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

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:

This article relates to business catastrophe savings

accounts.

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).

emergency is declared by the Governor under 35 Pa.C.S. § 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.

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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

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

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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

(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.

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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

(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

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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

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

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(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 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

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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

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.

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