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- LM-2 General Questions
- LM-2 Schedules 11-13 Questions
- LM-2 Schedules 14-19 Questions
- New form LM-2 Questions on Statement B - Reciepts and Disbursements
- LM-2 Signature Questions
- T-1 General Questions
- T-1 Electronic Filling Questions
- Form T-1 Record Keeping Questions
December 18, 2003
The Department of Labor's Office of Labor-Management Standards (OLMS) posts new LM-2 and Form T-1 FAQs.
Below are new questions that we have recently posted to our Web site at https://www.dol.gov/agencies/olms broken out by subject. Should you have any follow-up questions please feel free to submit them via e-mail to OLMS at: email@example.com.
Thank you for subscribing to the OLMS Mailing List. We hope that you find this mailing informative.
Q. What form do I file for a union that is in trusteeship?
A. Any labor organization that has placed a subordinate labor organization in trusteeship is responsible for filing the subordinate's annual financial report which must be filed on Form LM-2.
Q. If an LM-3 filer is placed in trusteeship, every transaction will have to be redone. If records are missing, destroyed, or unavailable, what are the options for filing?
A. A union that has placed a subordinate labor organization in trusteeship should attempt to reconstruct the information needed to complete the Form LM-2 on behalf of the subordinate to the best of its ability. This may include getting records from the subordinate's bank and other entities with which it did business during the reporting year. If there is information that is unavailable despite the union's best efforts, it should be explained in Item 69.
Q. Instructions for Schedule 13, Column (A) indicate that the definition of each membership category should specify whether members pay full dues. In the case of an international union, does this mean full per capita?
Q. If a union has some affiliates for which it cannot identify agency fee paying nonmembers, what should it do?
A. A union need only report agency fee paying non-members of which it is aware. Of course, if a union does in fact maintain a list of such fee-paying nonmembers and fails to include information in Schedule 13, the form will not be correct.
Q. In many instances labor organizations will make a single disbursement to a vendor for multiple purposes that fall under more than one functional category. How can a labor organization accurately allocate a single disbursement to multiple functional categories?
A. Labor organizations should use all available data in order to accurately allocate disbursements to the appropriate functional categories. When it is not possible to be precise, good faith estimates are acceptable.
Q. If a labor organization makes a payment to a vendor (e.g., a travel agency) who thereafter makes payments to third party vendors (airlines, rental car agencies), how are the disbursements to be reported? Who is the vendor for purposes of completing the itemization pages?
A. The third party vendors (e.g., airlines, rental car agencies) are considered the vendors for itemization purposes. There may, of course, be situations where a travel agency or other vendor sells a package that includes services or products from other vendors for whom the amount of the disbursement cannot be easily identified. In such a situation it is unnecessary to separately identify those vendors.
Q. If a union pays several invoices from a law firm with one check, how should that be reported?
A. Itemized information must be reported for disbursements that are over $5,000 in a particular category; the answer to this question depends on the amount of the check and whether it represents payment for services that may be attributable to more than one category. Assume the payment to the law firm for all of the invoices totals $45,000 and one third is attributable to representation activities, one third to overhead, and one third to lobbying. The union should report $15,000 in Schedule 15 (Representational Activities), $15,000 in Schedule 19 (Union Administration), and $15,000 in Schedule 16 (Political Activities and Lobbying), and itemized information should be provided for each payment in each schedule. If the check totals $45,000 and represents $40,000 for Representational Activities, $3,000 for Union Administration, and $2,000 for Political Activities and Lobbying, the relevant amounts should be reported in the appropriate schedules, but itemized information need only be reported for the $40,000 amount.
Q. If a law firm is handling several cases in one category, is it necessary to separate them by case?
A. No. The requirement is to report disbursements by purpose as indicated in Statement B, not by case.
Q. Some legal bills list details by date but not case. Does the union have to go through each bill and categorize them?
A. You should request the law firm to provide sufficient detail to complete the LM-2. If precise information is not available for each bill, the disbursements may be reported in appropriate categories based upon the proportion of work done by the firm in each category.
Q. How are retainers for law firms reported?
A. You should request the law firm to provide sufficient detail about the services rendered for the retainer to complete the LM-2.
Q. If a union makes only a minimum payment on a credit card, how does it report that?
A. You must allocate all transactions charged to a credit card to one of the disbursement categories in Statement B. If you make a payment that is less than the full amount due for a particular credit card statement, you must continue to allocate subsequent payments against the unpaid balance until it has been paid in full.
Q. Does the phone bill for the political department go in General Overhead?
A. If the union pays its total phone bill without differentiating the purpose for which calls are made, the payment for that bill may be reported in General Overhead. If the phone bill is for use of the phones identified with a particular purpose which fits within one of the schedules on Form LM-2, the payment should be reported in that schedule. Accordingly, a disbursement for a phone bill for the political department probably should be reported on Schedule 16 as a disbursement for Political Activities and Lobbying.
Q. Item 67(c), Total Withheld But Not Disbursed - If there is a tax liability and the union made payment on a prior year, how does it report that?
A. You may enter either positive or negative numbers on this line. In the situation described, you would enter a negative number.
Q. If an international puts an organization under trusteeship, does it have to get a digital signature for the trustee?
Q. Are digital signatures by file number or by organization? Can they be used for other things?
A. Digital signatures are obtained by individuals and may be used for other government forms requiring digital signatures.
Q. If there are new officers elected two weeks before the report is due, will they have time to get digital signatures?
A. They should apply for digital signatures as soon as possible. If the digital signatures have not been obtained at the time the report is due, they may elect a temporary hardship exemption.
Q. What is the definition of a trust in which a labor organization is interested?
A. A trust in which a labor organization is interested means a trust or other fund or organization (1) which was created or established by a labor organization, or one or more of the trustees or one or more members of the governing body of which is selected or appointed by a labor organization, and (2) a primary purpose of which is to provide benefits for the members of such labor organization or their beneficiaries.
Q. What is a contribution?
A. The term "contribution" is broadly construed and in addition to direct contributions from a labor organization or from an employer pursuant to a collective bargaining agreement also includes purchases of goods and services. Stock purchases, investments, and in-kind contributions all are considered contributions. However, a deposit to an account of the labor organization in a credit union or other financial institution would not be a contribution to the financial institution.
Q. Is rent considered a contribution to a trust?
Q. If a union donates $10,000 to a charity, does it have to file a T-1 for that charity?
A. The answer to this question depends upon whether the charity meets the definition of a trust in which the union is interested and has $250,000 in annual receipts. If it does, and no other exemption applies, it must file a Form T-1. If not, the disbursement must be reported in the appropriate schedule, but no Form T-1 is required.
Q. How does DOL define an officer of a trust?
A. There is no statutory definition. The union should rely on the trust to identify what it considers to be officers.
Q. Are Form T-1s required for trusteed labor organizations with annual receipts less that $250,000?
A. For many years, a union that has placed a subordinate union in trusteeship has been required to file the annual financial report for that union using a Form LM-2, whether or not the union placed in trusteeship would otherwise be permitted to use a Form LM-3 or LM-4. The more detailed reporting is required because the finances of a union that is placed in trusteeship are more likely to need the close scrutiny that more detailed disclosure permits. Similar reasoning supports the requirement reflected by the instructions for filing Form T-1 for labor organizations in trusteeship, which read as follows: Any labor organization that has placed a subordinate labor organization in trusteeship is responsible for filing the subordinate's annual financial reports. This obligation includes the requirement to file Form T-1 for any trusts in which the subordinate labor organization is interested. As with all Form T-1s, however, a union that is required to file a Form T-1 for a trust in which a union that is in trusteeship has an interest and is unable to obtain the cooperation of that trust should inform the Department of the efforts that it has made to obtain cooperation. If the union has made a good faith effort to obtain the information and has not been successful, it will have met the requirement under the rule.
Q. Is the international union required to file T-1 reports for non-covered affiliates that would not be exempt as a result of filing an LM report?
A. Although a non-covered affiliate may meet the definition of a trust, it is not the Department's intention to require reporting by labor organizations that are not engaged in an industry affecting commerce, or otherwise subject to U.S. law. Accordingly, the Department will not require a labor organization to file a Form T-1 for an affiliated labor organization that is not otherwise covered by the LMRDA unless it appears that the entity was structured as a labor organization in order to evade the reporting requirements of the Act and these regulations.
Q. What if the ERISA Form 5500 has not been filed by the time the Form LM-2 is due?
A. While a Form 5500 may be timely filed as much as 9 ½ months after the end of the trust's fiscal year, it may also be filed earlier, of course. If the 5500 has not been filed, or accepted as complete, when the reporting union's Form LM-2 is due, the union may indicate, in Item 69, that a Form 5500 will be filed and that the Form LM-2 will be updated when it is filed. The union should also indicate whether a Form 5500 was filed for the previous year and enter the three-digit plan number as well as the nine-digit employer identification number in Item 69. If the Form 5500 is not filed by the date that it is due, however, or is not complete on that date, then the union also will be delinquent in its obligation to file a Form T-1.
Q. Can a Form 990 be used to substitute for a T-1?
Q. What are the standards used for determining whether to grant a hardship exemption?
A. As stated in the instructions for revised Form LM-2 and new Form T-1, the condition for a temporary hardship exemption is whether the labor organization "experiences technical difficulties that prevent the timely preparation and submission of an electronic filing . . .", and the condition for a continuing hardship exemption is whether the form cannot be filed electronically "without undue burden or expense."
Q. Labor organizations must use the software prepared by the Department to file Form T 1. Will the Department require the officers of the trust to provide labor organizations with the information necessary for filing in a format compatible with the reporting software?
A. The Department will not require the trust to provide information in a specific format. It is the responsibility of the labor organization to work with the trust to obtain the information necessary to complete the Form T 1. The labor organization will be expected to take whatever steps it can to secure the necessary information. OLMS expects that in many instances the trust will prepare the Form T-1 and provide it to the labor organization(s) for filing. OLMS recognizes that there may be some situations when a labor organization will not have the leverage or authority to obtain trust records. In that situation, the labor organization should contact OLMS, and provide evidence that it has made a good faith effort to obtain the information. OLMS may then contact the trust and attempt to assist the labor organization in obtaining the necessary records. A union that makes a good faith effort to obtain the information necessary to prepare a Form T-1 but is unsuccessful will not be penalized.
Q. How can a union officer be responsible for records for an organization that the union does not control? If trust information is not available by the required filing date, what does the union do?
A. Even though a trust is a separate entity from the reporting labor organization, it is reasonable to expect that the labor organization will have sufficient authority and/or influence to obtain the required information from a trust for which it must file a Form T-1 because (1) the labor organization had established the trust and/or selected one or more of the members of the trust's governing body, and (2) the labor organization directly or indirectly made a substantial ($10,000 or more) contribution to the trust. The labor organization will be expected to take whatever steps it can to secure the necessary information. OLMS expects that in many instances the trust will prepare the Form T-1 and provide it to the labor organization(s) for filing. OLMS recognizes that there may be some situations when a labor organization will not have the leverage or authority to obtain trust records. In that situation, the labor organization should contact OLMS, and provide evidence that it has made a good faith effort to obtain the information. OLMS may then contact the trust and attempt to assist the labor organization in obtaining the necessary records. A union that makes a good faith effort to obtain the information necessary to prepare a Form T-1 but is unsuccessful will not be penalized.
Q. How can a labor organization get the necessary information from a trust to file Form T-1?
A. Even though a trust is a separate entity from the reporting labor organization, it is reasonable to expect that the labor organization will have sufficient authority and/or influence to obtain the required information from a trust for which it must file a Form T-1 because (1) the labor organization had established the trust and/or selected one or more of the members of the trust's governing body, and (2) the labor organization directly or indirectly made a substantial ($10,000 or more) contribution to the trust. The labor organization will be expected to take whatever steps it can to secure the necessary information. OLMS expects that in many instances the trust will prepare the Form T-1 and provide it to the labor organization(s) for filing.
Q. What if the labor organization is unable to obtain the required information?
A. OLMS recognizes that there may be some situations when a labor organization will not have the leverage or authority to obtain trust records. The labor organization should contact OLMS and we will deal with those situations on a case-by-case basis.
Q. Can a union member who is not a beneficiary of a trust examine the trust records?
A. Yes. All union members have the right to examine records necessary to verify the accuracy of the Form T-1 for just cause. Nothing in the final rule, however, requires the disclosure of information if such disclosure is otherwise prohibited by law.
Q. If a union member asserts just cause for examining records because the confidentiality provision has been invoked with respect to a union's filing on a T-1, does that entitle the member to look at all the underlying records of the LM-2, or just the records relating to that trust?
A. The Department's position is that the failure or refusal to disclose information because it may be adverse to the organization's legitimate interests constitutes "just cause" to examine the books and records that are necessary to verify the information reported in that fashion. The member would have to establish just cause for examining records supporting other entries on the Form T-1 or Form LM-2 separately.
Q. How does DOL define an officer of a trust?
A. There is no statutory definition. The union should rely on the trust to identify what it considers to be officers.
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Last Updated: 12-22-03