H.R. 2692: No Tax Breaks for Union Busting (NTBUB) Act

Federal tax law already refuses deductions for lobbying and for spending aimed at influencing the public in elections. H.R. 2692 adds a third category: any attempt by an employer to influence its own employees about unions, union elections, labor disputes, or collective action. Congress says the principle is the same in both cases, and that workers' choices should be made without a taxpayer subsidy behind the employer's side.

If your employer runs a campaign against a union drive, the consultants, the mandatory meetings, and the managers' time spent on it would all stop being tax deductible. The bill spells out three kinds of spending that count. The first is any cost, including wages and overhead, tied to conduct that ends in an unfair labor practice complaint from the National Labor Relations Board, a settlement reached while the board is investigating one, or a court finding of interference under railway and airline labor law. The second is the cost of producing, running, or attending any meeting or training where union topics are discussed and where the audience includes employees who are or could be in a bargaining unit. The third is anything the employer already has to disclose under the federal persuader-reporting law.

The bill draws lines around ordinary labor relations. Bargaining directly with a union that already represents workers stays deductible, and so do grievance procedures, joint labor-management committees under an existing contract, voluntarily recognizing a union, legally required workplace postings, and communications with shareholders that securities law demands. Spending tied to a labor board complaint that a court later throws out in full is also carved out.

The second half of the bill is disclosure. An employer that spends money on covered activity would have to tell the IRS the dates, the type of activity, and the amounts on its tax return, and any consultant doing that work would have to file a separate return naming the client. Leaving it off costs the greater of $10,000 or $1,000 for every full-time-equivalent employee. If the employer still has not filed 90 days after an IRS notice, that same amount is charged again for each additional 30 days, with the added penalties capped at $100,000. A reasonable-cause exception applies.

Treasury would have 240 days after enactment to write rules, and the new treatment would apply to tax years beginning after that window.