Last updated on February 13th, 2024
Each year, unions covered under the Labor-Management Reporting and Disclosure Act, Civil Service Reform Act or Foreign Service Act must file an annual financial report – a.k.a. Form LM-2, LM-3, or LM-4 – to maintain transparency and accountability. Following is an overview of what these annual financial reports are and why they matter.
In essence, Forms LM-2/3/4 are financial statements with varying levels of detail. Form LM-2 is the most comprehensive, encompassing a wide range of financial information, including receipts and disbursements, assets and liabilities, direct and indirect disbursements to officers and employees, and loans receivable and payable. LM-2 forms also provide information about membership numbers, political spending, grants, and more.
The forms promote financial transparency, empower stakeholders to make decisions, impact a union’s reputation, and foster accountability. They serve as a check against potential financial mismanagement. Inaccurate or incomplete forms can lead to legal issues (including penalties and potential legal actions); hurt trust in leadership; and threaten a union’s credibility, reach, and impact.
A union’s total annual receipts determine which form is required. Organizations with:
- $250,000 or more in annual receipts, file Form LM-2.
- At least $10,000 but less than $250,000 in annual receipts, file Form LM-3.
- Less than $10,000 in annual receipts, file Form LM-4.
The deadline for the annual filing is within 90 days of the end of the organization’s fiscal year. The form must be filed electronically using the Office of Labor-Management Standards (OLMS) Electronic Forms System (EFS). Before filing, an organization must register in the system.
A union’s president and treasurer or corresponding principal officers are personally responsible for the annual financial report’s accuracy and filing. Failure to file a report or keep required records for at least five years or knowingly misrepresenting or failing to disclose a material fact can result in significant financial fines, imprisonment, or both.
- For information on how to register for an EFS User ID and Password; obtain a union PIN; and obtain, sign and submit an LM form, click here.
- For detailed instructions for completing an LM form, visit the OLMS website.
- For compliance tips and information on how to avoid common reporting errors, click here.
One of the best ways to help promote LM-2/3/4 accuracy and compliance is to work with an experienced accounting professional, like the ones you’ll find at RBT CPAs. We’ve been operating in the Hudson Valley and beyond for over 50 years and we believe we succeed when we help our clients succeed. Interested in learning more about our accounting, tax, audit, and advisory services? Give us a call.
RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.