Final Words on the Form LM-2

It may seem like common sense, and I am sure that is what we all strive for but getting there is not necessarily so easy. The Form LM-2 is not the most intuitive form to complete, and the 38-page instructions, while extremely helpful, often don’t provide specific guidance to many questions.

Common Errors

Below are some pitfalls you can avoid in preparing your Form LM-2 this year:

• Cash – The LM-2 cannot be filed until you balance reported cash, meaning that the difference between your beginning and ending cash on statement A, Line 22 equals the difference between total receipts (Statement B Line 49) and total disbursements (Statement B Line 68).
• Investments and Fixed Assets Reconciliation – According to the Office of Labor-Management Standards (OLMS), one common reporting error is that the cost values of investments and fixed assets do not reconcile. Refer to our article on Statement A for information on how to reconcile investment and fixed asset transactions and balances.
• Schedule 14-19 Descriptions – Other common reporting errors on the Form LM-2, per the OLMS, are found on the itemization pages for Schedules 14 – 19. Nearly 20% of all reporting errors are due to incomplete descriptions in Column B regarding the type or classification of the individual or entity listed in Column A, as well as the purpose of the disbursement or receipt in Column C.

The LM-2 instructions call for a brief statement or description of the reason the receipt/disbursement was made. This is supposed to allow the reader to understand why the disbursement was made, or why the cash was received. So, instead of entering “legal fees,” write “litigation regarding for representational issues.” Or, instead of entering “organizing,” write “production of organizing pamphlets.”

• Signing the Form – The Form LM-2 must be signed by both the president and treasurer, or corresponding principal officers, of the labor organization via digital signature.
  • If the title of the signer is other than the president or treasurer, or the same person signs as both, explain why on Line 69.
  • By signing the Form LM-2, the signers are taking personal responsibility for the accuracy and filing of the Form. So, what happens when the President and/or Treasurer, or corresponding principal officers change, such as newly elected officers taking office on the first day of the new year? Is the new President going to take personal responsibility for the accuracy and the filing of the LM-2 by signing the Form, even though all the activity listed on the form was prior to their term in office? The answer is maybe. When new officers take office in the 90-day period following the end of the labor organization’s fiscal year, it is left to the discretion of the labor organization to determine who signs. Preferably, the former officers will sign and take responsibility for the reporting covering the period they were in office. Otherwise, in the absence of a union rule or determination specifying which officers are to sign the report, you should proceed on the assumption that the current officers (in office at the time of signing) should sign the report.
• Fixed Assets Expensed (Not Depreciated) – When fixed asset purchases fall below the organization’s capitalization policy, they are appropriately expensed when purchased. Did you know that the LM-2 still considers these fixed asset purchases? These transactions are to be reported on Schedule 4 as a purchase of fixed assets, and on Schedule 6, with the book value being listed as the costs, less the amount expensed, resulting in a zero book value.
• General Overhead (Schedule 18) v. Union Administration (Schedule 19) – Don’t let the names fool you. It is very common to think of union administration as general and administrative expenses. Union administration on Schedule 19 refers to the governance of the union while general overhead on Schedule 18 refers to what general expenses that do not fit in any other of the categories on Statement B. Refer to our article covering these schedules for more information.

Electronic Filing

Now let’s talk a little bit electronically filing the LM-2 through the OLMS electronic filing system (EFS). Here are some key points to keep in mind:

• The OLMS assigns a unique private identification number (PIN) as a manner of securely limiting access to the form. If you feel your union PIN has been compromised, you can request a new one by contacting the OLMS Forms Help Desk at 1-866-401-110.
• If you make changes to the LM-2 after it has been signed, but before it has been submitted, it will need to be signed again, as making any changes will remove the signatures.
• In most cases, it is easier to import the data into the form rather than enter it all by hand. There are specifications regarding how the data should be set up and imported. The OLMS has created a Data Specification Document that details these requirements. It can be found at https://www.dol.gov/olms/regs/compliance/dsd.htm.
• The Form has two types of built-in validations to ensure that the correct data is being entered. Page level validations occur when you navigate away from a page to let you know that there are items on the page that must be corrected while form level validations occur as a final check of the entire form. The Form cannot be signed and submitted until all validation items are cleared.
• It is always a good idea to save a signed copy of the form. To do so, prior to submitting, click on Print, then File and Save As to save a pdf to your computer.
• Remember to save your work often when working with the OLMS software. The system can automatically kick you off due to inactivity and any unsaved work can be lost.
• After you click on the Submit button it may take a few minutes for the form to be received by the OLMS. A message will pop up on your screen letting you know that the form has been successfully accepted. It is a good idea to save a copy of this acceptance message as proof of filing.

We hope this series of articles has been helpful to you and provided a little further insight on how to complete the LM-2.

For the official instructions and to obtain more detailed information, please refer to the form instructions and compliance tips published by OLMS. If you are uncertain how to complete or disclose unusual events or transactions that may have occurred during the reporting period, consult with a professional well-versed in the nuances of the Form LM-2.