See other bills
under the
same topic
PRINTER'S NO. 2862
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2192
Session of
2024
INTRODUCED BY KHAN, FLICK, DALEY, ORTITAY, GIRAL, PROKOPIAK,
SANCHEZ, SIEGEL, HILL-EVANS, DONAHUE, CURRY, WAXMAN, PROBST,
KENYATTA, BOROWSKI, RADER, GAYDOS, CERRATO, NEILSON AND
SCHLOSSBERG, APRIL 8, 2024
REFERRED TO COMMITTEE ON COMMERCE, APRIL 8, 2024
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," providing for business catastrophe savings
accounts.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding an article to
read:
ARTICLE XXIX-I
BUSINESS CATASTROPHE SAVINGS ACCOUNTS
Section 2901-I. Scope of article.
This article relates to business catastrophe savings
accounts.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Section 2902-I. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account holder." A qualified business that holds a business
catastrophe savings account.
"Business catastrophe savings account." A business
catastrophe savings account opened under section 2903-I(a).
"Catastrophic event." A natural disaster involving a
windstorm, earthquake, hurricane, ice storm, tornado, high
winds, flood, forest fire, hail, force majeure or similar
natural disaster, whether covered by insurance or not. The term
includes an event or occurrence for which a presidential
disaster declaration is declared or declaration of disaster
emergency is declared by the Governor under 35 Pa.C.S. ยง 7301(c)
(relating to general authority of Governor).
"Department." The Department of Revenue of the Commonwealth.
"Financial institution." A bank, trust company, savings
institution, credit union, broker-dealer, insurance company,
mutual fund or similar entity authorized to do business in this
Commonwealth.
"Qualified business." A business that is independently owned
and meets all of the following criteria:
(1) Is headquartered in this Commonwealth.
(2) Employs 100 or fewer employees.
(3) Has annual revenues of less than $10,000,000 in each
of the last three tax years.
(4) Is not dominant in its field.
"Qualifying catastrophe expense." A business expenditure
that covers the costs remaining after an insurance claim is
20240HB2192PN2862 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
settled as a result of a catastrophic event. The term includes
new construction, rebuilding or renovations to an existing
building, the construction of measures to mitigate future
catastrophic events, improvements to accessibility, safety
improvements to a building, the payment of employee wages or
reimbursing employees for expenses relating to a catastrophic
event.
Section 2903-I. Authorization of business catastrophe savings
accounts.
(a) Designation of account.--Beginning six months after the
effective date of this subsection, a qualified business may open
a business catastrophe savings account with a financial
institution.
(b) Use of account.--An account holder may only use money
contributed to a business catastrophe savings account to pay or
reimburse the account holder's qualifying catastrophe expense
for recovery and repair after a catastrophic event.
(c) Expenses.--An account holder may not use money
contributed to a business catastrophe savings account to pay the
expenses of the account, except that the financial institution
holding the account may deduct a service fee from the account.
(d) Contributions to account.--
(1) An account holder may contribute no more than
$50,000 in each taxable year to a business catastrophe
savings account.
(2) The maximum balance of a business catastrophe
savings account at one time may not exceed $750,000.
(e) Transfer of money.--An account holder may withdraw money
from a business catastrophe savings account and transfer money
into a new business catastrophe savings account held by a
20240HB2192PN2862 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
financial institution.
Section 2904-I. Deduction and exclusion from taxable income.
(a) Deduction of contributions.--Except as otherwise
provided under subsection (c), the amount contributed to a
business catastrophe savings account by an account holder shall
be deductible, up to the contribution limit under section 2903-
I(d)(1), from the taxable income of the account holder under
Articles III, IV, V and VI during the taxable year when the
contribution was made.
(b) Exclusion of earnings.--Except as otherwise provided
under subsection (c), the amount of earnings on a business
catastrophe savings account during a taxable year may be
excluded from the taxable income of an account holder under
Article III.
(c) Limitations on deductions and exclusions.--An account
holder may claim a deduction or exclusion under this section:
(1) for a period of no more than 10 years;
(2) for an aggregate amount of principal and earnings
not to exceed $750,000 within 10 years; and
(3) except as otherwise provided in section 2903-I(e),
only if the principal and earnings of the business
catastrophe savings account remain in the account until a
withdrawal is made for a qualifying catastrophe expense by
the account holder.
(d) Unqualified expenses.--If an amount is withdrawn from a
business catastrophe savings account by an account holder and is
not used for a qualifying catastrophe expense, the department
shall consider the amount of the withdrawal as taxable income of
the account holder under Articles III, IV, V and VI.
(e) Bankruptcy declaration.--If an account holder declares
20240HB2192PN2862 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
bankruptcy under 11 U.S.C. ( relating to bankruptcy) , the
financial institution holding the account holder's business
catastrophe savings ac count may distribute the money in the
account and close the account. The department shall consider the
amount distributed from a business catastrophe savings account
under this subsection as taxable income of the account holder
under Articles III, IV, V and VI.
(f) Business closures.--If the qualified business closes
permanently, the financial institution holding the account
holder's business catastrophe savings ac count may distribute the
money in the account and close the account. The department shall
consider the amount distributed from a business catastrophe
savings account under this subsection as taxable income of the
account holder under Articles III, IV, V and VI.
(g) Business sale or transfer of ownership.--If the
qualified business is sold or transferred to new ownership, the
new account holder shall submit proof to the department that the
new account holder is a qualified business. If the new account
holder does not submit proof to the department that the new
account holder is a qualified business within 60 days of the
sale or transfer of ownership, the department shall deem the
business to be unqualified under this article and the financial
institution holding the new account holder's business
catastrophe savings ac count may distribute the money in the
account and close the account. The department shall consider the
amount distributed from a business catastrophe savings account
under this subsection as taxable income of the account holder
under Articles III, IV, V and VI.
(h) Disqualification.--If a business employs 101 or greater
employees, has a revenue of $10,000,001 or greater within the
20240HB2192PN2862 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
last three tax years, becomes dominant in its field or moves its
headquarters outside this Commonwealth, the business shall cease
to be a qualified business under this article and the financial
institution holding the account holder's business catastrophe
savings ac count may distribute the money in the account and
close the account. The department shall consider the amount
distributed from a business catastrophe savings account under
this subsection as taxable income of the account holder under
Articles III, IV, V and VI.
Section 2905-I. Reports.
An account holder shall submit a report to the department of
all of the following:
(1) Upon a withdrawal of money from a business
catastrophe savings account, a detailed record of each
qualifying catastrophe expense for which the money was
applied and a statement of the amount of money remaining in
the account.
(2) On the account holder's personal income tax return:
(i) information regarding the business catastrophe
savings account, including a list of deposits,
withdrawals and any other transactions for the account
during the taxable year;
(ii) the form 1099-MISC or 1099-NEC issued by the
financial institution holding the account; and
(iii) any other information required by the
department.
(3) During each taxable year, a detailed record of the
business' qualifications for the b usiness catastrophe savings
account , including all of the following:
(i) Annual revenue for the last three taxable years.
20240HB2192PN2862 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(ii) The number of full-time, part-time and seasonal
employees.
(iii) Proof of the business being headquartered in
this Commonwealth.
(iv) Any other information required by the
department.
Section 2906-I. Duties of financial i nstitutions.
(a) Designation.--A financial institution shall designate an
account as a business catastrophe savings account.
(b) Limitations.--A financial institution may not be
required or be held liable to do any of the following:
(1) Track the use of money withdrawn from a business
catastrophe savings account.
(2) Allocate money in a business catastrophe savings
account among joint account holders or multiple qualified
beneficiaries.
(3) Report any information to the department or any
other governmental agency that is not otherwise required by
Federal or State law.
(4) Determine if an account satisfies the requirements
to be a business catastrophe savings account.
(5) Ensure that money in a business catastrophe savings
account is used for a qualifying catastrophe expense.
(6) Report or remit taxes or penalties relating to the
use of a business catastrophe savings account.
(c) Imposition of fees.--A financial institution may impose
reasonable fees on a business catastrophe savings account in the
same manner as the financial institution imposes reasonable fees
on other savings accounts.
(d) Distribution of money.--Upon proof of the closure or
20240HB2192PN2862 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
bankruptcy of a qualified business, the financial institution
holding the account holder's business catastrophe savings
ac count may distribute the money in the account and close the
account in accordance with the contract terms governing the
account.
Section 2907-I . Withdrawal for purposes other than qualifying
catastrophe expenses.
Except as permitted under section 2903-I(e) , if an account
holder withdraws money from a business catastrophe savings
account and uses the withdrawal for a purpose other than a
qualifying catastrophe expense, the department shall consider
the entire amount withdrawn as interest income under Articles
III, IV, V and VI for the taxable year when the withdrawal was
made.
Section 2908-I. Duties of department.
(a) Forms.-- The department shall prepare forms for the
following purposes:
(1) Designating an account with a financial institution
as a business catastrophe savings account.
(2) Allowing an account holder to annually submit to the
department detailed information regarding the account
holder's business catastrophe savings account, including a
list of transactions for the account during a taxable year
and identifying any supporting documentation that is required
to be maintained by the account holder.
(b) Regulations.--The department may promulgate regulations
as necessary to implement this article.
Section 2. This act shall take effect in 60 days.
20240HB2192PN2862 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28