U.S. Tax Court Rules Teachers Union Must Pay $1.1 Million for Magazines

A portion of National Education Association members’ dues count as circulation income for the union’s magazine, creating a $1.1 million tax bill for the group, the U.S. Tax Court ruled.

The court said in the ruling today that because NEA members had a “right to receive” the magazine, a share of member dues counted as circulation income.

That dues income wiped out a loss from circulation activity that was unavailable to offset taxable revenue from advertising in the magazine, NEA Today, according to the ruling.

As a result, the NEA owed tax of $319,094 for 2001, $444,554 for 2002 and $342,371 for 2003, according to Internal Revenue Service findings in June 2009 that led the teachers union to take its case to the tax court.

NEA maintained that its members didn’t have the right to receive the publication because the union was under no obligation to continue publishing it and because the magazine was available for free on the Internet.

The IRS said NEA members had right to receive the magazine because their dues paid for it.

NEA, based in Washington, has 3.2 million members. The union did not immediately respond to a request for comment today.

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.