[Congressional Record Volume 147, Number 64 (Thursday, May 10, 2001)]
[Senate]
[Pages S4827-S4828]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Bingaman, Mr. Murkowski, Mr. 
        Jeffords, Mr. Conrad, Mr. Breaux, Mr. Rockefeller, Mr. Daschle, 
        Mr. Baucus, and Mrs. Lincoln):
  S. 860. A bill to amend the Internal Revenue Code of 1986 to provide 
for the treatment of certain expenses of rural letter carriers; to the 
Committee on Finance.
  Mr. GRASSLEY. Mr. President, the U.S. Postal Service provides a vital 
and important communication link for the Nation and the citizens of my 
home state of Iowa. Rural Letter Carriers play a special role and have 
a proud history as an important link in assuring the delivery of our 
mail. Rural Carriers first delivered the mail with their own horses and 
buggies, later with their own motorcycles, and now in their own cars 
and trucks. They are repsonsible for maintenance and operation of their 
vehicles in all types of weather and road conditions. In the winter, 
snow and ice is their enemy, while in the spring, the melting snow and 
ice causes potholes and washboard roads. In spite of these quite 
adverse conditions, rural letter carriers daily drive over 3 million 
miles and serve 24 million American families on over 66,000 routes.
  Although the mission of rural carriers has not changed since the 
horse and buggy days, the amount of mail they deliver has changed 
dramatically. As the Nation's mail volume has increased throughout the 
years, the Postal Service is now delivering more than 200 billion 
pieces of mail a year. The average carrier delivers about 2,300 pieces 
of mail a day to about 500 addresses.
  Most recently, e-commerce has changed the type of mail rural carriers 
deliver. This fact was confirmed in a recent GAO study entitled ``U.S. 
Postal Service: Challenges to Sustaining Performance Improvements 
Remain Formidable on the Brink of the 21st Century,'' dated October 21, 
1999. As this report explains, the Postal Service expects declines in 
its core business, which is essentially letter mail, in the coming 
years. The growth of e-mail on the Internet, electronic communications, 
and electronic commerce has the potential to substantially affect the 
Post Service's mail volume.
  First-Class mail has always been the bread and butter of the Postal 
Service's revenue, but the amount of revenue from First-Class letters 
is declining. E-commerce is providing the Postal Service with another 
opportunity to increase another part of its business. That's because 
what individuals and companies order over the Internet must be 
delivered, sometimes by the Postal Service and often by rural carriers. 
Currently, the Postal Service has about 33 percent percent of the 
parcel business. Carriers are not delivering larger volumes of business 
mail, parcels, and priority mail packages. But, more parcel business 
will mean more cargo capacity will be necessary in postal delivery 
vehicles, especially in

[[Page S4828]]

those owned and operated by rural letter carriers.
  When delivering greeting cards or bills, or packages ordered over the 
Internet, Rural Letter Carriers use vehicles they currently purchase, 
operate and maintain. In exchange, they receive a reimbursement from 
the Postal Service. This reimbursement is called an Equipment 
Maintenance Allowance (EMA). Congress recognizes that providing a 
personal vehicle to deliver the U.S. Mail is not typical vehicle use. 
So, when a rural carrier is ready to sell such a vehicle, it's going to 
have little trade-in value because of the typically high mileage, 
extraorindary wear and tear, and the fact that it is probably right-
hand drive. Therefore, Congress intended to exempt the EMA allowance 
from taxation in 1988 through a specific provision for rural mail 
carriers in the Technical and Miscellaneous Revenue Act of 1988.

  That provision allowed an employee of the U.S. Postal Service who was 
involved in the collection and delivery of mail on a rural route, to 
compute their business use mileage deduction as 150 percent of the 
standard mileage rate for all business use mileage. As an alternative, 
rural carrier taxpayers could elect to utilize the actual expense 
method, business portion of actual operation and maintenance of the 
vehicle, plus depreciation. If EMA exceeded the allowable vehicle 
expense deductions, the excess was subject to tax. If EMA fell short of 
the allowable vehicle expenses, a deduction was allowed only to the 
extent that the sum of the shortfall and all other miscellaneous 
itemized deductions exceeded two percent of the taxpayer's adjusted 
gross income.
  The Taxpayer Relief Act of 1997 further simplified the tax returns of 
rural letter carriers. That Act permitted the EMA income and expenses 
``to wash,'' so that neither income nor expenses would have to be 
reported on a rural letter carrier's return. That simplified taxes for 
approximately 120,000 taxpayers, but the provision eliminated the 
option of filing the actual expense method for employee business 
vehicle expenses. The lack of this option, combined with the dramatic 
changes the Internet is having on the mail, specifically on rural 
carriers and their vehicles, is a problem I believe Congress can and 
must address.
  The mail mix is changing and already Postal Service management has, 
understandably, encouraged rural carriers to purchase larger right-hand 
drive vehicles, such as Sports Utility Vehicles, SUVs, to handle the 
increase in parcel loads. Large SUVs are much more expensive than 
traditional vehicles, so without the ability to use the actual expense 
method and depreciation, rural carriers must use their salaries to 
cover vehicle expenses. Additionally, the Postal Service has placed 
11,000 postal vehicles on rural routes, which means those carriers 
receive no EMA.
  These developments have created a situation that is contrary to the 
historical congressional intent of using reimbursement to fund the 
government service of delivering mail, and also has created an 
inequitable tax situation for rural carriers. If actual business 
expenses exceed the EMA, a deduction for those expenses should be 
allowed. To correct this inequity, I am introducing a bill today that 
reinstates the ability of a rural letter carrier to choose between 
using the actual expense method for computing the deduction allowable 
for business use of a vehicle, or using the current practice of 
deducting the reimbursed EMA expenses.
  Rural carriers perform a necessary and valuable service and face many 
changes and challenges in this new Internet era. We must make sure that 
these public servants receive fair and equitable tax treatment as they 
perform their essential role in fulfilling the Postal Service's mandate 
of binding the Nation together.
  I urge my colleagues to join Senators Bingaman, Murkowski, Jeffords, 
Conrad, Breaux, Rockefeller, Daschle, Baucus, Lincoln and myself in 
sponsoring this legislation.
  I ask unanimous consent that the text of the bill be printed in the 
record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 860

Be it enacted by the Senate and House of Representatives of the United 
                States of America in Congress assembled,

     SECTION 1. CERTAIN EXPENSES OF RURAL LETTER CARRIERS.

       (a) In General.--Section 162(o) of the Internal Revenue 
     Code of 1986 (relating to treatment of certain reimbursed 
     expenses of rural mail carriers) is amended by redesignating 
     paragraph (2) as paragraph (3) and by inserting after 
     paragraph (1) the following:
       ``(2) Special rule where expenses exceed reimbursements.--
     Notwithstanding paragraph (1)(A), if the expenses incurred by 
     an employee for the use of a vehicle in performing services 
     described in paragraph (1) exceed the qualified 
     reimbursements for such expenses, such excess shall be taken 
     into account in computing the miscellaneous itemized 
     deductions of the employee under section 67.''
       (b) Conforming Amendment.--The heading for section 162(o) 
     is amended by striking ``Reimbursed''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

  Mr. BINGAMAN. Mr. President, I rise today to introduce this important 
legislation with the Chairman of the Finance Committee and several of 
our colleagues that would reduce the costs incurred by rural letter 
carriers by allowing them to deduct the actual expenses they incur when 
using their own vehicle to deliver the mail. For many years, rural 
letter carriers were allowed to calculate their deductible expenses by 
using either a special formula or keeping track of their costs. In 
1997, Congress simplified the tax treatment for letter carriers, but 
disallowed them the ability to use the actual expense method (business 
portion of actual operation and maintenance of the vehicle, plus 
depreciation) for calculating their costs. The result is that many 
letter carriers are unable to account for the real expenses they incur 
when using their own vehicle to deliver the mail. This problem has been 
exasperated by the increased need for larger vehicles by rural letter 
carriers, in part, due to the volume and size of parcels. Road 
conditions and severe weather have also increased vehicle costs because 
of the necessity to have an SUV or four wheel drive vehicle. These 
letter carriers must often purchase special vehicles with right hand 
drive capabilities which are more expensive than the regular 
counterpart and may have little to no value when it is time to trade 
them in for a new one. It is important that these mail carriers are not 
forced to pay these costs out of their own pockets.
  Although the internet has made the world seem smaller, purchased 
goods must still be delivered. The benefits of internet purchases in 
remote locations is limited if the purchased item cannot be delivered. 
For this reason, in rural states, such as New Mexico, these letter 
carriers play an important role in delivering the majority of the 
state's mail and parcels. On a daily basis, across the nation rural 
letter carriers drive over 3 million miles delivering mail and parcels 
to over 30 million families. We need to be sure that we have not 
created a tax impediment for these dedicated individuals. I look 
forward to working with the Chairman and my colleagues to get this 
legislation passed this year.
                                 ______