I
118THCONGRESS
1
STSESSION H. R. 313
To amend the Internal Revenue Code of 1986 to provide emergency savings
accounts for small businesses.
IN THE HOUSE OF REPRESENTATIVES
JANUARY12, 2023
Mr. C
LOUDintroduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
emergency savings accounts for small businesses.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Small Business Emer-4
gency Savings Accounts Act of 2023’’. 5
SEC. 2. DEDUCTION FOR CONTRIBUTIONS TO SMALL BUSI-6
NESS EMERGENCY SAVINGS ACCOUNTS. 7
(a) I
NGENERAL.—Part VI of subchapter B of chap-8
ter 1 of the Internal Revenue Code of 1986 (relating to 9
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itemized deductions for individuals and corporations) is 1
amended by adding at the end the following new section: 2
‘‘SEC. 200. SMALL BUSINESS EMERGENCY SAVINGS AC-3
COUNTS. 4
‘‘(a) D
EDUCTIONALLOWED.—In the case of a eligi-5
ble business, there shall be allowed as a deduction for the 6
taxable year an amount equal to the aggregate amount 7
paid during such taxable year by such business to a small 8
business emergency savings account of such business. 9
‘‘(b) L
IMITATION.—The amount allowed as a deduc-10
tion under subsection (a) to any business for any taxable 11
year shall not exceed the lesser of— 12
‘‘(1) 25 percent of the wages (as defined in sec-13
tion 3121(a)) paid by the eligible business during 14
such taxable year, or 15
‘‘(2) the greater of— 16
‘‘(A) zero, or 17
‘‘(B) the maximum amount which when 18
added to the balance of such account (as deter-19
mined at the end of such taxable year but with-20
out regard to contributions made during such 21
taxable year) would not result in such balance 22
(as so determined) to exceed 150 percent of 23
wages (as defined in section 3121(a)) paid by 24
the eligible business during such taxable year. 25
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‘‘(c) ELIGIBLEBUSINESS.—For purposes of this sec-1
tion, the term ‘eligible business’ means any person if— 2
‘‘(1) such person carries on any trade or busi-3
ness in the United States (other than the trade or 4
business of being an employee), and 5
‘‘(2) the average number of full-time employees 6
(as determined for purposes of determining whether 7
an employer is an applicable large employer for pur-8
poses of section 4980H(c)(2)) employed by such em-9
ployer during the taxable year does not exceed 500. 10
‘‘(d) S
MALLBUSINESSEMERGENCYSAVINGSAC-11
COUNT.—For purposes of this section— 12
‘‘(1) I
N GENERAL.—The term ‘small business 13
emergency savings account’ means a trust created or 14
organized in the United States as a small business 15
emergency savings account exclusively for the pur-16
pose of paying the qualified disaster and public 17
health emergency expenses of the account bene-18
ficiary, but only if the written governing instrument 19
creating the trust meets the following requirements: 20
‘‘(A) Except in the case of a rollover con-21
tribution described in subsection (f)(5), no con-22
tribution will be accepted unless it is in cash. 23
‘‘(B) The trustee is a bank (as defined in 24
section 408(n)), an insurance company (as de-25
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fined in section 816), or another person who 1
demonstrates to the satisfaction of the Sec-2
retary that the manner in which such person 3
will administer the trust will be consistent with 4
the requirements of this section. 5
‘‘(C) No part of the trust assets will be in-6
vested in life insurance contracts. 7
‘‘(D) The assets of the trust will not be 8
commingled with other property except in a 9
common trust fund or common investment 10
fund. 11
‘‘(E) The interest of account beneficiary in 12
the balance in the account is nonforfeitable. 13
‘‘(2) Q
UALIFIED DISASTER AND PUBLIC 14
HEALTH EMERGENCY EXPENSES .—The term ‘quali-15
fied disaster and public health emergency expenses’ 16
means— 17
‘‘(A) disaster loss replacement expenses, 18
‘‘(B) disaster recovery operations expenses, 19
and 20
‘‘(C) public health emergency expenses. 21
‘‘(3) D
ISASTER LOSS REPLACEMENT EX -22
PENSES.—The term ‘disaster loss replacement ex-23
penses’ means any expense paid or incurred in the 24
ordinary course of a trade or business of the eligible 25
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business to replace or repair casualty losses totaling 1
$3,000 or more resulting from a federally declared 2
disaster. 3
‘‘(4) D
ISASTER RECOVERY OPERATIONS EX -4
PENSES.—The term ‘disaster recovery operations ex-5
penses’ means the following amounts if paid or in-6
curred in the ordinary course of a trade or business 7
of the eligible business while the declaration with re-8
spect to a federally declared disaster is in effect: 9
‘‘(A) Wages (as defined in section 3121(a)) 10
and taxes imposed under section 3111. 11
‘‘(B) Unemployment insurance contribu-12
tions. 13
‘‘(C) Health care costs. 14
‘‘(D) Rent, lease, or mortgage costs, in-15
cluding property taxes. 16
‘‘(E) Utilities. 17
‘‘(5) P
UBLIC HEALTH EMERGENCY EX -18
PENSES.—The term ‘public health emergency ex-19
penses’ means amounts described in subparagraphs 20
(A) through (E) of paragraph (4) if paid or incurred 21
in the ordinary course of a trade or business of the 22
eligible business while a public health emergency 23
declaration is in effect. 24
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‘‘(6) FEDERALLY DECLARED DISASTER .—The 1
term ‘federally declared disaster’ has the meaning 2
given such term by section 165(i)(5). 3
‘‘(7) P
UBLIC HEALTH EMERGENCY DECLARA -4
TION.—The term ‘public health emergency declara-5
tion’ means any declaration of a public health emer-6
gency by the Secretary of Health and Human Serv-7
ices under section 319 of the Public Health Service 8
Act (42 U.S.C. 247d). 9
‘‘(8) A
CCOUNT BENEFICIARY .—The term ‘ac-10
count beneficiary’ means the eligible business on 11
whose behalf the small business emergency savings 12
account was established. 13
‘‘(e) T
REATMENT OFACCOUNT.— 14
‘‘(1) I
N GENERAL.—A small business emer-15
gency savings account is exempt from taxation under 16
this subtitle unless such account has ceased to be a 17
small business emergency savings account. Notwith-18
standing the preceding sentence, any such account is 19
subject to the taxes imposed by section 511 (relating 20
to imposition of tax on unrelated business income of 21
charitable, etc. organizations). 22
‘‘(2) A
CCOUNT TERMINATIONS .—Rules similar 23
to the rules of paragraphs (2) and (4) of section 24
408(e) shall apply to small business emergency sav-25
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ings accounts, and any amount treated as distrib-1
uted under such rules shall be treated as not used 2
to pay qualified disaster and public health emer-3
gency expenses. 4
‘‘(f) T
AXTREATMENT OFDISTRIBUTIONS.— 5
‘‘(1) A
MOUNTS USED FOR QUALIFIED DISASTER 6
AND PUBLIC HEALTH EMERGENCY EXPENSES .—Any 7
amount paid or distributed out of a small business 8
emergency savings account which is used exclusively 9
to pay qualified disaster and public health emer-10
gency expenses of any account beneficiary shall not 11
be includible in gross income. 12
‘‘(2) I
NCLUSION OF AMOUNTS NOT USED FOR 13
QUALIFIED DISASTER AND PUBLIC HEALTH EMER -14
GENCY EXPENSES.—Any amount paid or distributed 15
out of a small business emergency savings account 16
which is not used exclusively to pay the qualified dis-17
aster and public health emergency expenses of the 18
account beneficiary shall be included in the gross in-19
come of such beneficiary. 20
‘‘(3) E
XCESS CONTRIBUTIONS RETURNED BE -21
FORE DUE DATE OF RETURN .— 22
‘‘(A) I
N GENERAL.—If any excess con-23
tribution is contributed for a taxable year to 24
any small business emergency savings account 25
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of an eligible business, paragraph (2) shall not 1
apply to distributions from the small business 2
emergency savings accounts of such eligible 3
business (to the extent such distributions do not 4
exceed the aggregate excess contributions to all 5
such accounts of such eligible business for such 6
year) if— 7
‘‘(i) such distribution is received by 8
the eligible business on or before the last 9
day prescribed by law (including extensions 10
of time) for filing such eligible business’s 11
return for such taxable year, and 12
‘‘(ii) such distribution is accompanied 13
by the amount of net income attributable 14
to such excess contribution. 15
Any net income described in clause (ii) shall be 16
included in the gross income of the eligible busi-17
ness for the taxable year in which it is received. 18
‘‘(B) E
XCESS CONTRIBUTION .—For pur-19
poses of subparagraph (A), the term ‘excess 20
contribution’ means any contribution (other 21
than a rollover contribution described in para-22
graph (5)) which is not deductible under this 23
section. 24
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‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT 1
USED FOR QUALIFIED DISASTER AND PUBLIC 2
HEALTH EMERGENCY EXPENSES .— 3
‘‘(A) I
N GENERAL.—The tax imposed by 4
this chapter on the account beneficiary for any 5
taxable year in which there is a payment or dis-6
tribution from a small business emergency sav-7
ings account of such beneficiary which is includ-8
ible in gross income under paragraph (2) shall 9
be increased by 20 percent of the amount which 10
is so includible. 11
‘‘(B) E
XCEPTION FOR DISABILITY OR 12
DEATH.—If the eligible business is an indi-13
vidual, subparagraph (A) shall not apply if the 14
payment or distribution is made after the ac-15
count beneficiary becomes disabled within the 16
meaning of section 72(m)(7) or dies. 17
‘‘(5) R
OLLOVER CONTRIBUTION .—An amount is 18
described in this paragraph as a rollover contribu-19
tion if it meets the requirements of subparagraphs 20
(A) and (B). 21
‘‘(A) I
N GENERAL.—Paragraph (2) shall 22
not apply to any amount paid or distributed 23
from a small business emergency savings ac-24
count to the account beneficiary to the extent 25
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the amount received is paid into a small busi-1
ness emergency savings account for the benefit 2
of such beneficiary not later than the 60th day 3
after the day on which the beneficiary receives 4
the payment or distribution. 5
‘‘(B) L
IMITATION.—This paragraph shall 6
not apply to any amount described in subpara-7
graph (A) received by an eligible business from 8
a small business emergency savings account if, 9
at any time during the 1-year period ending on 10
the day of such receipt, such eligible business 11
received any other amount described in sub-12
paragraph (A) from a small business emergency 13
savings account which was not includible in the 14
small business’s gross income because of the 15
application of this paragraph. 16
‘‘(g) C
OST-OF-LIVINGADJUSTMENT.— 17
‘‘(1) I
N GENERAL.—In the case of any taxable 18
year beginning in a calendar year after 2023, the 19
$3,000 amount in subsection (d)(3) shall be in-20
creased by an amount equal to— 21
‘‘(A) such dollar amount, multiplied by 22
‘‘(B) the cost-of-living adjustment deter-23
mined under section 1(f)(3) for the calendar 24
year in which such taxable year begins deter-25
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mined by substituting ‘calendar year 2022’ for 1
‘calendar year 2016’ in subparagraph (A)(ii) 2
thereof. 3
‘‘(2) R
OUNDING.—If any increase under para-4
graph (1) is not a multiple of $50, such increase 5
shall be rounded to the nearest multiple of $50. 6
‘‘(h) S
PECIALRULES.— 7
‘‘(1) D
ENIAL OF DEDUCTION TO DEPEND -8
ENTS.—No deduction shall be allowed under this 9
section to any individual with respect to whom a de-10
duction under section 151 is allowable to another 11
taxpayer for a taxable year beginning in the cal-12
endar year in which such individual’s taxable year 13
begins. 14
‘‘(2) T
AXABLE YEAR MUST BE FULL TAXABLE 15
YEAR.—Except in the case of a taxable year closed 16
by reason of the death of an individual who is an eli-17
gible business, no deduction shall be allowed under 18
this section in the case of a taxable year covering a 19
period of less than 12 months. 20
‘‘(3) C
ERTAIN RULES TO APPLY .—Rules similar 21
to the following rules shall apply for purposes of this 22
section: 23
‘‘(A) Section 219(d)(2) (relating to no de-24
duction for rollovers). 25
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‘‘(B) Section 219(f)(3) (relating to time 1
when contributions deemed made). 2
‘‘(C) Section 219(f)(5) (relating to em-3
ployer payments). 4
‘‘(D) Section 408(g) (relating to commu-5
nity property laws). 6
‘‘(E) Section 408(h) (relating to custodial 7
accounts). 8
‘‘(F) Section 223(f)(7) (relating to transfer 9
of account incident to divorce). 10
‘‘(G) Section 223(f)(8) (relating to treat-11
ment after death of account beneficiary). 12
‘‘(4) D
ENIAL OF DOUBLE BENEFIT .—No deduc-13
tion shall be allowed under this chapter for any 14
qualified disaster and public health emergency ex-15
penses with respect to which any payment or dis-16
tribution is excluded from gross income under sub-17
section (f)(1). 18
‘‘(i) R
EPORTS.—The Secretary may require the trust-19
ee of a small business emergency savings account to make 20
such reports regarding such account to the Secretary and 21
to the account beneficiary with respect to contributions, 22
distributions, the return of excess contributions, and such 23
other matters as the Secretary determines appropriate.’’. 24
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(b) DEDUCTIONALLOWEDWHETHER ORNOTINDI-1
VIDUALITEMIZESOTHERDEDUCTIONS.—Section 62(a) 2
of such Code is amended by inserting after paragraph (21) 3
the following new paragraph: 4
‘‘(22) S
MALL BUSINESS EMERGENCY SAVINGS 5
ACCOUNTS.—In the case of an individual who is an 6
eligible business, the deduction allowed by section 7
200.’’. 8
(c) T
AX ONEXCESSCONTRIBUTIONS.—Section 4973 9
of such Code (relating to tax on excess contributions to 10
certain tax-favored accounts and annuities) is amended— 11
(1) by striking ‘‘or’’ at the end of subsection 12
(a)(5), by inserting ‘‘or’’ at the end of subsection 13
(a)(6), and by inserting after subsection (a)(6) the 14
following new paragraph: 15
‘‘(7) a small business emergency savings ac-16
count (within the meaning of section 220(d)),’’; and 17
(2) by adding at the end the following new sub-18
section: 19
‘‘(i) E
XCESSCONTRIBUTIONS TO SMALLBUSINESS 20
E
MERGENCYSAVINGSACCOUNTS.—For purposes of this 21
section, in the case of small business emergency savings 22
accounts (within the meaning of section 220(d)), the term 23
‘excess contributions’ means the sum of— 24
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‘‘(1) the aggregate amount contributed for the 1
taxable year to the accounts (other than a rollover 2
contribution described in section 220(f)(5)) which is 3
not allowable as a deduction under section 220 for 4
such year, and 5
‘‘(2) the amount determined under this sub-6
section for the preceding taxable year, reduced by 7
the sum of— 8
‘‘(A) the distributions out of the accounts 9
which were included in gross income under sec-10
tion 220(f)(2), and 11
‘‘(B) the excess (if any) of— 12
‘‘(i) the maximum amount allowable 13
as a deduction under section 220(b) for 14
the taxable year, over 15
‘‘(ii) the amount contributed to the 16
accounts for the taxable year. 17
For purposes of this subsection, any contribu-18
tion which is distributed out of the small busi-19
ness emergency savings account in a distribu-20
tion to which section 220(f)(3) applies shall be 21
treated as an amount not contributed.’’. 22
(d) F
AILURETOPROVIDEREPORTS ON SMALL 23
B
USINESSEMERGENCY SAVINGSACCOUNTS.—Section 24
6693(a)(2) of such Code is amended by redesignating sub-25
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paragraphs (D), (E), and (F) as subparagraphs (E), (F), 1
and (G), respectively, and by inserting after subparagraph 2
(C) the following new subparagraph: 3
‘‘(D) section 220(i) (relating to small busi-4
ness emergency savings accounts),’’. 5
(e) C
LERICALAMENDMENT.—The table of sections 6
for part VI of subchapter B of chapter 1 of such Code 7
is amended by adding at the end the following: 8
‘‘Sec. 200. Small business emergency savings accounts.’’.
(f) EFFECTIVEDATE.—The amendments made by 9
this section shall apply to taxable years beginning after 10
December 31, 2022. 11
Æ
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