[Federal Register Volume 84, Number 99 (Wednesday, May 22, 2019)]
[Proposed Rules]
[Pages 23503-23504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10558]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3060
[Docket No. RM2019-5; Order No. 5097]
Accounting and Periodic Reporting Rules
AGENCY: Postal Regulatory Commission.
ACTION: Proposed rulemaking.
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SUMMARY: The Commission is proposing an amendment to its rules
involving the calculation of the assumed Federal income tax on
competitive products by the Postal Service each fiscal year. The
Commission invites public comment on the proposed revisions.
DATES: Comments are due: June 21, 2019.
ADDRESSES: For additional information, Order No.5097 can be accessed
electronically through the Commission's website at https://www.prc.gov.
Submit comments electronically via the Commission's Filing Online
system at http://www.prc.gov. Those who cannot submit comments
electronically should contact the person identified in the FOR FURTHER
INFORMATION CONTACT section by telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at
202-789-6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Basis and Purpose of Proposed Rules
III. Proposed Rules
I. Background
The Commission initiated this proceeding to amend its regulations
governing the assumed Federal income tax on competitive product income
appearing in existing 39 CFR part 3060. The proposed amendments would
revise regulations concerning the annual assumed Federal income tax
calculation for competitive products to reflect changes to the Internal
Revenue Code made by the Tax Cuts and Jobs Act and to remove other
obsolete provisions.\1\ The Commission sought comments from interested
parties on whether it should update its regulations to reflect the
changes and simplify the existing regulations.
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\1\ See Tax Cuts and Jobs Act, Public Law 115-97, 131 Stat. 2054
(2017) (Tax Cuts and Jobs Act).
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II. Basis and Purpose of Proposed Rules
Section 3634(b) of title 39 of the United States Code requires the
Postal Service to calculate the assumed Federal income tax on its
competitive products income each year and transfer the amount of the
assumed tax from the Competitive Products Fund to the Postal Service
Fund. As required by 39 U.S.C. 2011(h)(2)(B)(ii), on December 18, 2008,
the Commission issued the substantive
[[Page 23504]]
and procedural rules for determining the assumed Federal income tax
calculation, as codified in existing 39 CFR part 3060.\2\ In accordance
with its specific authority under 39 U.S.C. 2011(h)(2)(B)(ii) and its
general authority under 39 U.S.C. 503 to promulgate regulations and
establish procedures, the Commission establishes this proceeding to
consider two forms of amendments. First, the Commission proposes
revisions to reflect changes made to the Internal Revenue Code after
the Commission's initial 2008 rulemaking that would affect the
computation of the applicable tax rate for the assumed Federal income
tax calculation. Second, the Commission proposes to remove obsolete
provisions that authorized one-time extensions of time for the Postal
Service to calculate and transfer the assumed Federal income tax for
fiscal year 2008.
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\2\ See Docket No. RM2008-5, Order Establishing Accounting
Practices and Tax Rules for Competitive Products, December 18, 2008
(Order No. 151).
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A. Applicable Corporate Tax Rate
The assumed taxable income from competitive products for a given
year ``refers to the amount representing what would be the taxable
income of a corporation under the Internal Revenue Code of 1986 for the
year[.]'' 39 U.S.C. 3634(a)(2). Existing Sec. 3060.40(a) requires the
Postal Service's calculation of the assumed Federal income tax on
competitive product income to comply with chapter 1 of the Internal
Revenue Code. Additionally, existing Sec. 3060.40(a) specifies that
the computation of the competitive products enterprise's assumed tax
liability use either the ``regular'' rates in section 11 or the
Alternative Minimum Tax (AMT) rates in section 55(b)(1)(B) of the
Internal Revenue Code, whichever might be applicable.
Since the codification of existing Sec. 3060.40(a), the Internal
Revenue Code has undergone changes. Effective December 22, 2017, the
AMT no longer applies to corporations. Tax Cuts and Jobs Act Sec.
12001, 131 Stat. at 2092 (codified at 26 U.S.C. 55(a)). Therefore, it
is no longer appropriate for the Postal Service to compute the tax
liability at the AMT rate, as contemplated in existing Sec.
3060.40(a).
Rather than simply removing the cross-reference to the AMT, the
Commission proposes replacing both specific cross-references to
particular sections of chapter 1 of the Internal Revenue Code with a
general instruction for the Postal Service to use the applicable tax
rate for corporations. This would enable proposed Sec. 3060.40(a) to
stay current with any future changes to chapter 1 of the Internal
Revenue Code affecting the tax rate for corporations. Moreover, this
proposed approach would remain consistent with 39 U.S.C. 3634(a)(2).
B. Obsolete One-time Extension Provisions
The Commission published the existing regulations concerning the
assumed Federal income tax calculation in December 2008 and they took
effect in January 2009. Order No. 151 at 1, 21. Existing Sec. Sec.
3060.40(c) and 3060.43(c) include a one-time extension for the Postal
Service to submit the calculation and perform the annual transfer for
FY 2008, extending both deadlines to July 15, 2009. Since the existing
provisions concerning past extensions are outdated and unnecessary, the
Commission proposes removing this material from existing Sec. Sec.
3060.40(c) and 3060.43(c). The removal of these obsolete provisions
would simplify the regulations.
III. Proposed Rules
Proposed Sec. 3060.40(a). Proposed Sec. 3060.40(a) replaces
``section 11 (regular) or section 55(b)(1)(B) (Alternative Minimum Tax)
tax rates, as applicable'' with ``applicable corporate tax rate.''
Proposed Sec. 3060.40(c). Proposed Sec. 3060.40(c) deletes the
phrase ``except that a one-time extension of 6 months, until July 15,
2009, shall be permitted for the calculation of the assumed Federal
income tax due for fiscal year end September 30, 2008.''
Proposed Sec. 3060.43(c). Proposed Sec. 3060.43(c) removes the
text of existing Sec. 3060.43(c), in its entirety, and redesignates
existing Sec. 3060.43(d), and its text, as Sec. 3060.43(c).
List of Subjects in 39 CFR Part 3060
Administrative practice and procedure, Reporting and recordkeeping
requirements.
For the reasons stated in the preamble, the Commission proposes to
amend 39 chapter III of title 39 of the Code of Federal Regulations as
follows:
PART 3060--ACCOUNTING PRACTICES AND TAX RULES FOR THE THEORETICAL
COMPETITIVE PRODUCTS ENTERPRISE
0
1. The authority citation for part 3060 continues to read as follows:
Authority: 39 U.S.C. 503, 2011, 3633, 3634.
0
2. Amend Sec. 3060.40, by revising paragraphs (a) and (c) to read as
follows:
Sec. 3060.40 Calculation of the assumed Federal income tax.
(a) The assumed Federal income tax on competitive products income
shall be based on the Postal Service theoretical competitive products
enterprise income statement for the relevant year and must be
calculated in compliance with chapter 1 of the Internal Revenue Code by
computing the tax liability on the taxable income from the competitive
products of the Postal Service theoretical competitive products
enterprise at the applicable corporate tax rate.
* * * * *
(c) The calculation of the assumed Federal income tax due shall be
submitted to the Commission no later than the January 15 following the
close of the fiscal year referenced in paragraph (b) of this section.
* * * * *
Sec. 3060.43 [Amended]
0
3. Amend Sec. 3060.43, by removing paragraph (c) and redesignating
paragraph (d) as paragraph (c).
By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2019-10558 Filed 5-21-19; 8:45 am]
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