New Tax Bill Bans Deductions for Anti-Union Campaigns, Hits Employers with Steep Reporting Penalties

The No Tax Breaks for Union Busting (NTBUB) Act takes direct aim at how businesses spend money during union organizing drives. Essentially, this bill amends the tax code to say that employers can no longer write off the costs associated with trying to influence employees against forming or joining a union. If a company spends money trying to sway the vote—whether through mandatory meetings, hiring consultants, or legal fees—that money is now considered non-deductible under Section 162(e)(1) of the Internal Revenue Code. The goal is to remove the public subsidy (the tax deduction) for what the bill calls 'influence campaigns' that interfere with workers' rights to organize.

The Cost of 'Captive Audience' Meetings

For businesses, the biggest change comes from what is now explicitly non-deductible. The ban covers costs for producing, running, or attending any meeting or training session where employees discuss labor organizations or union activities. Think of those mandatory, company-wide meetings where management explains why unionizing is a bad idea—the costs associated with running that meeting, including the time and wages of the employees and managers involved, are now off the table for tax write-offs. Furthermore, if a company is hit with an unfair labor practice complaint by the National Labor Relations Board (NLRB), any legal costs or settlement money related to that charge are also non-deductible, even if the case settles before a formal complaint is issued (Sec. 3).

Where the Deductions Still Stand

It’s not a blanket ban on all labor-related expenses. The bill makes sure that costs related to normal business operations and existing agreements are still deductible. For instance, if your company already has a union, you can still deduct the costs of negotiating a new contract, handling a grievance procedure, or communicating directly with the union representative (Sec. 3). Basically, the tax code is fine with you talking with the union; it just doesn't want to subsidize you talking against the union.

The New Tax Reporting Headache

This is where things get serious for the accounting department. The NTBUB Act introduces strict new reporting requirements. Any business that incurs these newly non-deductible influence expenses must report them to the IRS when filing their taxes, detailing the dates, activity type, and amounts spent. If a business fails to report this information, the penalties are steep: the greater of $10,000 or $1,000 multiplied by the number of full-time equivalent employees (Sec. 3). If you run a mid-sized company with 100 FTEs, that's a minimum $100,000 penalty, and it can grow if the failure continues after IRS notification. Third-party consultants and law firms hired to run these campaigns also have to file a separate information return with the IRS, detailing who hired them and how much they were paid.

Real-World Impact: Shifting the Financial Scales

For workers considering organizing, this bill is designed to level the financial playing field. Right now, a company can spend millions on consultants and lawyers to fight a union drive, and Uncle Sam effectively pays a portion of that bill through the tax deduction. If this bill passes, those campaigns become 20% to 35% more expensive overnight, depending on the company's tax bracket. This could make employers think twice before launching a massive, expensive anti-union effort. For business owners, the biggest challenge isn't just the loss of the deduction, but the severe penalties and complexity of the new reporting requirements. The bill is vague on exactly how the IRS will define 'indirect' spending, which could create compliance headaches and potential audits down the line, especially for businesses that find themselves facing an NLRB complaint.