No Tax Breaks for Union Busting (NTBUB) Act
- Sponsor
- Rep. Norcross, Donald [D-NJ-1]
- Committees
- Ways and Means Committee (primary)
- Last action
- Apr 7, 2025
Bottom line
The bill eliminates tax deductions for employer spending on activities intended to influence employees' decisions about unionization and collective action, while imposing new transparency requirements on such expenditures.
What it actually does
This bill amends the Internal Revenue Code of 1986 to deny tax deductions for employer expenses incurred to influence their employees regarding labor organizations or collective action. It defines what constitutes such influence, including costs related to unfair labor practices or 'captive audience' meetings, and establishes new information reporting requirements for both employers and third-party consultants, with penalties for non-compliance.
Proponents argue
Supporters argue that the current tax code unfairly subsidizes employer efforts to deter unionization, which contradicts the National Labor Relations Act's policy of encouraging collective bargaining and protecting workers' freedom of association. They contend that ending this tax break will level the playing field for workers and reduce the financial incentive for employers to engage in anti-union tactics, including those that constitute unfair labor practices.
Opponents contend
Critics, while not explicitly detailed in the bill text, are likely to argue that denying tax deductions for legitimate business expenses, including communications with employees about labor matters, infringes on employer free speech rights and imposes undue regulatory burdens. They may also contend that the bill creates an uneven playing field by targeting employer communications while not similarly restricting union spending.
The bill is relatively short and clearly written, making it accessible for a quick but thorough review by an informed reader.
Section 3(a)
Denial of Deduction for Influencing Employees on Labor Matters
This provision amends Section 162(e)(1) of the Internal Revenue Code to explicitly deny tax deductions for any attempt by an employer to influence their employees with respect to labor organizations or labor organization activities, including their opinions on such matters. This means employers can no longer write off these costs as ordinary and necessary business expenses.
Supporters argue
Supporters argue this provision is essential to level the playing field in labor organizing, as taxpayers should not subsidize employer efforts to deter unionization, which runs counter to the stated policy of the National Labor Relations Act to encourage collective bargaining.
Critics contend
Critics might argue that all legitimate business expenses should be deductible, and this provision unfairly targets employers' rights to communicate with their employees about significant workplace issues, potentially infringing on free speech.
Tradeoffs
The bill balances the government's interest in promoting collective bargaining and worker rights against employers' ability to deduct business expenses and communicate with employees about labor matters.
Section 3(b)
Definitions of Labor Organizations and Activities
This section introduces new definitions into the Internal Revenue Code. 'Labor organization' is defined by reference to the Labor-Management Reporting and Disclosure Act of 1959. 'Labor organization activity' is broadly defined to include labor organization elections, labor disputes, collective actions (referencing Section 7 of the NLRA and the Railway Labor Act), and other related activities identified by the Secretary of the Treasury.
Section 3(c)(1)(i)
Specific Inclusions for Non-Deductible Expenses
This subsection details specific types of expenses that are considered 'attempts to influence' employees and are therefore non-deductible. These include amounts paid or incurred in connection with actions resulting in unfair labor practice complaints or settlements under the NLRA or findings of interference under the Railway Labor Act. It also covers expenses for meetings or training that include employees who could join a bargaining unit where labor organizations are discussed ('captive audience meetings'), and any amounts required to be reported under the Labor-Management Reporting and Disclosure Act of 1959.
Section 3(c)(1)(ii)
Exceptions to Non-Deductible Expenses
This subsection carves out several exceptions, allowing employers to continue deducting expenses for certain activities. These include direct communications or negotiations with recognized employee representatives, communications with shareholders as required by law, voluntary recognition of a labor organization, operation of labor-management partnerships or grievance procedures, expenses incurred by a labor organization itself, legally required communication materials, and expenses related to unfair labor practice complaints that are fully set aside.
Section 3(d)(1)
New Information Reporting Requirements and Penalties for Employers
This section creates a new Internal Revenue Code section (6720D) requiring taxpayers who incur non-deductible expenses related to influencing employees on labor matters to report specific information with their tax returns. This includes dates, activity type (e.g., related to ULP complaints), amounts paid, and copies of any LMRDA disclosures. Failure to provide this information or providing incorrect information incurs a penalty, starting at $10,000 or $1,000 per full-time equivalent employee, with increased penalties for continued failure, capped at $100,000.
Section 3(d)(2)
Third-Party Information Reporting Requirements
This section creates another new Internal Revenue Code section (6039K) requiring any person (e.g., a consultant) who conducts activities described in Section 162(e)(1)(E) on behalf of an employer to file a return with the IRS. This return must include information about the employer, dates of activities, activity type, and amounts paid or incurred. A penalty is added to Section 6724 for failure to comply with this reporting.
Grants the Secretary of the Treasury authority to prescribe guidance, rules, or regulations, specifically including rules relating to the timing of deductions for amounts related to unfair labor practice complaints that are later set aside in full.
Section 3(c)(2)(A)
Why it matters:This is standard legislative practice to grant implementing agencies the necessary regulatory authority for complex tax matters, ensuring the practical application of the main policy.
Case for: Proponents would argue this is necessary to ensure fair and consistent application of the tax code, allowing the IRS to develop detailed rules for situations where a deduction is initially denied but later becomes permissible upon appeal.
Case against: Critics might express concern that broad regulatory authority could lead to interpretations that expand or contract the bill's intent beyond what Congress explicitly legislated, potentially creating uncertainty for taxpayers until regulations are finalized.
Estimated impact: Affects the administrative process and potentially the cash flow for employers who successfully appeal unfair labor practice charges. The fiscal impact is likely minor but provides clarity for specific edge cases.