The US Department of Labor has proposed a rule that would require certain labor unions to list more financial information in annual disclosure forms, especially for those unions that have annual receipts of $8 million or more a year. The change is proposed to increase transparency in labor organization financial reporting to make it harder for improper or illegal spending to take place. The proposed changes are designed to provide members of labor organizations with additional and more detailed information about the financial activities of their labor organization than is what is currently being reported. Keep in mind that the Form LM-2 is a public document as well.
Some key changes to the current LM-2 would include:
- Mandatory reporting specific to the separate strike funds that unions maintain.
- Mandatory reporting specific to payments made to a single officer from more than one union.
- Providing a more detailed accounting of investment and asset sales, including the names of financial firms that unions use to make investments.
- Providing a more detailed accounting of political spending, including separate reporting of lobbying expenditures.
- Enhanced reporting relative to organizing and collective bargaining efforts. Report these activities separately rather than following the existing practice of lumping them under the umbrella of “representational services.”
- Report retired members separately from active members.
In the proposed rule the threshold for the LM-2 is expected to increase from $250,000 in annual receipts to $300,000 to adjust for inflation.
In addition, a new Form LM-2 LF “long-form” has been proposed for those unions with revenues of $8 million or more, which includes twelve new schedules. In addition to the Form LM-2 changes noted above, the Form LM-2 LF adds supporting schedules for certain cash receipts line items on Statement B, such as dues and agency fees, per capita tax, and sales of supplies. The proposed Form LM-2 LF also includes a requirement to report union strike funds and any foreign transactions be reported.
The comment period on the new legislation closes December 14, 2020. The Bonadio Labor partners are monitoring this development closely and will keep our labor clients apprised. Contact us to discuss how this impacts you.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute an accountant-client relationship.