Calculation of Assumed Federal Income Tax, 31738 [2019-14099]

Agencies

• POSTAL REGULATORY COMMISSION

[Federal Register Volume 84, Number 128 (Wednesday, July 3, 2019)]
[Rules and Regulations]
[Page 31738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14099]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3060

[Docket No. RM2019-5; Order No. 5136]


Calculation of Assumed Federal Income Tax

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is adopting final rules amending its rules 
involving the calculation of the assumed Federal income tax on 
competitive products by the Postal Service each fiscal year.

DATES: Effective: August 2, 2019.

ADDRESSES: For additional information, Order No. 5136 can be accessed 
electronically through the Commission's website at https://www.prc.gov.

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 Final 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 amendments 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 received comments in support of 
the amendments from the appointed Public Representative and the Postal 
Service. The Commission issues these final rules which are unchanged 
from the proposed rules published on May 22, 2019 (84 FR 23503).
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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 Final 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 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 
substantive and procedural rules for the assumed Federal income tax 
calculation, as codified in existing 39 CFR part 3060.\2\ In accordance 
with its specific authority to regulate the assumed Federal income tax 
calculation 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 initiated this proceeding to consider two forms of 
amendments to the existing regulations that would reflect changes made 
to the Internal Revenue Code after the Commission's 2008 rulemaking and 
remove obsolete provisions.
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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

    Existing 39 CFR 3060.40(a) explains the method for calculating the 
assumed Federal income tax. The existing regulation requires the Postal 
Service to comply with chapter 1 of the Internal Revenue Code, 
specifically by computing the tax using either the section 11 (regular) 
rates or the Alternative Minimum Tax rates in section 55(b)(1)(B), ``as 
applicable.'' The proposed amendment requires the calculation to be 
made using the applicable corporate tax rate in chapter 1 of the 
Internal Revenue Code, without specifying the particular rate or 
section. This change will align the regulations with the revised 
Internal Revenue Code and reduces the likelihood that future changes to 
the Internal Revenue Code will necessitate changes to the regulation. 
The Public Representative and the Postal Service support this proposed 
amendment. The Commission adopts this amendment as proposed.

B. Obsolete One-Time Extension Provisions

    Existing 39 CFR 3060.40(c) and 3060.43(c) indicate the deadlines 
for the FY 2008 calculation and transfer were extended from January 15, 
2009 to July 15, 2009. The proposed amendments remove these obsolete 
provisions and redesignate Sec.  3060.43(d) as Sec.  3060.43(c). These 
changes will remove the obsolete provisions and simplify the 
regulations. The Public Representative and the Postal Service support 
these proposed amendments. The Commission adopts these amendments as 
proposed.

Final Rules

List of Subjects for 39 CFR Part 3060

    Administrative practice and procedure, Reporting and recordkeeping 
requirements.

    For the reasons stated in the preamble, the Commission amends 
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. 2019-14099 Filed 7-2-19; 8:45 am]
 BILLING CODE 7710-FW-P