I 

113TH CONGRESS 

2D SESSION H. R. 5427 

To amend the Internal Revenue Code of 1986 to establish small business 

savings accounts. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 9, 2014 

Mr. ISRAEL (for himself and Mr. BISHOP of New York) 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘SAVE for Small Busi5 nesses Act’’ or the ‘‘Savings Accounts for a Variable Econ6 omy for Small Businesses Act’’. 

7 SEC. 2. SMALL BUSINESS SAVINGS ACCOUNTS. 

8 (a) IN GENERAL.—Chapter 77 of the Internal Rev9 enue Code of 1986 is amended by adding at the end the 

10 following new section: 


rfrederick on DSK6VPTVN1PROD with BILLS
2 

•HR 5427 IH

1 ‘‘SEC. 7529. SMALL BUSINESS SAVINGS ACCOUNTS. 

2 ‘‘(a) IN GENERAL.—Any eligible small business may 

3 enter into an agreement with the Secretary under this sec4 tion to establish a small business savings account with re5 spect to such business under terms which meet the re6 quirements of this section. 

7 ‘‘(b) SMALL BUSINESS SAVINGS ACCOUNTS.—For 

8 purposes of this section, the term ‘small business savings 

9 account’ means a tax preferred savings account which is 

10 designated at the time of establishment of the plan as a 

11 small business savings account. Such designation shall be 

12 made in such manner as the Secretary may by regulation 

13 prescribe. 

14 ‘‘(c) CONTRIBUTIONS.— 

15 ‘‘(1) DEDUCTION.—There shall be allowed as a 

16 deduction an amount equal to the contributions to a 

17 small business savings account for the taxable year. 

18 ‘‘(2) LIMITATION.—The aggregate amount of 

19 contributions for any taxable year to all small busi20 ness savings accounts maintained for the benefit of 

21 an eligible small business shall not exceed an 

22 amount equal to 10 percent of the gross profits of 

23 the business for the preceding taxable year. 

24 ‘‘(d) DISTRIBUTIONS.— 


rfrederick on DSK6VPTVN1PROD with BILLS
3 

•HR 5427 IH

1 ‘‘(1) IN GENERAL.—Any qualified distribution 

2 from a small business savings account shall not be 

3 includible in gross income. 

4 ‘‘(2) INCLUSION OF NONQUALIFIED DISTRIBU5 TIONS.—Any amounts distributed out of a small 

6 business savings account that are not qualified dis7 tributions shall be included in gross income for the 

8 taxable year of the distribution. 

9 ‘‘(3) QUALIFIED DISTRIBUTION.—For purposes 

10 of this subsection— 

11 ‘‘(A) IN GENERAL.—The term ‘qualified 

12 distribution’ means any amount— 

13 ‘‘(i) distributed from a small business 

14 savings account during a specified period 

15 of economic hardship, and 

16 ‘‘(ii) the distribution of which is cer17 tified by the taxpayer as part of a plan 

18 which provides for the reinvestment of 

19 such distribution for the funding of worker 

20 hiring or financial stabilization for the pur21 poses of job retention or creation. 

22 ‘‘(B) SPECIFIED PERIOD OF ECONOMIC

23 HARDSHIP.—The term ‘specified period of eco24 nomic hardship’ means— 


rfrederick on DSK6VPTVN1PROD with BILLS
4 

•HR 5427 IH

1 ‘‘(i) any 1-year period beginning im2 mediately after the end of any 3 consecu3 tive quarters during which the annual rate 

4 of real gross domestic product (as deter5 mined by the Bureau of Economic Analysis 

6 of the Department of Commerce) de7 creases, or 

8 ‘‘(ii) any period, in no event shorter 

9 than 1 year, specified by the Administrator 

10 of the Small Business Administration for 

11 purposes of this section. 

12 ‘‘(C) FEDERALLY DECLARED DISASTER

13 AREAS.—The Administrator of the Small Busi14 ness Administration may specify a period under 

15 subparagraph (B)(ii) with respect to a specified 

16 area in the case of an area determined by the 

17 President to warrant assistance from the Fed18 eral Government under the Robert T. Stafford 

19 Disaster Relief and Emergency Assistance Act 

20 (as in effect on the date of the enactment of the 

21 SAVE for Small Businesses Act). 

22 ‘‘(D) LIMITATION.—The Administrator of 

23 the Small Business Administration shall, in 

24 consultation with the Secretary, for each speci25 fied period of economic hardship establish a disVerDate Mar 15 2010 01:55 Sep 11, 2014 Jkt 039060 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5427.IH H5427

rfrederick on DSK6VPTVN1PROD with BILLS
5 

•HR 5427 IH

1 tribution limitation for qualified distributions 

2 from eligible small business accounts with re3 spect to such period. The aggregate qualified 

4 distributions for any such period from all ac5 counts with respect to an eligible small business 

6 shall not exceed such limitation. 

7 ‘‘(E) AMOUNTS NOT USED FOR REINVEST8 MENT.—Any distribution not used in the man9 ner certified under subparagraph (A)(ii) shall 

10 be treated as a distribution other than a quali11 fied distribution in the taxable year of such dis12 tribution. 

13 ‘‘(F) EIGHT-YEAR RULE.—Any amount 

14 contributed to a small business savings account 

15 (and any earnings attributable thereto), once 

16 distributed, shall not be treated as a qualified 

17 distribution unless such distribution is made 

18 not later than 8 years after the date of such 

19 contribution. For purposes of the preceding sen20 tence, amounts (and the earnings attributable 

21 thereto) shall be treated as distributed on a 

22 first-in first-out basis. 

23 ‘‘(e) TAX TREATMENT OF ACCOUNT.—Any small 

24 business savings account is exempt from taxation under 

25 this subtitle A unless such account has ceased to be a 


rfrederick on DSK6VPTVN1PROD with BILLS
6 

•HR 5427 IH

1 small business savings account. Notwithstanding the pre2 ceding sentence, any such account is subject to the taxes 

3 imposed by section 511 (relating to imposition of tax on 

4 unrelated business income of charitable, etc. organiza5 tions). 

6 ‘‘(f) ELIGIBLE SMALL BUSINESS.—For purposes of 

7 this section— 

8 ‘‘(1) IN GENERAL.—The term ‘eligible small 

9 business’ means, with respect to any calendar year, 

10 any person if the annual average number of full-time 

11 employees employed by such person during the pre12 ceding calendar year was 50 or fewer. For purposes 

13 of the preceding sentence, a preceding calendar year 

14 may be taken into account only if the person was in 

15 existence throughout the year. 

16 ‘‘(2) FULL-TIME EMPLOYEES.— 

17 ‘‘(A) IN GENERAL.—The term ‘full-time 

18 employee’ means, with respect to any year, an 

19 employee who is employed on average at least 

20 40 hours of service per week. 

21 ‘‘(B) HOURS OF SERVICE.—The Secretary, 

22 in consultation with the Secretary of Labor, 

23 shall prescribe such regulations, rules, and 

24 guidance as may be necessary to determine the 

25 hours of service of an employee, including rules 


rfrederick on DSK6VPTVN1PROD with BILLS
7 

•HR 5427 IH

1 for the application of this paragraph to employ2 ees who are not compensated on an hourly 

3 basis. 

4 ‘‘(3) STARTUPS, CONTROLLED GROUPS, AND

5 PREDECESSORS.—Rules similar to the rules of sub6 paragraphs (B) and (D) of section 220(c)(4) shall 

7 apply for purposes of this subsection. 

8 ‘‘(g) EFFECT OF PLEDGING ACCOUNT AS SECU9 RITY.—If, during any taxable year of the eligible small 

10 business for whose benefit an account is established, the 

11 account or any portion thereof is pledged as security for 

12 a loan, the portion so pledged shall be treated as distrib13 uted in a distribution other than a qualified distribution.’’. 

14 (b) SMALL BUSINESS SAVINGS ACCOUNT PRO15 GRAMS.— 

16 (1) IN GENERAL.—The Secretary of the Treas17 ury shall establish a program to administer small 

18 business savings accounts under section 7529 of the 

19 Internal Revenue Code of 1986. 

20 (2) ACCOUNT STANDARDS.—The Secretary 

21 shall establish minimum standards for small busi22 ness savings accounts and shall establish accounts 

23 within the Department of the Treasury or enter into 

24 agreements with trustees that meet these standards 

25 to administer such accounts. In establishing such 


rfrederick on DSK6VPTVN1PROD with BILLS
8 

•HR 5427 IH

1 standards and making such agreements the Sec2 retary shall, to the extent practicable, seek to mini3 mize fees, minimize risk of loss of principal, and en4 sure a range of investment risk options available to 

5 account beneficiaries. 

6 (c) EXCESS CONTRIBUTIONS.—Section 4973 of the 

7 Internal Revenue Code of 1986 is amended by adding at 

8 the end the following new subsection: 

9 ‘‘(h) EXCESS CONTRIBUTIONS TO SMALL BUSINESS

10 SAVINGS ACCOUNTS.—For purposes of this section, in the 

11 case of contributions to all small business savings accounts 

12 (within the meaning of section 7529(b)) maintained for 

13 the benefit of an individual, the term ‘excess contributions’ 

14 means the sum of— 

15 ‘‘(1) the excess (if any) of— 

16 ‘‘(A) the amount contributed to such ac17 counts for the taxable year, over 

18 ‘‘(B) the amount allowable as a contribu19 tion under section 7529(c)(2) for such taxable 

20 year, and 

21 ‘‘(2) the amount determined under this sub22 section for the preceding taxable year, reduced by 

23 the sum of— 

24 ‘‘(A) the distributions out of the accounts 

25 for the taxable year, and 


rfrederick on DSK6VPTVN1PROD with BILLS
9 

•HR 5427 IH

1 ‘‘(B) the excess (if any) of— 

2 ‘‘(i) the maximum amount allowable 

3 as a contribution under section 7529(c)(2) 

4 for such taxable year, over 

5 ‘‘(ii) the amount contributed to such 

6 accounts for such taxable year.’’. 

7 (d) CLERICAL AMENDMENT.—The table of sections 

8 for chapter 77 of the Internal Revenue Code of 1986 is 

9 amended by adding at the end the following new item: 

‘‘Sec. 7529. Small Business Savings Accounts.’’. 

10 (e) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to taxable years beginning after 

12 the date of the enactment of this Act. 

Æ 


rfrederick on DSK6VPTVN1PROD with BILLS