S1310-119

What This Bill Does

The "No Tax Breaks for Union Busting Act" eliminates tax deductions for employer spending on activities designed to influence workers' decisions about unionizing, collective bargaining, or other labor organization activities. Currently, employers can deduct these "union-busting" expenses as ordinary business costs, effectively receiving a taxpayer subsidy for anti-union campaigns. This bill ends that tax benefit and requires employers and anti-union consultants to report such spending to the IRS, with penalties for non-compliance.

Who Benefits and How

• Workers and labor unions benefit because employers face higher costs to oppose unionization efforts, potentially making anti-union campaigns less attractive and giving workers more freedom to make organizing decisions without employer interference
• The federal treasury benefits from increased tax revenue as companies can no longer write off anti-union expenditures, which currently total an estimated $340 million annually on outside consultants alone
• Labor organizations gain a more level playing field in organizing campaigns, as employer opposition becomes more expensive

Who Bears the Burden and How

• All employers who engage in activities to influence employees' labor-related decisions lose tax deductions for these expenses, increasing their effective cost by their marginal tax rate (potentially 21% or more for corporations)
• Anti-union consulting firms ("union avoidance consultants") must file new IRS reporting returns disclosing their clients and activities, increasing transparency and compliance burden
• Employers conducting covered activities face new compliance requirements including mandatory reporting of dates, amounts, and types of labor-related expenditures on their tax returns
• Non-compliant employers face penalties starting at $10,000 minimum (or $1,000 per full-time employee, whichever is greater), with escalating penalties of the same amount every 30 days for continued failures, up to $100,000 maximum

Key Provisions

• Eliminates tax deductions for any employer attempt to influence employees regarding labor organizations, including captive audience meetings, anti-union training sessions, and costs related to unfair labor practice complaints or settlements
• Defines covered expenditures broadly to include: direct and indirect costs (including wages), amounts triggering NLRB complaints or settlements, meetings with employees discussing unions, and anything reportable under existing labor disclosure laws
• Exempts legitimate labor relations activities including: collective bargaining negotiations with recognized unions, voluntary recognition processes, labor-management partnerships, grievance procedures, legally-required workplace postings, and amounts paid by labor organizations themselves
• Creates penalty structure under new IRC Section 6720D for failing to report labor-related expenditures, with reasonable cause exception
• Requires third-party consultant reporting under new IRC Section 6039K, mandating that anti-union consultants file returns identifying their clients, activities, and amounts received
• Takes effect 240 days after enactment to allow Treasury time to issue implementing regulations