New Tax Law Targets $340M in Anti-Union Spending: Companies Face Penalties Up to $100K for Non-Reporting

The No Tax Breaks for Union Busting (NTBUB) Act is a sharp piece of legislation aimed squarely at corporate spending during union organizing drives. Essentially, this bill pulls the rug out from under companies by saying they can no longer write off the costs of trying to influence their employees’ decisions about joining or forming a union. If a company spends money trying to sway workers away from unionizing, that money is now coming straight out of their bottom line, starting in tax years that begin about eight months after this law takes effect.

The Checkbook Changes: What’s Not Deductible Anymore

Right now, companies can deduct most of their business expenses, including the estimated $340 million they spend annually on consultants and other efforts to manage union activity. This bill changes that by making a whole host of anti-union expenditures non-deductible. Think of it this way: if a company hosts mandatory meetings to discuss the downsides of unionizing, the wages paid to the employees and management for that time, plus the administrative costs of running the meeting, are now non-deductible. If the company gets hit with an unfair labor practice complaint by the National Labor Relations Board (NLRB), the legal fees and settlement costs related to that complaint are also off the table for tax purposes.

There are carve-outs, of course, mostly for normal business operations. Companies can still deduct costs related to bargaining with an existing, recognized union, communicating with shareholders, or running established grievance procedures. The goal here isn't to stop legitimate communication, but to stop taxpayers from indirectly subsidizing campaigns designed to influence workers' choices about organizing.

The Compliance Headache and the Penalty Trap

This bill doesn't just deny a deduction; it creates a massive new compliance and reporting burden for businesses. If a company makes any of these non-deductible expenditures—like paying a consultant to advise on union avoidance—they have to report specific details about the activity, the dates, and the amounts spent when filing their taxes. This is where things get really serious for the CFO and HR departments.

If a company fails to provide this required information, the penalties are steep and unforgiving. The minimum penalty is the greater of $10,000 or $1,000 multiplied by the number of full-time equivalent employees. If that failure isn't fixed quickly after the IRS sends a notice, the penalty escalates, potentially reaching up to $100,000 for a single failure to report. For a busy business owner or a corporation with complex tax filings, this creates a high-stakes environment where a simple administrative mistake could result in a massive financial hit. Furthermore, any external consultant or firm hired to conduct these influence activities must also file a separate informational return with the IRS detailing their work, pulling third parties into this new regulatory net.

The Real-World Impact: Transparency vs. Cost

For workers looking to organize, this bill is a huge win for transparency and fairness. By removing the tax subsidy, it makes the decision to spend hundreds of thousands of dollars on union avoidance a much more expensive business choice, potentially leveling the playing field for organizing efforts. The required reporting also shines a light on exactly how much money is being spent on these campaigns.

For businesses, however, this represents both a loss of a substantial deduction and a significant increase in regulatory risk. The denial of deductions directly increases their tax liability for these specific expenses. More concerning is the vagueness around what exactly constitutes “attempting to influence employees.” While the bill gives examples like legal costs from unfair labor practices, the general definition is broad. This could lead to disputes with the IRS over whether certain internal communications or training sessions fall under the non-deductible umbrella, forcing companies to tread very carefully or face those escalating $100,000 penalties.