S 9578: Establishes the New York state energy savings program authorizing the establishment of energy savings accounts; establishes a personal income tax deduction for deposits into such accounts.

  
  STATE OF NEW YORK ________________________________________________________________________ 9578  IN SENATE March 26, 2026 ___________ Introduced by Sen. PALUMBO -- read twice and ordered printed, and when printed to be committed to the Committee on Energy and Telecommuni- cations AN ACT to amend the energy law, in relation to establishing the New York state energy savings program, authorizing the establishment of energy savings accounts; and to amend the tax law, in relation to establish- ing a personal income tax deduction for deposits into such accounts The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The energy law is amended by adding a new article 13 to 2 read as follows: 3 ARTICLE 13 4 NEW YORK STATE ENERGY 5 SAVINGS PROGRAM 6 Section 13-101. Program established. 7 13-102. Purposes. 8 13-103. Definitions. 9 13-104. Functions of the comptroller. 10 13-105. Powers of the comptroller. 11 13-106. Program requirements; energy savings account. 12 13-107. Program limitations; energy savings account. 13 § 13-101. Program established. There is hereby established an energy 14 savings program and such program shall be known and may be cited as the 15 "New York state energy savings program". 16 § 13-102. Purposes. The purposes of the program shall be to authorize 17 the establishment of energy savings accounts and to provide guidelines 18 for the maintenance of such accounts to: 19 1. enable residents of this state to benefit from the tax incentive 20 provided for qualified state energy savings accounts under section six 21 hundred twelve of the tax law; and 22 2. incentivize residents to save for the purchase of qualified energy 23 expenses as detailed herein. 24 § 13-103. Definitions. As used in this article, the following terms 25 shall have the following meanings: EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD15322-02-6 
 S. 9578 2 1 1. "Account" or "energy savings account" shall mean an individual 2 savings account established in accordance with the provisions of this 3 article for the exclusive benefit of the account owner. 4 2. "Account owner" shall mean a taxpayer who enters into an energy 5 savings agreement pursuant to the provisions of this article. 6 3. "Designated beneficiary" shall mean, with respect to an account or 7 accounts, the designated individual or individuals whose energy 8 purchase expenses are expected to be paid from the account or accounts. 9 4. "Financial organization" shall mean an organization authorized to 10 do business in the state, and (a) which is an authorized fiduciary to 11 act as a trustee pursuant to the provisions of an act of congress enti- 12 tled "Employee Retirement Income Security Act of 1974", as such 13 provisions may be amended from time to time, or an insurance company; 14 and (b)(i) is licensed or chartered by the department of financial 15 services, (ii) is chartered by an agency of the federal government, 16 (iii) is subject to the jurisdiction and regulation of the securities 17 and exchange commission of the federal government, (iv) is any other 18 entity otherwise authorized to act in this state as a trustee pursuant 19 to the provisions of an act of congress entitled "Employee Retirement 20 Income Security Act of 1974", as such provisions may be amended from 21 time to time, (v) or any banking organization as defined in subdivision 22 eleven of section two of the banking law, national banking association, 23 state chartered credit union, federal mutual savings bank, federal 24 savings and loan association or federal credit union. 25 5. "Program" shall mean the New York energy savings program estab- 26 lished pursuant to this article. 27 6. "Qualified energy purchase expenses" shall mean monies applied for 28 the purchase of the following: energy efficiency upgrades for residen- 29 tial buildings based upon expenditures in compliance with the state 30 energy conservation construction code pursuant to article eleven of 31 this chapter, or upon expenditures in compliance with the New York state 32 uniform fire prevention and building code act pursuant to article eigh- 33 teen of the executive law, expenditures to purchase a battery powered 34 electric vehicle for personal use or expenditures to purchase vehicle 35 charging infrastructure for residential use subject to rules or regu- 36 lations promulgated by New York state energy research and development 37 authority to identify such qualified energy expenses or payments to meet 38 outstanding unpaid utility bills. 39 7. "Qualified withdrawal" shall mean a withdrawal from an account to 40 pay the qualified energy purchase expense of the account owner. 41 8. "Nonqualified withdrawal" shall mean a withdrawal from an account 42 but shall not include: 43 (a) a qualified withdrawal; 44 (b) a withdrawal made as the result of death; 45 (c) an unforeseeable emergency; or 46 (d) need based upon qualifying for military service in the armed forc- 47 es of the United States as determined by rules and regulations promul- 48 gated by the comptroller. 49 9. "Comptroller" shall mean the state comptroller. 50 10. "Management contract" shall mean the contract executed by the 51 comptroller and a financial organization selected to act as a depository 52 and manager of the program. 53 11. "Energy savings agreement" shall mean an agreement between the 54 comptroller or a financial organization and the account owner. 55 12. "Program manager" shall mean a financial organization selected by 56 the comptroller to act as a depository and manager of the program. 
 S. 9578 3 1 13. "Commissioner" shall mean the commissioner of taxation and 2 finance. 3 § 13-104. Functions of the comptroller. 1. The comptroller shall 4 implement the program under the terms and conditions established by this 5 article and a memorandum of understanding with the commissioner relating 6 to any terms or conditions not otherwise expressly provided for in this 7 article. 8 2. In furtherance of such implementation the comptroller shall: 9 (a) develop and implement the program in a manner consistent with the 10 provisions of this article through rules and regulations established in 11 accordance with the state administrative procedure act; 12 (b) engage the services of consultants on a contract basis for render- 13 ing professional and technical assistance and advice; 14 (c) seek rulings and other guidance from the United States Department 15 of Treasury and the Internal Revenue Service relating to the program; 16 (d) make changes to the program required for the participants in the 17 program to obtain the state income tax benefits or treatment provided by 18 this article; 19 (e) charge, impose and collect administrative fees and service charges 20 in connection with any agreement, contract or transaction relating to 21 the program; 22 (f) develop marketing plans and promotion materials; 23 (g) establish the methods by which the funds held in such accounts be 24 disbursed; 25 (h) establish the method by which funds shall be allocated to pay for 26 administrative costs; and 27 (i) do all things necessary and proper to carry out the purposes of 28 this article. 29 § 13-105. Powers of the comptroller. 1. The comptroller may implement 30 the program through use of financial organizations as account deposito- 31 ries and managers. Under the program, an account owner may establish 32 accounts directly with an account depository. 33 2. The comptroller may solicit proposals from financial organizations 34 to act as depositories and managers of the program. Financial organiza- 35 tions submitting proposals shall describe the investment instrument 36 which will be held in accounts. The comptroller shall select as program 37 depositories and managers the financial organization, from among the 38 bidding financial organizations that demonstrates the most advantageous 39 combination, both to potential program participants and this state, of 40 the following factors: 41 (a) financial stability and integrity of the financial organization; 42 (b) the safety of the investment instrument being offered; 43 (c) the ability of the financial organization to satisfy recordkeeping 44 and reporting requirements; 45 (d) the financial organization's plan for promoting the program and 46 the investment it is willing to make to promote the program; 47 (e) the fees, if any, proposed to be charged to persons for opening 48 accounts; 49 (f) the minimum initial deposit and minimum contributions that the 50 financial organization will require; 51 (g) the ability of banking organizations to accept electronic with- 52 drawals, including payroll deduction plans; and 53 (h) other benefits to the state or its residents included in the 54 proposal, including fees payable to the state to cover expenses of oper- 55 ation of the program. 
 S. 9578 4 1 3. The comptroller may enter into a contract with a financial organ- 2 ization. Such financial organization management may provide one or more 3 types of investment instrument. 4 4. The comptroller may select more than one financial organization for 5 the program. 6 5. A management contract shall include, at a minimum, terms requiring 7 the financial organization to: 8 (a) take any action required to keep the program in compliance with 9 requirements of section 13-106 of this article and any actions not 10 contrary to its contract to manage the program to qualify as an "energy 11 savings account" under paragraph forty-eight of subsection (c) of 12 section six hundred twelve of the tax law; 13 (b) keep adequate records of each account, keep each account segre- 14 gated from each other account, and provide the comptroller with the 15 information necessary to prepare the statements required by section 16 13-106 of this article; 17 (c) compile and total information contained in statements required to 18 be prepared under section 13-106 of this article and provide such compi- 19 lations to the comptroller; 20 (d) if there is more than one program manager, provide the comptroller 21 with such information necessary to determine compliance with section 22 13-106 of this article; 23 (e) provide the comptroller or such comptroller's designee access to 24 the books and records of the program manager to the extent needed to 25 determine compliance with the contract; 26 (f) hold all accounts for the benefit of the account owner; 27 (g) be audited at least annually by a firm of certified public 28 accountants selected by the program manager and that the results of such 29 audit be provided to the comptroller; 30 (h) provide the comptroller with copies of all regulatory filings and 31 reports made by it during the term of the management contract or while 32 it is holding any accounts, other than confidential filings or reports 33 that will not become part of the program. The program manager shall make 34 available for review by the comptroller the results of any periodic 35 examination of such manager by any state or federal banking, insurance 36 or securities commission, except to the extent that such report or 37 reports may not be disclosed under applicable law or the rules of such 38 commission; and 39 (i) ensure that any description of the program, whether in writing or 40 through the use of any media, is consistent with the marketing plan as 41 developed pursuant to the provisions of section 13-104 of this article. 42 6. The comptroller may provide that an audit shall be conducted of the 43 operations and financial position of the program depository and manager 44 at any time if the comptroller has any reason to be concerned about the 45 financial position, the recordkeeping practices, or the status of 46 accounts of such program depository and manager. 47 7. During the term of any contract with a program manager, the comp- 48 troller shall conduct an examination of such manager and its handling of 49 accounts. Such examination shall be conducted at least biennially if 50 such manager is not otherwise subject to periodic examination by the 51 superintendent of financial services, the federal deposit insurance 52 corporation or other similar entity. 53 8. (a) If selection of a financial organization as a program manager 54 or depository is not renewed, after the end of its term: 55 (i) accounts previously established and held in investment instruments 56 at such financial organization may be terminated; 
 S. 9578 5 1 (ii) additional contributions may be made to such accounts; 2 (iii) no new accounts may be placed with such financial organization; 3 and 4 (iv) existing accounts held by such depository shall remain subject to 5 all oversight and reporting requirements established by the comptroller. 6 (b) If the comptroller terminates a financial organization as a 7 program manager or depository, such comptroller shall take custody of 8 accounts held by such financial organization and shall seek to promptly 9 transfer such accounts to another financial organization that is 10 selected as a program manager or depository and into investment instru- 11 ments as similar to the original instruments as possible. 12 9. The comptroller may enter into such contracts as it deems necessary 13 and proper for the implementation of the program. 14 § 13-106. Program requirements; energy savings account. 1. Energy 15 savings accounts established pursuant to the provisions of this article 16 shall be governed by the provisions of this section. 17 2. An energy savings account may be opened by any person who desires 18 to save money for the payment of the qualified energy expenses of the 19 account owner or designated beneficiary. An account owner may designate 20 another person as successor owner of the account in the event of the 21 death of the original account owner. Such person who opens an account or 22 any successor owner shall be considered the account owner. 23 (a) An application for such account shall be in the form prescribed by 24 the program and contain the following: 25 (i) the name, address and social security number or employer identifi- 26 cation number of the account owner; 27 (ii) the designation of a designated beneficiary; 28 (iii) the name, address, and social security number of the designated 29 beneficiary; and 30 (iv) such other information as the program may require. 31 (b) The comptroller and the corporation may establish a nominal fee 32 for such application. 33 3. Any person, including the account owner, may make contributions to 34 the account after the account is opened. 35 4. Contributions to accounts may be made only in cash. 36 5. An account owner may withdraw all or part of the balance from an 37 account as authorized under rules governing the program. Such rules 38 shall include provisions that will generally enable the determination as 39 to whether a withdrawal is a nonqualified withdrawal or a qualified 40 withdrawal. 41 6. (a) An account owner may change the designated beneficiary of an 42 account in accordance with procedures established by the memorandum of 43 understating pursuant to the provisions of section 13-104 of this arti- 44 cle. 45 (b) An account owner may transfer all or a portion of an account to 46 another energy savings account. 47 (c) Changes in designated beneficiaries and transfers under this 48 subdivision shall not be permitted to the extent that they would cause 49 all accounts for the same beneficiary to exceed the permitted aggregate 50 maximum account balance. 51 7. The program shall provide separate accounting for each designated 52 beneficiary. 53 8. No account owner or designated beneficiary of any account shall be 54 permitted to direct the investment of any contributions to an account or 55 the earnings thereon more than two times in any calendar year. 
 S. 9578 6 1 9. Neither an account owner nor a designated beneficiary may use an 2 interest in an account as security for a loan. Any pledge of an interest 3 in an account shall be of no force and effect. 4 10. The comptroller shall promulgate rules or regulations to prevent 5 contributions on behalf of a designated beneficiary in excess of an 6 amount that would cause the aggregate account balance for all accounts 7 for a designated beneficiary to exceed a maximum account balance, as 8 established from time to time by the comptroller. 9 11. Contributions to an energy savings account shall be limited to one 10 hundred thousand dollars per account. This amount shall not take into 11 consideration any gain or loss to the principal investment into the 12 account. 13 12. In the event that an individual makes a nonqualified withdrawal of 14 monies from the energy savings account such individual shall have the 15 entire account taxed, including any interest, as though it was income at 16 the account owner's federal tax rate in the tax years the monies were 17 withdrawn, and incur an additional ten percent state penalty on the 18 amount of earnings. In the event account owners or designated benefici- 19 ary does not use the qualified energy expenditures the account owner 20 shall have the entire account taxed, including any interest, as though 21 it was ordinary income at the account owner's federal tax rate in the 22 tax years the monies were withdrawn and incur an additional ten percent 23 state penalty on the amount of earnings. The penalty shall be in addi- 24 tion to any taxes due pursuant to a non-qualified withdrawal from an 25 energy savings account. 26 13. Withdrawals from the account during a period of less than twelve 27 months from the date such account was created shall be considered a 28 nonqualified withdrawal. 29 14. Penalties may be waived by the commissioner if the individual can 30 show proof that the reason the individual did not use the qualified 31 energy expenditures was due to either: 32 (a) an employment relocation outside the state and such relocation 33 required the individual to become a resident of another state; 34 (b) an unforeseeable emergency; 35 (c) an absence due to qualifying military service; or 36 (d) death. 37 For purposes of this subdivision, an "unforeseeable emergency" shall 38 mean a severe financial hardship resulting from illness, accident or 39 property loss to the account owner, or such account owner's dependents 40 resulting in circumstances beyond their control. The circumstances that 41 constitute an unforeseeable financial emergency will depend on the facts 42 of each case, however, withdrawal of account funds may not be made, 43 without penalty, to the extent that such hardship is or may be relieved 44 by either: 45 (i) reimbursement or compensation by insurance or otherwise; or 46 (ii) liquidation of the individual's assets to the extent the liqui- 47 dation of such assets would not itself cause severe financial hardship. 48 15. The commissioner and the comptroller are directed to promulgate 49 all rules and regulations necessary to implement the provisions of this 50 subdivision and are hereby directed to establish, supervise and regulate 51 energy savings accounts authorized to be created by this section. 52 16. (a) If there is any distribution from an energy savings account to 53 any individual or for the benefit of any individual during a calendar 54 year, such distribution shall be reported to the Internal Revenue 55 Service and the account owner, the designated beneficiary, or the 56 distributee to the extent required by federal law or regulation. 
 S. 9578 7 1 (b) Statements shall be provided to each account owner at least once 2 each year within sixty days after the end of the twelve-month period to 3 which they relate. The statement shall identify the contributions made 4 during a preceding twelve-month period, the total contributions made to 5 the account through the end of the period, the value of the account at 6 the end of such period, distributions made during such period and any 7 other information that the comptroller shall require to be reported to 8 the account owner. 9 (c) Statements and information relating to accounts shall be prepared 10 and filed to the extent required by federal and state tax laws. 11 17. An annual fee may be imposed upon the account owner for the main- 12 tenance of the account. 13 18. The program shall disclose the following information in writing to 14 each account owner of an energy savings account: 15 (a) the terms and conditions for establishing an energy savings 16 account; 17 (b) any restrictions on the substitution of beneficiaries; 18 (c) the person or entity entitled to terminate the energy savings 19 agreement; 20 (d) the period of time during which a beneficiary may receive benefits 21 under the energy savings agreement; 22 (e) the terms and conditions under which money may be wholly or 23 partially withdrawn from the program, including, but not limited to, any 24 reasonable charges and fees that may be imposed for withdrawal; 25 (f) the probable tax consequences associated with contributions to and 26 distributions from accounts; and 27 (g) all other rights and obligations pursuant to energy savings agree- 28 ments, and any other terms, conditions, and provisions deemed necessary 29 and appropriate by the terms of the memorandum of understanding entered 30 into pursuant to section 13-104 of this article. 31 19. Energy savings agreements shall be subject to section fourteen-c 32 of the banking law and the "truth-in-savings" regulations promulgated 33 thereunder. 34 20. Nothing in this article or in any energy savings agreement entered 35 into pursuant to this article shall be construed as a guarantee by the 36 state that the account owner or designated beneficiary will qualify for 37 the purchase of a qualified energy expense. 38 21. Monies withdrawn from energy savings accounts and any interest 39 which has accrued shall not be considered as taxable income to the 40 account owner for state personal income taxation purposes, so long as 41 the monies are applied for the purchase of a qualified energy expense by 42 the account owner or designated beneficiary of the account. 43 § 13-107. Program limitations; energy savings account. 1. Nothing in 44 this article shall be construed to: 45 (a) give any designated beneficiary any rights or legal interest with 46 respect to an account unless the designated beneficiary is the account 47 owner; 48 (b) guarantee that the account owner or designated beneficiary will be 49 financially qualified for purchase of a qualified energy expense; or 50 (c) create state residency for an individual merely because the indi- 51 vidual is a designated beneficiary. 52 2. (a) Nothing in this article shall create or be construed to create 53 any obligation of the comptroller, the state, or any agency or instru- 54 mentality of the state to guarantee for the benefit of the account owner 55 or designated beneficiary with respect to: 56 (i) the rate of interest or other return on any account; and 
 S. 9578 8 1 (ii) the payment of interest or other return on any account. 2 (b) The comptroller by rule or regulation shall provide that every 3 contract, application, deposit slip or other similar document that may 4 be used in connection with a contribution to an account clearly indicate 5 that the account is not insured by the state and neither the principal 6 deposited nor the investment return is guaranteed by the state. 7 § 2. Subsection (c) of section 612 of the tax law is amended by adding 8 two new paragraphs 48 and 49 to read as follows: 9 (48) Contributions made during the taxable year by an account owner to 10 an energy savings account established under the New York state energy 11 savings program to the extent not deductible or eligible for credit for 12 federal income tax purposes, provided, however, the exclusion provided 13 for in this paragraph shall not exceed five thousand dollars for an 14 individual or head of household, and for married couples who file joint 15 tax returns, shall not exceed ten thousand dollars; provided, further 16 that such exclusion shall be available only to the account owner and not 17 to any other person. A taxpayer with an adjusted gross income in excess 18 of two hundred fifty percent of the area median income as defined by the 19 U.S. Department of Housing and Urban Development shall not be eligible 20 for the tax deduction pursuant to this section. 21 (49) Distributions from an energy savings account established under 22 the New York state energy savings program provided for under article 23 thirteen of the energy law, to the extent includible in gross income for 24 federal income tax purposes. 25 § 3. This act shall take effect on the one hundred eightieth day after 26 it shall have become a law, and shall apply to taxable years commencing 27 on or after the first of January next succeeding the date on which it 28 shall have become a law; provided, however, that effective immediately, 29 the commissioner of taxation and finance and the state comptroller are 30 authorized to promulgate any rules or regulations necessary to implement 31 the provisions of this act on its effective date on or before such date.