BILL NUMBER: S4427
SPONSOR: ASHBY
 
TITLE OF BILL:
An act to amend the tax law, in relation to a business tax credit for
purchase of data breach insurance; and providing for the repeal of such
provisions upon expiration thereof
 
PURPOSE OR GENERAL IDEA OF BILL:
This bill would create a data breach insurance tax credit for small
businesses.
 
SUMMARY OF PROVISIONS:
Sections 1, 2 and 3: Establishes the Data Breach Insurance tax credit
within three parts of the tax law, laying out the requirements for qual-
ification and the technical compliances required. Defines small business
as employing 100 or less employees.
Section 4: Establishes the effective date.
 
JUSTIFICATION:
As commerce becomes increasingly modernized, an increasing amount of
credit and debit card information are held by businesses both large and
small. As a result of sales over the internet, which have dramatically
increased in the last 20 years, has resulted in many risks for both
businesses and consumers. State law should be upgraded to reflect the
realities of e-commerce, particularly in relation to ensuring small
businesses can remain competitive online. Data breach insurance is a
relatively new form of insurance that covers losses that occur as a
result of hackers, which not only could lead to loss of consumer confi-
dence, but also significant investments of time and money to recover any
lost information. In addition, there are also several potential local,
state, and federal guidelines in relation to fraud that businesses must
comply with. This type of insurance helps cover fraud and some firms
even provide compliance assistance.
This bill would provide a tax credit equal to one-quarter (25%) of the
costs incurred by premiums for data breach insurance for small busi-
nesses. By doing so, this bill would allow small businesses to take
advantage of this new type of insurance, providing not only peace of
mind but also a strong sense of confidence in expanding a small business
to the rapidly expanding world of e-commerce.
 
PRIOR LEGISLATIVE HISTORY:
2023-24: S.4871-referred to Budget and Revenue
2021-22: S.2087- referred to Budget and Revenue
 
FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
Immediately, applying to taxable years beginning on and after January
1st after which it had become law, remaining in effect for 5 years.

Statutes affected:
S4427: 210-B tax law, 606 tax law, 606(i) tax law