The IRS is demanding the Laborers' Int'l
Union of N. Am. pay $2,273,876 for back income taxes from 1987-90
and 1993-96 and $618,510 in penalties. The IRS says that fees
paid to LIUNA by its subordinate Nat'l Postal Mail Handlers Union
constitute taxable business income unrelated to the purpose for
which LIUNA is tax exempt. LIUNA filed a petition in U.S. Tax
Court in Washington Jan. 24 to reverse the IRS decision.
The 50,000 member NPMHU has been a division
of LIUNA since 1969. Since 1963, it has operated a government-wide
health insurance plan that federal employees may join even if
they aren't postal employees. The plan now has 1 million members.
To be in the plan, non-postal employees must
become NPMHU associate members. They pay dues to locals, but don't
have a voice or a vote in union affairs. For each associate member,
NPMHU began paying LIUNA a $3.60 fee in 1987 and then $4 in 1992.The
IRS says by collecting these fees, LIUNA has engaged in "an
activity that constituted a trade or business."
Associate members don't receive conventional
union "services and support" from LIUNA; and thus, they're
merely members of the health plan.LIUNA claims that the desire
to make profits is not present and that the fee furthers LIUNA's
tax-exempt purpose. [Non-Profit Times 3/00]