itemized deductions for individuals and corporations) is 
amended by adding at the end the following new section: 
‘‘SEC. 200. SMALL BUSINESS EMERGENCY SAVINGS AC-
COUNTS. 
‘‘(a) DEDUCTION ALLOWED.—In the case of a eligi-
ble 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 deduc-
tion 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 sec-
tion 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 deter-
mined at the end of such taxable year but with-
out 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. 
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‘‘(c) ELIGIBLE BUSINESS.—For purposes of this sec-
tion, the term ‘eligible business’ means any person if— 
‘‘(1) such person carries on any trade or busi-
ness 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 pur-
poses of section 4980H(c)(2)) employed by such em-
ployer during the taxable year does not exceed 500. 
‘‘(d) SMALL BUSINESS EMERGENCY SAVINGS AC-
COUNT.—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 pur-
pose of paying the qualified disaster and public 
health emergency expenses of the account bene-
ficiary, but only if the written governing instrument 
creating the trust meets the following requirements: 
‘‘(A) Except in the case of a rollover con-
tribution described in subsection (f)(5), no con-
tribution will be accepted unless it is in cash. 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)), an insurance company (as de-
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fined in section 816), or another person who 
demonstrates to the satisfaction of the Sec-
retary 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 in-
vested 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 ‘quali-
fied 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
EX-
PENSES.—The term ‘disaster loss replacement ex-
penses’ means any expense paid or incurred in the 
ordinary course of a trade or business of the eligible 
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business to replace or repair casualty losses totaling 
$3,000 or more resulting from a federally declared 
disaster. 
‘‘(4) DISASTER
RECOVERY
OPERATIONS
EX-
PENSES.—The term ‘disaster recovery operations ex-
penses’ means the following amounts if paid or in-
curred in the ordinary course of a trade or business 
of the eligible business while the declaration with re-
spect 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 contribu-
tions. 
‘‘(C) Health care costs. 
‘‘(D) Rent, lease, or mortgage costs, in-
cluding property taxes. 
‘‘(E) Utilities. 
‘‘(5) 
PUBLIC
HEALTH
EMERGENCY
EX-
PENSES.—The term ‘public health emergency ex-
penses’ 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. 
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‘‘(6) FEDERALLY
DECLARED
DISASTER.—The 
term ‘federally declared disaster’ has the meaning 
given such term by section 165(i)(5). 
‘‘(7) PUBLIC
HEALTH
EMERGENCY
DECLARA-
TION.—The term ‘public health emergency declara-
tion’ means any declaration of a public health emer-
gency by the Secretary of Health and Human Serv-
ices under section 319 of the Public Health Service 
Act (42 U.S.C. 247d). 
‘‘(8) ACCOUNT
BENEFICIARY.—The term ‘ac-
count 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 emer-
gency savings account is exempt from taxation under 
this subtitle unless such account has ceased to be a 
small business emergency savings account. Notwith-
standing 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 sav-
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ings accounts, and any amount treated as distrib-
uted under such rules shall be treated as not used 
to pay qualified disaster and public health emer-
gency 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 emer-
gency expenses of any account beneficiary shall not 
be includible in gross income. 
‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 
QUALIFIED DISASTER AND PUBLIC HEALTH EMER-
GENCY EXPENSES.—Any amount paid or distributed 
out of a small business emergency savings account 
which is not used exclusively to pay the qualified dis-
aster and public health emergency expenses of the 
account beneficiary shall be included in the gross in-
come of such beneficiary. 
‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
any small business emergency savings account 
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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 busi-
ness for the taxable year in which it is received. 
‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
than a rollover contribution described in para-
graph (5)) which is not deductible under this 
section. 
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‘‘(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 dis-
tribution from a small business emergency sav-
ings account of such beneficiary which is includ-
ible 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 indi-
vidual, subparagraph (A) shall not apply if the 
payment or distribution is made after the ac-
count 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 contribu-
tion 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 ac-
count to the account beneficiary to the extent 
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the amount received is paid into a small busi-
ness 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 subpara-
graph (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 sub-
paragraph (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 2021, the 
$3,000 amount in subsection (d)(3) shall be in-
creased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which such taxable year begins deter-
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mined by substituting ‘calendar year 2020’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
‘‘(2) ROUNDING.—If any increase under para-
graph (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
DEPEND-
ENTS.—No deduction shall be allowed under this 
section to any individual with respect to whom a de-
duction under section 151 is allowable to another 
taxpayer for a taxable year beginning in the cal-
endar 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 eli-
gible 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 de-
duction for rollovers). 
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‘‘(B) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(C) Section 219(f)(5) (relating to em-
ployer payments). 
‘‘(D) Section 408(g) (relating to commu-
nity 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 treat-
ment after death of account beneficiary). 
‘‘(4) DENIAL OF DOUBLE BENEFIT.—No deduc-
tion shall be allowed under this chapter for any 
qualified disaster and public health emergency ex-
penses with respect to which any payment or dis-
tribution is excluded from gross income under sub-
section (f)(1). 
‘‘(i) REPORTS.—The Secretary may require the trust-
ee 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.’’. 
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(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL 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 ac-
count (within the meaning of section 220(d)),’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(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— 
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‘‘(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 sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of the accounts 
which were included in gross income under sec-
tion 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 contribu-
tion which is distributed out of the small busi-
ness emergency savings account in a distribu-
tion 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 sub-
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paragraphs (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 busi-
ness 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, 2020. 
Æ 
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