savings account 7within the meaning of section #bbj7;d771 2 and 7#b7 by adding at the end the following new subsection3 7i7 ,excess contributions to small business emergency savings accounts ,for purposes of this section1 in the case of small business emergency savings accounts 7within the meaning of section #bbj7;d771 the term excess contributions means the sum of-- 7#a7 the aggregate amount contributed for the taxable year to the accounts 7other than a rollover contribution described in section #bbj7;f77#e77 which is not allowable as a deduction under section #bbj for such year1 and 7#b7 the amount determined under this subsection for the preceding taxable year1 reduced by the sum of-- 7,a7 the distributions out of the accounts which were included in gross income under section #bbj7;f77#b71 and 7,b7 the excess 7if any7 of-- 7i7 the maximum amount allowable as a deduction under section #bbj7;b7 for the taxable year1 over 7ii7 the amount contributed to the accounts for the taxable year4 ,for purposes of this subsection1 any contribution which is distributed out of the small business emergency savings account in a distribution to which section #bbj7;f77#c7 applies shall be treated as an amount not contributed4 4 7d7 ,failure ,to provide reports on small business emergency savings accounts ,section #ffic7;a77#b7 of such ,code is amended by redesignating subparagraphs 7,d71 7,e71 and 7,f7 as subparagraphs 7,e71 7,f71 and 7,g71 respectively1 and by inserting after subparagraph 7,c7 the following new subparagraph3 7,d7 section #bbj7;i7 7relating to small business emergency savings accounts71 4 7e7 ,clerical amendment ,the table of sections for part ,,vi of subchapter ,b of chapter #a of such ,code is amended by adding at the end the following3 ,sec4 #bbj4 ,small business emergency savings accounts4 4 7f7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjai4