Summary#
This bill would change the tax code to stop employers from taking tax deductions for spending that tries to influence their employees about labor organizations or labor organization activities. It adds a definition of "labor organization" and "labor organization activity," lists what counts as influence spending, and lists specific exceptions. The bill also creates new reporting rules for employers and for third parties who do such work, adds penalties for failures to report required information, and requires the Treasury to write regulations and guidance within 240 days. The changes take effect for taxable years beginning after 240 days following enactment.
What it means for you#
- If you work for an employer: the bill does not change the rights described in the National Labor Relations Act or the Railway Labor Act. It changes how certain employer spending that relates to union organizing or collective actions is treated for tax and reporting purposes.
- If you run a business or provide services to employers: certain expenses used to influence employees about unions or collective action would no longer be tax deductible. Businesses and third-party consultants doing these activities would have new information-reporting duties and could face penalties if they fail to provide required information.
Expenses#
- The bill adds a rule denying deductions under IRC section 162 for any attempt to influence the taxpayer's employees with respect to labor organizations or labor organization activities.
- Examples of amounts treated as influence spending include: amounts connected to actions that result in an NLRB complaint, a settlement of an unfair labor practice charge without a complaint, or a court finding under the Railway Labor Act; amounts for meetings or trainings that include employees who could be in a bargaining unit and where labor organization activity is discussed; and amounts required to be reported under the Labor-Management Reporting and Disclosure Act.
- The bill lists exceptions, including communications with a designated employee representative, communications to shareholders required under securities law, communications related to voluntary recognition, amounts for operating labor-management partnerships under an existing collective bargaining agreement, grievance-procedure communications under a CBA, amounts paid by a labor organization, required legal postings for employees, and amounts relating to complaints that are later set aside in full.
- The bill creates a new reporting penalty (section 6720D): the greater of $10,000 or $1,000 multiplied by the employer's full-time equivalent employees, with additional penalties if a failure continues more than 90 days (subject to a $100,000 cap). There is a reasonable cause exception.
- Third parties performing these activities for others must also file information returns under a new section 6039K.
Proponents' View#
The bill says employers spend large amounts to influence employees about union organizing and collective action, including lawful and unlawful tactics. Its sponsors argue that the tax code should not subsidize that spending. They say denying deductions will remove a taxpayer subsidy for employer influence and help protect workers' free choices about union representation and collective action.
Opponents' View#
No publicly available information.