Proposed Bill Ends Tax Deductions for Employer Spending Against Union Efforts

Let's break down the 'No Tax Breaks for Union Busting Act,' or NTBUB Act. The core idea is pretty straightforward: this bill aims to stop companies from claiming tax deductions for money they spend trying to persuade employees not to unionize or engage in union activities. Right now, some of these costs can be written off as business expenses. This legislation proposes amending Section 162(e) of the Internal Revenue Code to specifically disallow deductions for these kinds of expenditures.

What Spending Gets the Axe?

The bill gets specific about what counts as 'influencing employees' regarding unions. Think costs related to:

• Hiring consultants or law firms specifically to counter union organizing drives (often called 'persuader activity').
• Running meetings or producing materials aimed at discouraging union membership.
• Expenses tied to fighting unfair labor practice complaints filed under the National Labor Relations Act (NLRA) if the company is found to have interfered with employee rights.
• Settlement costs related to investigations by the National Labor Relations Board (NLRB).

Essentially, if the money is spent trying to sway workers' opinions on unionizing or collective bargaining, the bill says it shouldn't reduce the company's taxable income. It defines 'labor organization activity' broadly, covering union elections, disputes, and collective actions.

What's Still Deductible?

It's important to note what isn't targeted. The bill explicitly exempts certain costs. Companies could still deduct expenses for:

• Negotiating or communicating with an existing union that already represents employees (like during contract talks).
• Costs related to legally required communications (like posting workplace rights notices).
• Expenses for handling grievances under an existing collective bargaining agreement.
• Voluntarily recognizing a union without an election.

So, interacting with established unions or fulfilling legal duties remains a standard deductible business expense.

New Rules and Reporting

This isn't just about changing the deduction; it adds new reporting requirements. Companies would have to detail these specific anti-union expenditures on their tax returns, including dates, amounts, and the type of activity. They'd also need to attach copies of any related disclosures required under the Labor-Management Reporting and Disclosure Act (LMRDA).

Failure to report accurately comes with penalties: the greater of $10,000 or $1,000 per full-time employee, capped at $100,000 for continued non-compliance. Consultants doing this work on behalf of employers would also have filing requirements.

The Treasury Department is tasked with issuing guidance and regulations within 240 days of the bill's enactment to clarify implementation. The changes would apply to expenses in tax years starting after that 240-day mark.

The Bottom Line

This bill shifts the financial calculation for companies considering campaigns against unionization. By removing the tax deduction, it increases the net cost of these activities. The stated goal, outlined in the bill's findings, is to align tax policy with federal labor law that protects workers' rights to organize, arguing that taxpayers shouldn't subsidize efforts that interfere with those rights. The practical effect depends on how companies respond and how rigorously the new reporting rules are enforced once Treasury provides detailed guidance.