Savings Accounts for a Variable Economy for Small Businesses Act

Summary: SAVE for Small Businesses Act or the Savings Accounts for a Variable Economy for Small Businesses Act - Amends the Internal Revenue Code to provide for tax-exempt small business savings accounts. Allows tax deductible contributions to such accounts of not more than 10% of the gross profits of an eligible small business (persons employing an average of 50 or fewer full-time employees)&nbsp;for the preceding taxable year.  Excludes qualified distributions from such accounts from gross income for income tax purposes. Defines "qualified distribution" as: (1) any amount that is distributed from a small business savings account during a specified period of economic hardship, and (2) the distribution of which is certified as being part of a plan that provides for the reinvestment of such distribution for the funding of worker hiring or financial stabilization for the purposes of job retention or creation.  Directs the Secretary of the Treasury to: (1) establish minimum standards for small business savings accounts that seek to minimize fees and risk of loss of principal, and (2) ensure a range of investment risk options available to account beneficiaries. 

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:
    ``(h) 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.