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Five Simple Ways to Make Your LM-2 Filing Go More Smoothly

Five Simple Ways to Make Your LM-2 Filing Go More Smoothly

Each year, labor organizations subject to the Labor-Management Reporting and Disclosure Act (LMRDA), as amended, with total annual receipts of $250,000 or more must file Form LM-2, Labor Organization Annual Report, with the U.S. Department of Labor. Form LM-2 is due within 90 days of the labor organization's fiscal year-end with no extensions. While some labor organizations prepare their own Form LM-2, many employ the services of a certified public accounting (CPA) firm.

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Even though Form LM-2 is due within 90 days after year-end, preparation for the form occurs over the course of the year. You can do several things to facilitate year-end reporting—here are our top five suggestions.

Five Simple Things You Can Do

     1.    Be Prepared

If your CPA firm requests that you complete a questionnaire and prepare supporting schedules to assist in Form LM-2 preparation, have all requested items ready ahead of time to ensure a smoother process.  To refresh your memory, scan through the prior year's Form LM-2. Also refer to Lindquist’s list of Commonly Requested Supporting Schedules for Form LM-2.

     2.   Code As You Go

Information for disbursements is generally extracted from your organization's accounting software. When disbursements are made during the year, code them to the proper LM-2 category (i.e., representational activities; political activities and lobbying; contributions, gifts and grants; general overhead; union administration; direct line item; or disbursement to officer/employee) at the time the check is written and include documentation for the purpose of the disbursement in the description or memo section of the accounting software.   Also maintain contact with your CPA firm throughout the year and discuss any questions that arise throughout this process.

     3.    Maintain Up-to-Date Vendor Information

Make sure you maintain complete information for all vendors (i.e., name, address and vendor type). You must report separately vendors who received over $5,000, individually or in the aggregate, on Form LM-2.

     4.    Review Your Work

Recordkeeping for Form LM-2 reporting occurs throughout the year; however, at the end of the year, you should do one last review of the coding before handing the records over to the CPA firm. Print the LM-2 classification report from the accounting software and scan the classifications for reasonableness.

     5.    Obtain ID and Password

Once the Form LM-2 has been prepared, your organization will be required to file it electronically. Make sure the President and Treasurer each have an Electronic Forms System user ID and password to sign the form.  For additional information, refer to our prior Lindquist Solutions article, New Web-Based Reporting System for Forms LM-2, LM-3 and LM-4.

The Finish Line

Form LM-2 requires a quick turnaround. Your cooperation in supplying the requested information will facilitate Form LM-2 preparation, which can ultimately reduce the costs.  By working together, you and your CPA firm can also identify ways to improve operating efficiency and reduce the risk of errors.

Jasmine S. Baker, CPA, is a manager in the San Ramon, California, office of Lindquist LLP.  She has seven years of experience with audit and accounting services for labor organizations and employee benefit plans.  As a manager, Jasmine trains staff and helps develop technical guidance for the firm.  She also participates in the firm's audit technology group, which evaluates and promotes efficient use of technology in the audit process.  Jasmine is a member of the American Institute of Certified Public Accountants.  She received a bachelor of science degree in accounting from St. Mary's College.

Our firm provides the information in this e-newsletter for general guidance only.  It does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

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