NCPA - National Center for Policy Analysis

Unions Failing to Report Political Expenses to IRS

August 7, 2001

In at least the last three elections, unions may have failed to report political expenditures as they are required by law to do -- and such failures may be grounds for an audit. That is according to Associated Press reporters who gathered the tax forms of several major unions that reported no political expenditures whatsoever, and described them to Internal Revenue Service officials.

The documents reportedly show that labor unions have spent millions of dollars of workers' dues on election-year ads and get-out-the-vote drives without reporting the expenditures.

  • The AFL-CIO spent $35 million on political activities during the 1996 election campaign.
  • The unions also failed to separate their political spending from lobbying expenditures -- as they are required to do.
  • The AP did not divulge which unions were in possible non-compliance and, indeed, did not share the names of the unions in question with the IRS.
  • But IRS officials said it appeared the unions were obliged to disclose on their tax forms at least some of the activities described in the documents.

Failure to report can result in back taxes and fines if the IRS concludes the spending did not follow rules for tax-exempt organizations such as unions.

Among the unions' political activities, one document laid out a strategy to elect Democrats in North Carolina and to be partially funded by unions: "We seek to: re-elect President Bill Clinton, re-elect Gov. Jim Hunt, elect Harvey Gantt to the Senate... win back at least two seats if not the majority in our state's congressional delegation." All three named men are Democrats.

Source: Larry Margasak (Associated Press), "Unions Said to Flout IRS by Not Reporting Political Expenses," Washington Times, August 7, 2001.


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