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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘SAVE for Small Busi-
nesses Act’’ or the ‘‘Savings Accounts for a Variable Econ-
omy for Small Businesses Act’’. 
SEC. 2. SMALL BUSINESS SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Chapter 77 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new section: 
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‘‘SEC. 7529. SMALL BUSINESS SAVINGS ACCOUNTS. 
‘‘(a) IN GENERAL.—Any eligible small business may 
enter into an agreement with the Secretary under this sec-
tion to establish a small business savings account with re-
spect to such business under terms which meet the re-
quirements 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 busi-
ness 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.— 
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‘‘(1) IN GENERAL.—Any qualified distribution 
from a small business savings account shall not be 
includible in gross income. 
‘‘(2) INCLUSION OF NONQUALIFIED DISTRIBU-
TIONS.—Any amounts distributed out of a small 
business savings account that are not qualified dis-
tributions 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 cer-
tified 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 pur-
poses of job retention or creation. 
‘‘(B) SPECIFIED
PERIOD
OF
ECONOMIC 
HARDSHIP.—The term ‘specified period of eco-
nomic hardship’ means— 
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‘‘(i) any 1-year period beginning im-
mediately after the end of any 3 consecu-
tive quarters during which the annual rate 
of real gross domestic product (as deter-
mined by the Bureau of Economic Analysis 
of the Department of Commerce) de-
creases, 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 Busi-
ness 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 Fed-
eral 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 speci-
fied period of economic hardship establish a dis-
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tribution limitation for qualified distributions 
from eligible small business accounts with re-
spect to such period. The aggregate qualified 
distributions for any such period from all ac-
counts with respect to an eligible small business 
shall not exceed such limitation. 
‘‘(E) AMOUNTS NOT USED FOR REINVEST-
MENT.—Any distribution not used in the man-
ner certified under subparagraph (A)(ii) shall 
be treated as a distribution other than a quali-
fied distribution in the taxable year of such dis-
tribution. 
‘‘(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 sen-
tence, 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 
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small business savings account. Notwithstanding the pre-
ceding 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. organiza-
tions). 
‘‘(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 pre-
ceding 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 
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