Number: 04-04

March 16, 2004

Updated FAQs

The Department of Labor’s Office of Labor-Management Standards (OLMS) has posted additional information to the Revised Form LM-2 and Form T-1 FAQs.

Below are new questions that we have recently posted to our Web site broken out by subject heading. This is in addition to the most recent update on March 11, 2004 (OLMS News 03-04). Should you have any follow-up questions please feel free to submit them via e-mail to OLMS at:

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Form LM-2

General Questions

Q. Our union has members and funds in Canada. Would we have to report the Canadian funds?

A. Affiliates located in Canada are not covered by the LMRDA. 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. However, if an LMRDA-covered union has an interest in a trust that is located in Canada, the trust can still be a significant trust in which the union is interested.

Q. Canadian dues are paid in Canadian dollars, do we report that?

A. If a union in the U.S. covered by the LMRDA receives funds in a foreign currency, the amounts must be reported in U.S. dollars in the LMRDA reporting forms.

Q. Does "just cause" allow members to look at all records or just the ones withheld?

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. Whether or not a member may also be able to establish just cause to examine books and records to verify other information in the Form LM-2 will depend on all of the facts and circumstances and the Department has not taken any position on that issue.

Q. How will disputes about a member's right to review records be resolved?

A. Disputes concerning members' requests for supporting records that a union denies are resolved by a court pursuant to member litigation.

Electronic Filing Questions

Q. Can the union file a "test" report before the deadline to ensure that electronic filing works?

A. OLMS will conduct extensive testing of the software, which will include submission of test reports. There will also be a feature built into the form that allows the user to test their import files before actually importing them into the form. Validation routines will be run prior to submission to inform the user of any errors. There will be technical help available for the software in the form of a help desk.

Q. How do you know the form transmitted properly? How quickly will you get a confirmation?

A. The software will run a number of validation checks when information is entered and when the form is submitted, similar to those in use with the current software. Also, the reporting labor organization will be sent confirmation that the report was received.

Q. Can you alter the data on the form after import?

A. Yes, data can be edited after importing it into the form.

Computer and Software Requirements

Q. Will there be a network version of the software so that more than one person can work on the form at one time?

A. No, the form can only be edited by one person at a time. However, multiple people can work on creating the data import files for the different schedules that can then be imported into the form.

Q. Will the software auto-complete items when you start typing if you are entering the same text over and over?

A. The software comes equipped with an auto-complete function that can be turned "on" under the preferences menu.

Statement A - Assets and Liabilities

Q. Can Statement A be completed on the cash basis?

A. Schedule 1, Accounts Receivable, and Schedule 8, Accounts Payable, must be completed in accordance with the instructions. Therefore, Statement A- Assets and Liabilities may be reported on either an accrual basis or on a modified cash basis.

Questions on Schedules 1 - 10

Q. Do we have to track delinquent dues as accounts receivable?

A. Schedule 1, Accounts Receivable, and Schedule 8, Accounts Payable, must be completed in accordance with the instructions.

Q. Must a labor organization report payables in Schedule 8 that are disputed by the union, or should they be reported in Item 69, Additional Information?

A. Disputed payables should be listed on Schedule 8. The disputed nature may be explained in Item 69.

Questions on Schedules 14 - 19

Q. The IU has an apartment in another city - does the expense for that go in overhead or is it allocated by use?

A. If, for example, the union owns a condominium apartment in Washington D.C. for the use of officers and employees on official business whose workplace is in another city, the disbursements should, if possible, be allocated among the schedules identified with a particular function. If it is not possible to otherwise allocate the disbursements, the total disbursements should be reported as General Overhead. If, however, the apartment is for the use of a particular officer or employee, the disbursements should be reported in Schedule 11 or 12 by the officer's or employee's name.

Q. For credit card transactions, should the union use the date of the charge or the date of the payment?

A. In order for cash to balance, the date of the payment should be used.

Q. What is the difference between Schedule 18, General Overhead, and Schedule 19, Union Administration?

A. Generally, disbursements for union administration relate to the general governance of the union (such as officer elections, meetings, member education, etc.) and complying with obligations established by the government (such as filing Form LM-2 reports). Disbursements for operating expenses that cannot be allocated to any of the disbursement categories in Statement B of Form LM-2 should be included in General Overhead.

Form T-1

General Questions

Q. Is a union required to file a Form T-1 for a trust that only receives payments from an employer?

A. If an employer makes payments to a trust in which a labor organization is interested on the labor organization's behalf or pursuant to a negotiated agreement, and if the payments are $10,000 or more during the reporting period, and if the trust's total receipts are $250,000 or more, the union must file a Form T-1 for the trust.

Q. For building corporations, what constitutes a contribution for purposes of determining if a Form T-1 must be filed?

A. Examples of contributions would be payments for rent, maintenance, repairs, and improvements.

Q. If a trust begins filing a Form 5500 for its fiscal year ending 12/31/2005 which is not due until 10/15/2006, what is the responsibility of a labor organization on 3/31/2006 if its fiscal year ends on 12/31/2005?

A. If the Form 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. When is a terminal report on a trust due?

A. A terminal report for a trust is due thirty (30) days after the trust ceases to exist or the labor organization no longer has an interest in the trust.

Q. How much of the Form T-1 must we fill out if it is a terminal report?

A. The entire Form T-1 must be completed for a terminal report. If the labor organization is filing the terminal report because it no longer has an interest in the trust and the due date for the Form T-1 is in the middle of the trust's fiscal year, the labor organization should take whatever steps it can to secure the necessary information. If the labor organization is unable to obtain the necessary information, it 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.

Q. In making trust documents available for members to review, if the trust does not cooperate, will the union be liable if a member is denied access?

A. This will be a matter for the courts to determine in private litigation brought by a member. However, in general a union is expected to take whatever steps it can to comply with the requirements of the LMRDA by providing to members the information in its control that is required to be contained in the Form T-1, as well as permitting members to examine such records as are necessary to verify the report.

Q. Can the Department contact trusts to advise them of what is required and when?

A. The Department is planning to contact trusts to advise them of the Form T-1 reporting and recordkeeping requirements when labor organizations request file numbers for the trusts and provide identifying information on the trusts.

Questions on the Definition of a Trust

Q. When would a bank be considered a trust?

A. This would have to be determined on a case by case basis as to whether the bank meets the statutory definition of a trust in which a labor organization is interested.

Q. As part of a collective bargaining agreement, a trust receives contributions from employers to provide training to the union members. However, the trust forwards those funds to a subsidiary 501(c)(3) corporation, which the union has no involvement in the operation thereof. What is the reporting responsibility of the union with regard to Form T-1?

A. The union must file a Form T-1 for the trust, if the trust meets the statutory definition of a trust and the trust size and contribution level thresholds are met. Further, if the subsidiary 501(c)(3) corporation meets the statutory definition of a trust in which a labor organization is interested, the union would have to file a Form T-1 for the subsidiary corporation if the trust size and contribution level thresholds are met.

Questions on Schedules 1, 2, & 3

Q. Would you confirm that if the audit report is provided in place of the Form T-1, then the itemization for vendors would include the payments made for salary and a separate Schedule 3 would not be required?

A. That is correct.

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Last Updated: 03/17/04