,i  #aaf? ,,congress  #b;d ,session  ,h4
 ,r4 #hfef  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,octob] #bc1 #bjbj,mr4
 ,cl\d 7= himself1 ,mr4 ,web] ( ,texas1 
,mr4 ,gohm]t1 & ,mr4 ,k+ ( ,i[a7        
introduc$ ! foll[+ bill2 :i* 0 ref]r$ to
 ! ,committee on ,ways & ,means  ,a     
,,bill  ,to am5d ! ,int]nal ,rev5ue     
,code ( #aihf to provide em]g5cy sav+s  
acc\nts = small bus9esses4  #a4 ,%ort   
title ,?is ,act may be cit$ z ! ,small  
,bus9ess ,em]g5cy ,sav+s ,acc\nts ,act (
 #bjbj4  #b4 ,d$uction = contributions  
to small bus9ess em]g5cy sav+s acc\nts  
7a7 ,9 g5]al ,"p ,,vi ( sub*apt] ,b (   
*apt] #a ( ! ,int]nal ,rev5ue ,code (   
#aihf 7relat+ to itemiz$ d$uctions =    
individuals & corporations7 is am5d$ by 
add+ at ! end ! foll[+ new section3     
#bjj4 ,small bus9ess em]g5cy sav+s      
acc\nts  7a7 ,d$uction all[$ ,9 ! case (
 a eligible bus9ess1 !re %all be all[$ z
 a d$uction = ! taxable ye> an am\nt    
equal to ! aggregate am\nt paid dur+ su*
 taxable ye> by su* bus9ess to a small  

bus9ess em]g5cy sav+s acc\nt ( su*      
bus9ess4  7b7 ,limitation ,! am\nt all[$
 z a d$uction "u subsection 7a7 to any  
bus9ess = any taxable ye> %all n exce$ !
 less] (-- 7#a7 #be p]c5t ( ! wages 7z  
def9$ 9 section #caba7;a77 paid by !    
eligible bus9ess dur+ su* taxable ye>1  
or  7#b7 ! great] (-- 7,a7 z]o1 or  7,b7
 ! maximum am\nt :i* :5 add$ to !       
balance ( su* acc\nt 7z det]m9$ at ! end
 ( su* taxable ye> b )\t reg>d to       
contributions made dur+ su* taxable ye>7
 w\ld n result 9 su* balance 7z s       
det]m9$7 to exce$ #aej p]c5t ( wages 7z 
def9$ 9 section #caba7;a77 paid by !    
eligible bus9ess dur+ su* taxable ye>4  
7c7 ,eligible bus9ess ,= purposes ( ?is 
section1 ! t]m eligible bus9ess means   
any p]son if-- 7#a7 su* p]son c>ries on 
any trade or bus9ess 9 ! ,unit$ ,/ates  
7o!r ?an ! trade or bus9ess ( be+ an    
employee71 &  7#b7 ! av]age numb] (     
full-"t employees 7z det]m9$ = purposes 
( det]m9+ :e!r an employ] is an         
applicable l>ge employ] = purposes (    

section #dihj;,h7c77#b77 employ$ by su* 
employ] dur+ ! taxable ye> does n exce$ 
#ejj4  7d7 ,small bus9ess em]g5cy sav+s 
acc\nt ,= purposes ( ?is section-- 7#a7 
,9 g5]al ,! t]m small bus9ess em]g5cy   
sav+s acc\nt means a tru/ creat$ or     
organiz$ 9 ! ,unit$ ,/ates z a small    
bus9ess em]g5cy sav+s acc\nt exclusively
 = ! purpose ( pay+ ! qualifi$ disa/] & 
public heal? em]g5cy exp5ses ( ! acc\nt 
b5efici>y1 b only if ! writt5 gov]n+    
in/rum5t creat+ ! tru/ meets ! foll[+   
requirem5ts3 7,a7 ,except 9 ! case ( a  
rollov] contribution describ$ 9         
subsection 7f77#e71 no contribution w be
 accept$ unless x is 9 ca%4  7,b7 ,!    
tru/ee is a bank 7z def9$ 9 section     
#djh7n771 an insurance company 7z def9$ 
9 section #haf71 or ano!r p]son :o      
demon/rates to ! satisfaction ( !       
,secret>y t ! mann] 9 :i* su* p]son w   
adm9i/] ! tru/ w be consi/5t ) !        
requirem5ts ( ?is section4  7,c7 ,no "p 
( ! tru/ assets w be inve/$ 9 life      
insurance contracts4  7,d7 ,! assets ( !

 tru/ w n be comm+l$ ) o!r prop]ty      
except 9 a common tru/ fund or common   
inve/m5t fund4  7,e7 ,! int]e/ ( acc\nt 
b5efici>y 9 ! balance 9 ! acc\nt is     
non=feitable4  7#b7 ,qualifi$ disa/] &  
public heal? em]g5cy exp5ses ,! t]m     
qualifi$ disa/] & public heal? em]g5cy  
exp5ses means-- 7,a7 disa/] loss        
replacem5t exp5ses1  7,b7 disa/] recov]y
 op]ations exp5ses1 &  7,c7 public heal?
 em]g5cy exp5ses4  7#c7 ,disa/] loss    
replacem5t exp5ses ,! t]m disa/] loss   
replacem5t exp5ses means any exp5se paid
 or incurr$ 9 ! ord9>y c\rse ( a trade  
or bus9ess ( ! eligible bus9ess to      
replace or repair casualty losses total+
 #c1jjj or m result+ f a f$]ally decl>$ 
disa/]4  7#d7 ,disa/] recov]y op]ations 
exp5ses ,! t]m disa/] recov]y op]ations 
exp5ses means ! foll[+ am\nts if paid or
 incurr$ 9 ! ord9>y c\rse ( a trade or  
bus9ess ( ! eligible bus9ess :ile !     
decl>ation ) respect to a f$]ally decl>$
 disa/] is 9 effect3 7,a7 ,wages 7z     
def9$ 9 section #caba7;a77 & taxes      

impos$ "u section #caaa4  7,b7          
,unemploym5t insurance contributions4   
7,c7 ,heal? c>e co/s4  7,d7 ,r5t1 lease1
 or mortgage co/s1 includ+ prop]ty      
taxes4  7,e7 ,utilities4  7#e7 ,public  
heal? em]g5cy exp5ses ,! t]m public     
heal? em]g5cy exp5ses means am\nts      
describ$ 9 subp>agraphs 7,a7 ?r\gh 7,e7 
( p>agraph 7#d7 if paid or incurr$ 9 !  
ord9>y c\rse ( a trade or bus9ess ( !   
eligible bus9ess :ile a public heal?    
em]g5cy decl>ation is 9 effect4  7#f7   
,f$]ally decl>$ disa/] ,! t]m f$]ally   
decl>$ disa/] has ! mean+ giv5 su* t]m  
by section #afe7;i77#e74  7#g7 ,public  
heal? em]g5cy decl>ation ,! t]m public  
heal? em]g5cy decl>ation means any      
decl>ation ( a public heal? em]g5cy by !
 ,secret>y ( ,heal? & ,human ,s]vices "u
 section #cai ( ! ,public ,heal? ,s]vice
 ,act 7#db ,u4,s4,c4 #bdg;d74  7#h7     
,acc\nt b5efici>y ,! t]m acc\nt         
b5efici>y means ! eligible bus9ess on ^:
 behalf ! small bus9ess em]g5cy sav+s   
acc\nt 0 e/abli%$4  7e7 ,treatm5t (     

acc\nt  7#a7 ,9 g5]al ,a small bus9ess  
em]g5cy sav+s acc\nt is exempt f        
taxation "u ?is subtitle unless su*     
acc\nt has ceas$ to be a small bus9ess  
em]g5cy sav+s acc\nt4 ,not)/&+ ! prec$+ 
s5t5ce1 any su* acc\nt is subject to !  
taxes impos$ by section #eaa 7relat+ to 
imposition ( tax on unrelat$ bus9ess    
income ( *>itable1 etc4 organizations74 
7#b7 ,acc\nt t]m9ations ,rules simil> to
 ! rules ( p>agraphs 7#b7 & 7#d7 (      
section #djh7;e7 %all apply to small    
bus9ess em]g5cy sav+s acc\nts1 & any    
am\nt treat$ z di/ribut$ "u su* rules   
%all be treat$ z n us$ to pay qualifi$  
disa/] & public heal? em]g5cy exp5ses4  
7f7 ,tax treatm5t ( di/ributions  7#a7  
,am\nts us$ = qualifi$ disa/] & public  
heal? em]g5cy exp5ses ,any am\nt paid or
 di/ribut$ out ( a small bus9ess em]g5cy
 sav+s acc\nt :i* is us$ exclusively to 
pay qualifi$ disa/] & public heal?      
em]g5cy exp5ses ( any acc\nt b5efici>y  
%all n be includible 9 gross income4    
7#b7 ,inclusion ( am\nts n us$ =        

qualifi$ disa/] & public heal? em]g5cy  
exp5ses ,any am\nt paid or di/ribut$ out
 ( a small bus9ess em]g5cy sav+s acc\nt 
:i* is n us$ exclusively to pay !       
qualifi$ disa/] & public heal? em]g5cy  
exp5ses ( ! acc\nt b5efici>y %all be    
includ$ 9 ! gross income ( su*          
b5efici>y4  7#c7 ,excess contributions  
return$ be=e due date ( return  7,a7 ,9 
g5]al ,if any excess contribution is    
contribut$ = a taxable ye> to any small 
bus9ess em]g5cy sav+s acc\nt ( an       
eligible bus9ess1 p>agraph 7#b7 %all n  
apply to di/ributions f ! small bus9ess 
em]g5cy sav+s acc\nts ( su* eligible    
bus9ess 7to ! ext5t su* di/ributions d n
 exce$ ! aggregate excess contributions 
to all su* acc\nts ( su* eligible       
bus9ess = su* ye>7 if-- 7i7 su*         
di/ribution is receiv$ by ! eligible    
bus9ess on or be=e ! la/ day prescrib$  
by law 7includ+ ext5sions ( "t7 = fil+  
su* eligible bus9ess's return = su*     
taxable ye>1 &  7ii7 su* di/ribution is 
accompani$ by ! am\nt ( net income      

attributable to su* excess contribution4
  ,any net income describ$ 9 clause 7ii7
 %all be includ$ 9 ! gross income ( !   
eligible bus9ess = ! taxable ye> 9 :i* x
 is receiv$4  7,b7 ,excess contribution 
,= purposes ( subp>agraph 7,a71 ! t]m   
excess contribution means any           
contribution 7o!r ?an a rollov]         
contribution describ$ 9 p>agraph 7#e77  
:i* is n d$uctible "u ?is section4  7#d7
 ,additional tax on di/ributions n us$ =
 qualifi$ disa/] & public heal? em]g5cy 
exp5ses  7,a7 ,9 g5]al ,! tax impos$ by 
?is *apt] on ! acc\nt b5efici>y = any   
taxable ye> 9 :i* !re is a paym5t or    
di/ribution f a small bus9ess em]g5cy   
sav+s acc\nt ( su* b5efici>y :i* is     
includible 9 gross income "u p>agraph   
7#b7 %all be increas$ by #bj p]c5t ( !  
am\nt :i* is s includible4  7,b7        
,exception = disability or dea? ,if !   
eligible bus9ess is an individual1      
subp>agraph 7,a7 %all n apply if !      
paym5t or di/ribution is made aft] !    
acc\nt b5efici>y becomes disabl$ )9 !   

mean+ ( section #gb7m77#g7 or dies4     
7#e7 ,rollov] contribution ,an am\nt is 
describ$ 9 ?is p>agraph z a rollov]     
contribution if x meets ! requirem5ts ( 
subp>agraphs 7,a7 & 7,b74 7,a7 ,9 g5]al 
,p>agraph 7#b7 %all n apply to any am\nt
 paid or di/ribut$ f a small bus9ess    
em]g5cy sav+s acc\nt to ! acc\nt        
b5efici>y to ! ext5t ! am\nt receiv$ is 
paid into a small bus9ess em]g5cy sav+s 
acc\nt = ! b5efit ( su* b5efici>y n lat]
 ?an ! #fj? day aft] ! day on :i* !     
b5efici>y receives ! paym5t or          
di/ribution4  7,b7 ,limitation ,?is     
p>agraph %all n apply to any am\nt      
describ$ 9 subp>agraph 7,a7 receiv$ by  
an eligible bus9ess f a small bus9ess   
em]g5cy sav+s acc\nt if1 at any "t dur+ 
! #a-ye> p]iod end+ on ! day ( su*      
receipt1 su* eligible bus9ess receiv$   
any o!r am\nt describ$ 9 subp>agraph    
7,a7 f a small bus9ess em]g5cy sav+s    
acc\nt :i* 0 n includible 9 ! small     
bus9ess's gross income because ( !      
application ( ?is p>agraph4  7g7        

,co/-(-,liv+ adju/m5t  7#a7 ,9 g5]al ,9 
! case ( any taxable ye> beg9n+ 9 a     
cal5d> ye> aft] #bjbj1 ! #c1jjj am\nt 9 
subsection 7d77#c7 %all be increas$ by  
an am\nt equal to-- 7,a7 su* doll>      
am\nt1 multipli$ by  7,b7 ! co/-(-liv+  
adju/m5t det]m9$ "u section #a7;f77#c7 =
 ! cal5d> ye> 9 :i* su* taxable ye>     
beg9s det]m9$ by sub/itut+ cal5d> ye>   
#bjai = cal5d> ye> #bjaf 9 subp>agraph  
7,a77ii7 !re(4  7#b7 ,r\nd+ ,if any     
increase "u p>agraph 7#a7 is n a        
multiple ( #ej1 su* increase %all be    
r\nd$ to ! ne>e/ multiple ( #ej4  7h7   
,special rules  7#a7 ,d5ial ( d$uction  
to dep5d5ts ,no d$uction %all be all[$  
"u ?is section to any individual )      
respect to :om a d$uction "u section    
#aea is all[able to ano!r taxpay] = a   
taxable ye> beg9n+ 9 ! cal5d> ye> 9 :i* 
su* individual's taxable ye> beg9s4     
7#b7 ,taxable ye> mu/ be full taxable   
ye> ,except 9 ! case ( a taxable ye>    
clos$ by reason ( ! dea? ( an individual
 :o is an eligible bus9ess1 no d$uction 

%all be all[$ "u ?is section 9 ! case ( 
a taxable ye> cov]+ a p]iod ( less ?an  
#ab mon?s4  7#c7 ,c]ta9 rules to apply  
,rules simil> to ! foll[+ rules %all    
apply = purposes ( ?is section3 7,a7    
,section #bai7;d77#b7 7relat+ to no     
d$uction = rollov]s74  7,b7 ,section    
#bai7;f77#c7 7relat+ to "t :5           
contributions deem$ made74  7,c7        
,section #bai7;f77#e7 7relat+ to employ]
 paym5ts74  7,d7 ,section #djh7;g7      
7relat+ to community prop]ty laws74     
7,e7 ,section #djh7;h7 7relat+ to       
cu/odial acc\nts74  7,f7 ,section       
#bbc7;f77#g7 7relat+ to transf] ( acc\nt
 incid5t to divorce74  7,g7 ,section    
#bbc7;f77#h7 7relat+ to treatm5t aft]   
dea? ( acc\nt b5efici>y74  7#d7 ,d5ial (
 d\ble b5efit ,no d$uction %all be all[$
 "u ?is *apt] = any qualifi$ disa/] &   
public heal? em]g5cy exp5ses ) respect  
to :i* any paym5t or di/ribution is     
exclud$ f gross income "u subsection    
7f77#a74  7i7 ,reports ,! ,secret>y may 
require ! tru/ee ( a small bus9ess      

em]g5cy sav+s acc\nt to make su* reports
 reg>d+ su* acc\nt to ! ,secret>y & to !
 acc\nt b5efici>y ) respect to          
contributions1 di/ributions1 ! return ( 
excess contributions1 & su* o!r matt]s z
 ! ,secret>y det]m9es appropriate4  4   
7b7 ,d$uction all[$ :e!r or n individual
 itemizes o!r d$uctions ,section #fb7;a7
 ( su* ,code is am5d$ by ins]t+ aft]    
p>agraph 7#ba7 ! foll[+ new p>agraph3   
7#bb7 ,small bus9ess em]g5cy sav+s      
acc\nts ,9 ! case ( an individual :o is 
an eligible bus9ess1 ! d$uction all[$ by
 section #bjj4  4  7c7 ,tax on excess   
contributions ,section #digc ( su* ,code
 7relat+ to tax on excess contributions 
to c]ta9 tax-favor$ acc\nts & annuities7
 is am5d$-- 7#a7 by /rik+ or at ! end ( 
subsection 7a77#e71 by ins]t+ or at !   
end ( subsection 7a77#f71 & by ins]t+   
aft] subsection 7a77#f7 ! foll[+ new    
p>agraph3  7#g7 a small bus9ess em]g5cy 
sav+s acc\nt 7)9 ! mean+ ( section      
#bbj7;d771  2 &  7#b7 by add+ at ! end !
 foll[+ new subsection3  7i7 ,excess    

contributions to small bus9ess em]g5cy  
sav+s acc\nts ,= purposes ( ?is section1
 9 ! case ( small bus9ess em]g5cy sav+s 
acc\nts 7)9 ! mean+ ( section #bbj7;d771
 ! t]m excess contributions means ! sum 
(-- 7#a7 ! aggregate am\nt contribut$ = 
! taxable ye> to ! acc\nts 7o!r ?an a   
rollov] contribution describ$ 9 section 
#bbj7;f77#e77 :i* is n all[able z a     
d$uction "u section #bbj = su* ye>1 &   
7#b7 ! am\nt det]m9$ "u ?is subsection =
 ! prec$+ taxable ye>1 r$uc$ by ! sum   
(-- 7,a7 ! di/ributions out ( ! acc\nts 
:i* 7 includ$ 9 gross income "u section 
#bbj7;f77#b71 &  7,b7 ! excess 7if any7 
(-- 7i7 ! maximum am\nt all[able z a    
d$uction "u section #bbj7;b7 = ! taxable
 ye>1 ov]  7ii7 ! am\nt contribut$ to ! 
acc\nts = ! taxable ye>4  ,= purposes ( 
?is subsection1 any contribution :i* is 
di/ribut$ out ( ! small bus9ess em]g5cy 
sav+s acc\nt 9 a di/ribution to :i*     
section #bbj7;f77#c7 applies %all be    
treat$ z an am\nt n contribut$4  4  7d7 
,failure ,to provide reports on small   

bus9ess em]g5cy sav+s acc\nts ,section  
#ffic7;a77#b7 ( su* ,code is am5d$ by   
r$esignat+ subp>agraphs 7,d71 7,e71 &   
7,f7 z subp>agraphs 7,e71 7,f71 & 7,g71 
respectively1 & by ins]t+ aft]          
subp>agraph 7,c7 ! foll[+ new           
subp>agraph3  7,d7 section #bbj7;i7     
7relat+ to small bus9ess em]g5cy sav+s  
acc\nts71  4  7e7 ,cl]ical am5dm5t ,!   
table ( sections = "p ,,vi ( sub*apt] ,b
 ( *apt] #a ( su* ,code is am5d$ by add+
 at ! end ! foll[+3  ,sec4 #bbj4 ,small 
bus9ess em]g5cy sav+s acc\nts4  4  7f7  
,effective date ,! am5dm5ts made by ?is 
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjai4