Building trades unions are trying new tactics to fight back at the anti-union Associated Builders and Contractors.

Over the last several months, we have reported how the AFL-CIO Building Trades Department, in an effort to strengthen apprenticeship standards, has requested an inquiry by the U.S. Department of Labor following a building trades study that found extremely low graduation levels among ABC apprentices.

Earlier this month, the building trades sent information to the Internal Revenue Service and state tax agencies documenting that local ABC affiliates did not pay taxes – but should have – on insurance payments they received from the national ABC.

“If ABC chapters want to be in the insurance business, they must pay federal and state taxes legally due,” said Building Trades Department President Edward Sullivan. “Having nonprofit status as a trade association is no license to avoid taxes on sideline business activities that are generating enormous profits. It’s time for the IRS and Congress to ask why these ABC chapters have not been paying these taxes.”

The investigation of publicly available tax returns filed by the ABC revealed that many of the non-profit group’s local affiliates did not pay taxes, as required, on their for-profit insurance activities. The Building Trades Department found that ABC affiliates reported income not directly related to ABC purposes as non-taxable.

However, “the IRS has repeatedly taken the view that revenues to trade associations from sale of insurance policies to their members are taxable,” the building trades report says.

For example, between 1997 and 2001, the National ABC Insurance Trust paid local ABC chapters $2.2 million, and paid the national ABC $636,628 in service fees. The national group paid taxes on the income, while a number of chapters did not – but should have, the building trades maintain.

Among the Associated Builders and Contractors chapters that did not to pay taxes on possible insurance-related income is the Western Michigan Chapter, which itemized income of $320,493 as “Royalty Income.” The chapter claimed the money was exempt from taxation under the IRS exemption for passive income. The study said it is unclear if the income is related to the national ABC Insurance Trust, or from the local chapter’s own insurance activities.