NY A10382

Small businesses are authorized to establish and deposit profits into tax-deferred savings accounts, with withdrawals allowed tax-free only when the Commissioner of Labor declares an economic downturn.

Withdrawals from these accounts made when no economic downturn has been declared are taxable as income under New York tax law.

Beginning January 1, 2013, small businesses are exempt from all taxes on withdrawals from tax-deferred savings accounts made during a declared economic downturn.

The Commissioner of Labor must calculate and publish a monthly composite index of business cycle indicators using employment, manufacturing hours, unemployment, and sales tax data, with an economic downturn declared when the index declines for five consecutive months.

The Commissioner must notify the Governor, Assembly Speaker, Senate President, and legislative minority leaders when an economic downturn is declared.