What is Legally Required?

January 16, 2019

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(This article first appeared in the January/February 2019 issue of the American Postal Worker magazine) 

By Secretary-Treasurer Liz Powell

One of the triggers that will prompt the Department of Labor (DOL) and Internal Revenue Service (IRS) to conduct a local or state union audit is failing to submit required DOL Labor Management (LM) reports and failure to file 990 forms. Additional triggers include failure to pay payroll taxes or any of the anomalies the IRS flags on tax forms. Local presidents and treasurers are constantly reminded of these legal requirements and the severe penalties that can result if these, and additional forms are not filed in a timely manner.

Local affiliates of unions are required by the DOL to have in place – and, when requested, provide the DOL a copy of – a local/state constitution and a local bond covering 10 percent of liquid assets, however, local affiliates are advised to have bond coverage of 100 percent of their liquid assets. The DOL requires an election at least every three years for local and four years for state affiliates, as well as retention of financial records (for five prior years plus the current year) and executive board and general member minutes (required to be maintained and kept forever). Maintaining these minutes serve many purposes, but most important is documenting the history of constitutional changes, motions discussed, and what actions were taken by the members.

The IRS requires local affiliates to file 990 reports annually – whether it be a 990, 990-EZ or 990-N – whichever is applicable for the affiliate’s annual receipts. Filing of 990 reports is also required of retiree chapters that handle their own funds. The Secretary-Treasurer’s department is available to help local officers fulfill their legal requirements by providing various tutorials and webinars specific to LM and 990 filings. It is recommended that the local/state president and treasurer attend at least one financial training class each year. There will be two Secretary-Treasurer Trainings in 2019 for local officers to attend, one from Mar. 9-11, 2019 and the other Oct. 25-27, 2019.

Budgets and Setting Goals

The Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) imposes a duty on officers and stewards to manage the funds and property of the union solely for the benefit of the union.

Local officers should identify and categorize financial goals, and keep track of the local’s progress. A budget enables local officers and their membership to maximize effectiveness of available assets and resources. Presidents and treasurers should assume responsibility for ensuring that the local has written goals and objectives. Each year, your local budget should be reviewed to identify areas of over and under expenditures. Discussing these over and under expenditures with your executive board and other officers not on the board helps in making decisions about what must be added or cut to achieve a balanced budget.

Lastly, discussing a budget with the membership provides an opportunity for debate on what the local expects to gain by following a budget. Locals are encouraged to have a motion to accept the budget as printed and to give authority to spend the total budget in aggregate. Starting off the year with a guide to where your local is going financially is a worthwhile goal to achieve.


For some in 2019, there are off-year state senate, house of representatives and general assembly elections throughout the nation to consider. We must stay vigilant, specifically with the continued threat of privatization in the forefront. We must continue to elect Congressional, state lawmakers and community leaders who are going to protect our services and our jobs.

Filing LM Forms

The Annual LM report for local and state unions whose fiscal year ended December 31, 2018, must be filed electronically with the Department of Labor by March 31, 2019.

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