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Respondent argues “petitioner’s collection of income from
the associate membership of Mail Handlers constitutes a trade or
business.” Respondent’s argument is flawed. First, as a factual
matter, petitioner does not collect any income from the associate
membership of Mail Handlers. Mail Handlers collects dues from
its associate members. It is irrelevant to the issue before us
that receipt of that income by Mail Handlers may well be UBTI to
Mail Handlers. Mail Handlers is not before the Court. Second,
other than the services petitioner provides its members and
affiliated unions in furtherance of its exempt purposes,
petitioner provides no goods or services for a profit and
therefore cannot be in an unrelated trade or business. Although
respondent correctly observes that courts have found that the
collection of associate dues in exchange for access to a health
insurance program constitutes a trade or business, see, e.g., Am.
Postal Workers Union v. United States, 925 F.2d 480, 483 (D.C.
Cir. 1991), petitioner does not provide access to the Mail
Handlers’ health plan.
Respondent further argues:
In substance, the income petitioner receives is a
portion of the associate member dues retained by Mail
Handlers. The income may not have come to petitioner
directly from the associate members, but each dollar
petitioner collects from Mail Handlers is generated
from the unrelated trade or business activity of
providing access to health insurance. This is the same
unrelated trade or business activity that generates
UBTI to Mail Handlers and its Local Unions. The
portion of associate member dues that is forwarded to
petitioner, therefore, should retain its character as
UBTI when it is passed along to petitioner. The
associate member dues paid to Mail Handlers and then to
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Last modified: May 25, 2011