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| November 5, 2008 DOL Home > ESA > OLMS > Form LM-2 > FAQs > Schedules 1-10 |  |
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Office of Labor-Management Standards (OLMS)
Form LM-2 Frequently Asked QuestionsQuestions on Schedules 1 - 10 Additions are made regularly to the Frequently Asked Questions, so please check these pages often for updates. If you have a question that is not addressed here, you may email your question to olms-public@dol.gov.
Q. Items listed in Schedules 1 and 8, Column E (Liquidated Account Receivable/Payable) on the revised Form LM-2 would, by virtue of having been written off, no longer constitute an account receivable or payable. Why is this column on the form since the union's assets and liabilities will not be accurately reported if these items are included? A. Column E on Schedules 1 and 8 includes information on activity that occurred during the reporting year. The amounts entered in Column E do not reflect accounts in existence at the end of the year and therefore are not carried forward to Statement A. Q. Will a labor organization be required to individually list all of their accounts receivable in Schedule 1 of the revised Form LM-2? A. No. The labor organization must report 1) all accounts with an entity or individual that aggregate to a value of $5,000 or more and that are more than 90 days past due at the end of the reporting period or were liquidated, reduced or written off during the reporting period; and 2) the total aggregated value of all other accounts. 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. The revised LM-2 requires unions to report the value of the ownership interest it has in its trusts in Schedules 5 and 7 and hence Statement A. Does DOL acknowledge, therefore, that the start of report period assets reported on the first LM-2 report filed on the revised form may be understandably different from the end of report period assets reported on the prior year's LM-2? A. There should not be a considerable difference; but any difference should be noted in Item 69, Additional Information. Currently, if a separate report is filed for an investment subsidiary, the net assets are reported in Schedule 2, Other Investments. Likewise, net assets of non-investment subsidiaries are reported in Schedule 3. The value of trusts to be reported in Schedules 5 and 6 of the new reports are essentially the same as the net assets of the old subsidiaries. Q. For the aging schedules, Schedules 1 and 8, how should the due date for the accounts receivable and payable be set for determining the number of days past due? A. Generally the due date is when the bill states payment is due. The union should be sure to handle this consistently. Q. In a district council consisting of many subordinate locals, checkoff checks from employers are made payable to the local but are deposited to the district council's checking account. Assuming there are accounts receivable to be reported on Schedule 1, who reports the accounts receivable? A. The receipts would be reported by the district council in Item 46, On Behalf of Affiliates for Transmittal to Them, and the district council's remittance to the locals would be reported in Item 63, To Affiliates of Funds Collected on Their Behalf. Any accounts receivable would represent money owed to the locals and should be reported by the locals. Q. If an individual member is more than 90 days past due in dues totaling $5,000 or more, should that individual be reported in Schedule 1? A. The $5,000 threshold should eliminate nearly all concerns about individual union dues appearing on the accounts receivable schedule. It would be unusual - and likely take years - for a union member to become $5,000 or more delinquent on union dues. If, however, a union member is more than 90 days delinquent on dues in excess of $5,000, that fact must be disclosed. The names of such members must be reported on Schedule 1. Q. If an individual member's past due membership dues are forgiven, should that individual be reported in Schedule 1? A. The names of individual members whose debts of $5,000 or more to the union are forgiven must be reported on Schedule 1. Q. If an individual owes membership dues that are over 90 days past due and that individual is consequently dropped from membership and the dues owed are written off, should that individual be reported in Schedule 1? A. The names of individual members whose debts of $5,000 or more to the union are forgiven must be reported on Schedule 1. Q. If a member owes under $5,000 in past dues and the member drops out of the union before paying up and prior to the end of the fiscal year, is the member's account liquidated and not required to be reported? A. It is the union's decision whether to liquidate the account or continue to carry it on its books. If the union liquidates the account, the amount liquidated should be included in Schedule 1, Column E, on Line 27, "Totals from all other accounts receivable." If the union continues to carry the account on its books, it should include the amount owed in Schedule 1, Column A, on Line 27. Q. If a union's constitution and bylaws provides a member with a two-month grace period for dues payments and the member maintains his dues in arrears for two months, do the dues owed by the member constitute an account receivable for that member and does that member's account then have to be reported in Line 27? A. Yes. Since the dues are overdue by two months, it is an account receivable and must be reported in Line 27 of Schedule 1. Q. If an employer owes the union more than $5,000 in dues deductions and the receivable is more than 90 days past due, but the union does not know the exact amount of the receivable because the employer has not provided a record of the total amount deducted, what should the union report in Schedule 1? A. The union should report its best estimate of the amount of dues receivable from the employer. The union may assume that the employer deducted the amount authorized by the member necessary to fulfill the member's obligations to the union. Q. If a subordinate affiliate owes the union more than $5,000 in per capita tax and the receivable is more than 90 days past due, but the union does not know the exact amount of the receivable because the subordinate has not provided a per capita tax report documenting the number of members (hence the amount owed), what should the union report in Schedule 1? A. The union should report its best estimate of the amount of per capita receivable from the subordinate affiliate. Q. Do I have to report all of my union's loans in Schedule 2, even if they are not evidenced by a promissory note or secured by a mortgage? A. Yes. You must report details of all direct and indirect loans (whether or not evidenced by promissory notes or secured by mortgages) owed to the labor organization at any time during the reporting period by individuals, business enterprises, benefit plans, and other entities including labor organizations. Q. What is an example of an indirect loan? A. An example of an indirect loan is a disbursement by the labor organization to an educational institution for the tuition expense of an officer, employee, or member that must be repaid to the labor organization by that individual. Q. Do I have to report a loan that has been repaid in full during the reporting period? A. Yes. You must report all loans that were made and repaid in full during the reporting period. Q. Should I include investments in corporate bonds or mortgages purchased on a block basis through a bank or similar institution in Schedule 2? A. No. Investments in corporate bonds or mortgages purchased on a block basis through a bank or similar institution must be reported in Schedule 5 (Investments Other Than U.S. Treasury Securities). Q. Are advances, such as a salary advance, considered loans? A. Yes, advances, including salary advances, are considered loans and must be reported in Schedule 2 (Loans Receivable). However, advances to officers and employees of the labor organization for travel expenses necessary for conducting official business are not considered loans if the following conditions are met:
Q. How do I complete Column A of Schedule 2? A. To complete Column A you must enter the following information on Lines 1 through 3 (and on continuation pages if necessary):
For each officer or employee listed, indicate after each name either "O" (officer) or "E" (employee). Q. Will I be disclosing unauthorized confidential information if I list the names of each officer, employee, or member in Column A of Schedule 2? A. No. The LMRDA requires labor organizations to report any direct or indirect loans to any officer, employee or member which exceed $250 during the reporting period. Q. Can a labor organization make a loan to an officer or employee of the labor organization for an amount that exceeds $2,000? A. No. Section 503(a) of the LMRDA (29 U.S.C. 503) prohibits labor organizations from making direct or indirect loans to any officer or employee of the labor organization which result in a total indebtedness on the part of such officer or employee to the labor organization in excess of $2,000 at any time. Q. What do I have to report in Schedule 3? A. In Schedule 3, you must report details of the sale or redemption by the labor organization of U.S. Treasury securities, marketable securities, other investments, and fixed assets, including those fixed assets that were expensed, during the reporting period. Q. What do you mean by "fixed assets that were expensed"? A. "Fixed assets that were expensed" means the cost of those assets was charged to current expenses, rather than entered on the books and periodically depreciated. Q. For Schedule 3 (Sale of Investments and Fixed Assets), the instructions require itemization of the sale of fixed assets. Does that mean we should itemize every chair, desk, cabinet, etc., that we sold during the year? Should we include fixed assets that were written off or disposed of during the year? A. For Schedule 3, enter a general description of the types of investment or fixed asset sold, such as U.S. Treasury securities, stocks, bonds, land, automobiles, etc. Consistent with the approach taken in Schedule 6 (Fixed Assets), office furniture and equipment can be reported in the aggregate. If fixed assets were disposed of during the year other than by sale, Item 15 should be answered "Yes" and details should be provided in Item 69 (Additional Information). Q. Should I include receipts from sales of mortgages? A. You should include receipts from sales of mortgages that were purchased on a block basis through a bank or similar institution. Q. Do I include receipts from repayments by individual mortgagors? A. No. Do not include receipts from repayments by individual mortgagors, which must be reported in Schedule 2 (Loans Receivable) as loan repayments. Q. How do I complete Column A of Schedule 3? A. To complete Column A of Schedule 3, enter on Lines 1 through 11 (and on additional pages, if necessary) a general description of the type of investment or fixed asset sold, such as U.S. Treasury securities, stocks, bonds, land, automobiles, etc. Q. How do I give an adequate description of land or buildings which were sold? A. If land or buildings were sold, enter the location of the property, including the street address, if appropriate. Q. What does the term "reinvestments" mean in Line 14 of Schedule 3? A. Enter on Line 14 the total amount from the sale or redemption of U.S. Treasury securities, marketable securities, or other investments that was promptly reinvested (i.e., "rolled over") in U.S. Treasury securities, marketable securities, or other investments during the reporting period. Calculate the total amount reinvested by adding, for each investment, the lower of each investment's original cost or the amount received from the sale or redemption that was actually reinvested. The total on Line 14 of Schedule 3 must agree with the amount reported on Line 14 of Schedule 4. If only a portion of the amount received was reinvested, only the reinvested portion may be included on Line 14. Interest and dividends received during the reporting period must be reported in Items 40 (Interest) and 41 (Dividends). Q. What do I do if the amount received during the reporting period was less than the amount due? A. If the amount received during the reporting period was less than the amount due (gross sales price less any deductions for selling expenses and repayments of secured loans or mortgages), the additional amount due to the labor organization must be reported in Schedule 7 (Other Assets) with a description sufficient to identify the type of asset. However, if a mortgage or note was taken back, it must be reported as a new loan in Schedule 2 (Loans Receivable). Q. What do I report in Schedule 4 (Purchase of Investments and Fixed Assets)? A. Report details of the purchase by your labor organization of U.S. Treasury securities, marketable securities, other investments, and fixed assets, including those fixed assets that were expensed (that is, the cost of the asset was charged to current expenses, rather than entered on the books and periodically depreciated), during the reporting period. Include disbursements for mortgages that were purchased on a block basis through a bank or similar institution. Q. How do I complete Column A of Schedule 4? A. To complete Column A of Schedule 4, you must enter on Lines 1 through 11 (and on additional pages, if necessary) a general description of the type of investment or fixed asset purchased, such as U.S. Treasury securities, stocks, bonds, land, automobiles, etc. Q. How do I describe land or buildings that were purchased by my labor organization? A. If land or buildings were purchased, enter the location of the property, including the street address, if appropriate. Q. What does the term "reinvestments" mean in Line 14 of Schedule 4? A. Enter on Line 14 the total amount from the sale or redemption of U.S. Treasury securities, marketable securities, or other investments that was promptly reinvested (i.e., "rolled over") in U.S. Treasury securities, marketable securities, or other investments during the reporting period. Calculate the total amount reinvested by adding, for each investment, the lower of each investment's original cost or the amount received from the sale or redemption that was actually reinvested. If only a portion of the amount received was reinvested, only the reinvested portion may be included on Line 14. Interest and dividends received during the reporting period must be reported in Items 40 (Interest) and 41 (Dividends). The total on Line 14 must agree with the amount reported on Line 14 of Schedule 3 (Sale of Investments and Fixed Assets). Q. For Schedule 4 (Purchase of Investments and Fixed Assets), the instructions state that fixed assets that were expensed should be included in this schedule. It is our policy that purchases below $500 are to be expensed. For example, if we purchase computer software that costs $250, we expense it. According to the instructions, the computer software should be itemized on Schedule 4. Is that correct? A. You must enter a general description of the type of fixed asset. Purchases may be aggregated by these general categories. Each individual purchase does not have to be itemized. Q. What do I report in Schedule 5? A. Report details of all the labor organization's investments at the end of the reporting period, other than U.S. Treasury securities. Include mortgages purchased on a block basis and any investments in a trust as defined in Section X (Trusts in Which a Labor Organization is Interested) of the revised Form LM-2 instructions. Q. Do I report savings accounts, certificates of deposit, or money market accounts in Schedule 5? A. No. Do not include savings accounts, certificates of deposit, or money market accounts, which must be reported in Item 22 (Cash). Q. Why should information on trusts be reported here when it is reported on Form T-1? A. The Form LM-2 filed by a union would not accurately and completely disclose the union's financial condition and operations without showing its share of the value of a trust in which it is interested. Also, Form T-1 is not filed for all trusts in which a labor organization is interested. Q. What are "marketable securities"? A. Marketable securities are those for which current market values can be obtained from published reports of transactions in listed securities or in securities traded "over the counter," such as corporate stocks and bonds, stock and bond mutual funds, state and municipal bonds, and foreign government securities. Q. What does the term "book value" mean in Schedule 5? A. Book value is the lower of cost or market value. Q. What do I enter on Line 3 of Schedule 5? A. List in Column (A) each marketable security that has a book value over $5,000 and exceeds 5% of the total book value entered on Line 2 and enter its book value in Column (B). Q. What do I enter on Line 4 of Schedule 5? A. Enter the total cost, including any transaction costs, of all the labor organization's other investments (that is, those that are not U.S. Treasury securities or marketable securities). Include mortgages purchased on a block basis. Q. What do I enter on Line 6 of Schedule 5? A. List in Column (A) each other investment that has a book value over $5,000 and exceeds 5% of the total book value entered on Line 5 and enter its book value in Column (B). Q. In regard to Form LM-2 Schedule 5, Line 6: If a local union owns a building in which it has an office, is that an "other investment" or a fixed asset reportable in Schedule 6? Is there a difference if the building is owned as a trust or building corporation? Is it then reported as a trust rather than as an asset or investment? What is the importance of the union's subjective purpose? A. A. If the local union owns the building, or a discrete portion of a building, it should be reported as a fixed asset and itemized as required by Schedule 6. If the local union wholly or partially has an interest in a trust that owns the building, it must be reported on Schedule 5, line 6 and a T-1 must be filed if the trust meets the definition of a trust in which the union is interested and if it is a significant trust. If the local union wholly or partially has an interest in a corporation that does not meet the definition of a trust, the interest must be reported on Schedule 5, line 6 if the book value of that interest is over $5,000 and exceeds 5% of the total book value of all other investments of the union. Q. In Schedule 5, do I have to report all trusts in which the labor organization is interested which are investments? A. All trusts in which the labor organization is interested which are investments of the labor organization (such as real estate trusts, building corporations, etc.) must be reported in Schedule 5. On Lines 6(a) through (d) enter the name of each trust in Column (A) and the labor organization's share of its book value in Column (B). Q. What do I report in Schedule 6 (Fixed Assets)? A. Report details of all fixed assets, such as land, buildings, automobiles and other vehicles, and office furniture and equipment owned by the labor organization at the end of the reporting period. Land and buildings must be itemized, whereas automobiles and other vehicles, and office furniture and equipment should be aggregated. Include fixed assets that were expensed (that is, the cost of the asset was charged to current expenses, rather than entered on the books and periodically depreciated), fully depreciated, or carried on the labor organization's books at scrap value or other nominal value. Q. Is it necessary to secure a formal appraisal of my labor organization's assets to complete Column (E) of Schedule 6? A. No. It is not necessary to secure a formal appraisal of the assets; a good faith estimate is sufficient. The value used for insurance purposes or for tax appraisals, for example, will normally be acceptable as representing the fair market value. Q. What are the criteria for capitalization of furniture and equipment? A. Unions may use any reasonable accounting standards to determine whether furniture should be expensed or depreciated. Q. What do I have to report in Schedule 7 (Other Assets)? A. Report details of all your labor organization's assets at the end of the reporting period other than Item 22 (Cash), Item 23 (Accounts Receivable), Item 24 (Loans Receivable), Item 25 (U.S. Treasury Securities), Item 26 (Investments), and Item 27 (Fixed Assets). The labor organization's other assets must be described in Column (A) and may be classified by general groupings or bookkeeping categories, such as utility deposits, inventory of supplies for resale, or travel advances that are not required to be reported as loans as explained in the instructions for Schedule 2 (Loans Receivable), if the description is sufficient to identify the type of assets. Enter in Column (B) the value as shown on the labor organization's books of each asset or group of assets described in Column (A). Q. If a labor organization has an interest in a training fund through a collective bargaining agreement with a company but does not contribute to the fund, does the labor organization need to report the fund under other assets? If yes, what if the company does not provide the information for filing? Can the labor organization be held accountable? A. Yes. If the labor organization has an ownership interest of a non-investment nature in a trust in which it is interested (such as a training fund), the value of the labor organization's ownership interest in the entity as shown on the labor organization's books must be reported in Schedule 7 (Other Assets). Enter in Column (A) the name of any such entity. Enter in Column (B) the value as shown on the labor organization's books of its share of the net assets of any such entity. The labor organization should be able to determine the value of its own ownership interest. If the labor organization makes a contribution of $10,000 or more to the trust during the reporting year, or a contribution is made on its behalf, and it is not able to obtain the necessary information from the trust, 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. Q. What do I do if my labor organization has an ownership interest of a non-investment nature in a trust in which it is interested? A. If the labor organization has an ownership interest of a non-investment nature in a trust in which it is interested (such as a training fund) the value of the labor organization's ownership interest in the entity as shown on the labor organization's books must be reported in Schedule 7 (Other Assets). Q. How should a labor organization determine the value of its ownership interest in a trust such as a training fund? A. The value of an ownership interest is not a matter that can be determined under the LMRDA. Labor organization officers will have discretion to determine the value of their organizations' ownership interest in trusts. The union's ownership interest in a trust which is an investment must be reported in Schedule 5 and the union's ownership interest in a trust of a non-investment nature must be reported in Schedule 7. Q. How do you put a value on a training fund? No unions own the apprenticeship fund. A. If the union does not have any ownership interest in the fund there would be nothing to report in this schedule, but if the union does have an ownership interest in the assets of a non-investment trust, that amount should be reported in Schedule 7. Q. What do I report in Schedule 8 (Accounts Payable Aging Schedule)? A. The labor organization must report 1) individual accounts that are valued at $5,000 or more and that are more than 90 days past due at the end of the reporting period or were liquidated, reduced or written off during the reporting period; and 2) the total aggregated value of all other accounts. Q. Will unions have to account for accrued salaries, per capita, etc., i.e., if the fiscal year ends in the middle of the week and the union will owe two days of salary for the remainder of the week, but the week ends in the next fiscal year or per capita for December that is not paid until January? A. No. Salaries, per capita, etc. are not considered accounts payable until the date the payments are due. Q. Does Schedule 8 require itemized reporting of an account payable where $5,000 is 90 days past due, or does it just have to be a $5,000 or greater account payable any portion of which is 90 days past due? Q. If the total debt or account payable is $5,000 or more and any portion is over 90 days past due, the total account payable should be listed in Column (B) of Schedule 8, the amount 90 - 180 days past due should be listed in Column (C), and the amount over 180 days past due should be listed in Column (D). 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. Q. What do I report in Schedule 9 (Loans Payable)? A. Report details of all loans payable on which your labor organization owed money at any time during the reporting period except those secured by mortgages or similar liens on real property (land or buildings) that must be reported in Item 32 (Mortgages Payable). Q. What do I report in Schedule 10 (Other Liabilities)? A. Report details of all your labor organization's liabilities at the end of the reporting period other than Item 30 (Accounts Payable), Item 31 (Loans Payable), and Item 32 (Mortgages Payable). Any portion of withheld taxes or any other payroll or other deductions, which have not been transmitted at the end of the reporting period, are liabilities of your labor organization and must be reported in Schedule 10. Payroll or other deductions that are retained by your labor organization (such as repayments of loans to officers or employees) must be fully explained in Item 69 (Additional Information). Your labor organization's other liabilities must be described in Column (A) and may be classified by general groupings or bookkeeping categories if the description is sufficient to identify the type of liability. List separately any payroll taxes withheld but not yet paid, other unpaid payroll taxes of the labor organization, such as FICA taxes, and any funds collected on behalf of affiliates or members and not disbursed by the end of the reporting period. Do not include reserves for special purposes (for example, "Reserve for Building Fund") that are actually an allocation of certain assets for specific purposes rather than a liability. Last Updated: 03/23/07
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