The head of a New York labor union who allegedly took a payoff from Secretary of Labor Raymond J. Donovan's construction company has lost an appeal of his conviction in an income tax evasion case.

Louis Sanzo, president of Laborers International Local 29, faces three years in prison. He was convicted on charges involving $400,000 in payoffs from two contracting companies that employed members of his union.

The 2nd U.S. Circuit Court of Appeals upheld Sanzo's conviction this month and dismissed his claims of having been victimized by false testimony and prejudiced by "intimations" of ties to organized crime.

Sanzo filed a motion for reconsideration with the appeals court Monday. He is free on $20,000 bond.

Since his conviction last summer, Sanzo has been publicly accused by Local 29's former secretary treasurer, Mario Montuoro, of taking an envelope containing $2,000 in cash from an official of the Schiavone Construction Co. of Secaucus, N.J., during a 1977 luncheon. Members of Local 29 have worked for Schiavone on New York subway construction projects.

Montuoro has charged that Donovan, then executive vice president of Schiavone, was at the meeting when Sanzo got the envelope.

The allegations, which Donovan has denied, triggered a federal grand jury investigation being conducted under the aegis of a special prosecutor. Sanzo testified before the panel Feb. 16 and reportedly denied taking a payoff from Donovan's firm.

In appealing his conviction on tax evasion and conspiracy charges, Sanzo had asserted that Montuoro was among the government witnesses who testified falsely on various points..