Key Filing Compliance Requirements
While this article on compliance and financial reporting may seem a bit redundant — it is necessary. Our goal is to continue providing guidance and/or support to help improve the reporting compliance of our affiliated locals and councils. In 2017, we met with many new financial officers and local leaders at the educational conferences. These smaller venues provided the opportunity for more informal one-on-one training. In October, we provided financial training at the Power 4 America Conference (P4A). Whether in smaller, member-to-member settings, or in larger groups like a regional conference, our organization is committed to assisting and reinforcing the importance of regulatory compliance and the protection of UWUA funds and assets.
One vehicle to assist in compliance and training is the U.S. Department of Labor (DOL). The UWUA continues to work with the DOL through the Voluntary Compliance Partnership Program to assist our affiliates’ compliance with the Office of Labor Management Standards (OLMS). In September, we met with DOL representatives to review several of the Voluntary Compliance Program objectives, including the following:
1) continued partnership in the program; 2) successful transition to the new mandatory electronic filing requirements; 3) bonding requirements; 4) review of all affiliate’s compliance; and, 5) utilization of OLMS resources to assist the UWUA financial training efforts. (DOL representatives provided financial training at the P4A Conference). Below, we have listed several key components for reference and proper filing. As always, please do not hesitate to contact the National Office for guidance, clarification or assistance.
DOL filing requirements
What form do you file?
Depending on size of organizations’ receipts, there are 3 potential forms your union would be required to file. Form LM-2 is filed if your union’s total annual receipts were $250K or more, Form LM-3 is filed if the organization’s total annual receipts were $10K or more, but less than $250K, and Form LM-4 is filed if your union’s total annual receipts were less than $10K.
When is the form due to the DOL?
There are no extensions on the due date for either of the 3 forms listed above. The Form LM-2, LM-3 and LM-4 are all due 90 days after year end and they must be filed electronically.
Fidelity bonding requirements
The LMRDA provides that any person who handles union funds must be bonded for at least 10% of the funds handled during the previous fiscal year up to a maximum of $500,000. Your accountant can assist you in determining the amount of bonding required, and the coverage must be computed at the start of each fiscal year. Any increase in coverage must be promptly obtained. The National Office can and does obtain the coverage for your local union or council through a national policy; however, each affiliate must provide the National Office with the amount of coverage needed annually.
IRS filing requirements
What form do you file?
Depending on the size of a union’s assets and receipts, there are 3 potential forms organizations would be required to file. 990-N (Postcard) if your union normally has gross receipts of $50K or less; 990-EZ if your union has gross receipts less than $200K and total assets at the end of the tax year less than $500K; and the full Form 990 which is filed if either gross receipts are greater than or equal to $200K or total assets are greater than or equal to $500K at the end of the tax year.
When is the form due to the IRS?
All forms are to be filed electronically, and for organizations that have a calendar year end of December 31, the Form 990, 990-EZ, or 990-N is due May 15th (4 and ½ months after year end).
Organizations can apply for a 1st extension which will extend the time to August 15th (7 and ½ months after year end) and for 1 additional extension which will extend the time to November 15th (10 and ½ months after year end). Steep monetary penalties may apply for late filers.
Ramifications for non-compliance
In addition to monetary penalties, if you do not file for three consecutive years, your union’s tax exemption will be automatically revoked and you will be considered a taxable entity and possibly be subject to income taxes similar to for-profit entities. To apply for reinstatement to be considered a not-for-profit, you must go through a fairly lengthy application process — so make sure to comply with the annual filing requirements.