al Service in the provision of competitive products, be paid 
out of the Competitive Products Fund. 
‘‘(h)(1) The Secretary of the Treasury, in consultation 
with the Postal Service and an independent, certified public 
accounting firm and such other advisors as the Secretary 
considers appropriate, shall develop recommendations re-
garding— 
‘‘(A) the accounting practices and principles that 
should be followed by the Postal Service with the ob-
jectives of (i) identifying and valuing the assets and 
liabilities of the Postal Service associated with pro-
viding, and the capital and operating costs incurred 
by the Postal Service in providing, competitive prod-
ucts, and (ii) subject to subsection (e)(5), preventing 
the subsidization of such products by market-domi-
nant products; and 
‘‘(B) the substantive and procedural rules that 
should be followed in determining the Postal Service’s 
assumed Federal income tax on competitive products 
income for any year (within the meaning of section 
3634). 
Such recommendations shall be submitted to the Postal Reg-
ulatory Commission no earlier than 6 months, and no later 
than 12 months, after the effective date of this section.
‘‘(2)(A) Upon receiving the recommendations of the 
Secretary of the Treasury under paragraph (1), the Com-
mission shall give interested parties, including the Postal 
Service, users of the mails, and an officer of the Commission 
who shall be required to represent the interests of the general 
public, an opportunity to present their views on those rec-
ommendations through submission of written data, views, 
or arguments, with or without opportunity for oral presen-
tation, or in such other manner as the Commission con-
siders appropriate. 
‘‘(B) After due consideration of the views and other 
information received under subparagraph (A), the Commis-
sion shall by rule— 
‘‘(i) provide for the establishment and applica-
tion of the accounting practices and principles which 
shall be followed by the Postal Service; 
‘‘(ii) provide for the establishment and applica-
tion of the substantive and procedural rules described 
in paragraph (1)(B); and 
‘‘(iii) provide for the submission by the Postal 
Service to the Postal Regulatory Commission of an-
nual and other periodic reports setting forth such in-
formation as the Commission may require. 
Final rules under this subparagraph shall be issued not 
later than 12 months after the date on which the Secretary
of the Treasury makes his submission to the Commission 
under paragraph (1) (or by such later date as the Commis-
sion and the Postal Service may agree to). The Commission 
is authorized to promulgate regulations revising such rules. 
‘‘(C) Reports described in subparagraph (B)(iii) shall 
be submitted at such time and in such form, and shall in-
clude such information, as the Commission by rule requires. 
The Commission may, on its own motion or on request of 
an interested party, initiate proceedings (to be conducted 
in accordance with such rules as the Commission shall pre-
scribe) to improve the quality, accuracy, or completeness of 
Postal Service data under such subparagraph whenever it 
shall appear that— 
‘‘(i) the quality of the information furnished in 
those reports has become significantly inaccurate or 
can be significantly improved; or 
‘‘(ii) those revisions are, in the judgment of the 
Commission, otherwise necessitated by the public in-
terest. 
‘‘(D) A copy of each report described in subparagraph 
(B)(iii) shall also be transmitted by the Postal Service to 
the Secretary of the Treasury and the Inspector General of 
the United States Postal Service. 
‘‘(i) The Postal Service shall render an annual report 
to the Secretary of the Treasury concerning the operation
of the Competitive Products Fund, in which it shall address 
such matters as risk limitations, reserve balances, allocation 
or distribution of moneys, liquidity requirements, and 
measures to safeguard against losses. A copy of its then most 
recent report under this subsection shall be included with 
any other submission that it is required to make to the Post-
al Regulatory Commission under section 3652(g).’’. 
(2) CLERICAL
AMENDMENT.—The analysis for 
chapter 20 of title 39, United States Code, is amended 
by adding after the item relating to section 2010 the 
following: 
‘‘2011. Provisions relating to competitive products.’’. 
(b) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) DEFINITION.—Section 2001 of title 39, 
United States Code, is amended by striking ‘‘and’’ at 
the end of paragraph (1), by redesignating paragraph 
(2) as paragraph (3), and by inserting after para-
graph (1) the following: 
‘‘(2) ‘Competitive Products Fund’ means the 
Postal Service Competitive Products Fund established 
by section 2011; and’’. 
(2) CAPITAL OF THE POSTAL SERVICE.—Section 
2002(b) of title 39, United States Code, is amended 
by striking ‘‘Fund,’’ and inserting ‘‘Fund and the 
balance in the Competitive Products Fund,’’. 
(3) POSTAL SERVICE FUND.—
(A) PURPOSES FOR WHICH AVAILABLE.— 
Section 2003(a) of title 39, United States Code, 
is amended by striking ‘‘title.’’ and inserting 
‘‘title (other than any of the purposes, functions, 
or powers for which the Competitive Products 
Fund is available).’’. 
(B) DEPOSITS.—Section 2003(b) of title 39, 
United States Code, is amended by striking 
‘‘There’’ and inserting ‘‘Except as otherwise pro-
vided in section 2011, there’’. 
(4) RELATIONSHIP
BETWEEN
THE
TREASURY 
AND THE POSTAL SERVICE.—Section 2006 of title 39, 
United States Code, is amended— 
(A) in subsection (a), by inserting ‘‘or sec-
tion 2011’’ before ‘‘of this title,’’; 
(B) in subsection (b), by inserting ‘‘under 
section 2005’’ before ‘‘in such amounts’’ in the 
first sentence and before ‘‘in excess of such 
amount.’’ in the second sentence; and 
(C) in subsection (c), by inserting ‘‘or sec-
tion 2011(e)(4)(E)’’ before ‘‘of this title,’’.
SEC. 302. ASSUMED FEDERAL INCOME TAX ON COMPETI-
TIVE PRODUCTS INCOME. 
Subchapter II of chapter 36 of title 39, United States 
Code, as amended by section 202, is amended by adding 
at the end the following: 
‘‘§ 3634. Assumed Federal income tax on competitive 
products income 
‘‘(a) DEFINITIONS.—For purposes of this section— 
‘‘(1) the term ‘assumed Federal income tax on 
competitive products income’ means the net income 
tax that would be imposed by chapter 1 of the Inter-
nal Revenue Code of 1986 on the Postal Service’s as-
sumed taxable income from competitive products for 
the year; and 
‘‘(2) the term ‘assumed taxable income from com-
petitive products’, with respect to a year, refers to the 
amount representing what would be the taxable in-
come of a corporation under the Internal Revenue 
Code of 1986 for the year, if— 
‘‘(A) the only activities of such corporation 
were the activities of the Postal Service allocable 
under section 2011(h) to competitive products; 
and 
‘‘(B) the only assets held by such corpora-
tion were the assets of the Postal Service allo-
cable under section 2011(h) to such activities.