Transcript Slides - the nage federal division

LOCAL OFFICIAL FINANCIAL
RESPONSIBILITIES
UNDER
NAGE CONSTITUTION AND BY-LAWS
AND
DEPARTMENT OF LABOR/IRS RULES
DRAFT
ROLE OF LOCAL OFFICIALS
• Safeguard and protect Local funds and assets
• Manage funds and property of the union for
the benefit of the union and its members in
accordance with NAGE Constitution and ByLaws.
• Comply with government regulations and
reporting requirements.
DRAFT
Managing Local Funds
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Bank Account
EIN Numbers
Bonding
Filing with Department of Labor
Filing with IRS
Financial Reporting to Members
Requirements Under the Constitution
Best Practices
DRAFT
What is Required to Open or Maintain
a Bank Account
• Copy of the Constitution and By-Laws (CBL)
• EIN Number.
• Two authorized signatures
– Two signatures required for checks and/or to
withdraw from the account.
• ATM cards are prohibited by the CBL.
• When officers change adjustments to the account
should be made to reflect the change
• Do not comingle union monies with personal
funds.
DRAFT
EIN NUMBERS
• Employer Identification Number (EIN) is an IRS
identification number.
• The Local must have an EIN to open a bank
account.
• Internet application is the preferred method
at http://www.irs.gov/Charities-&-NonProfits/Employer-Identification-Number
• Through internet application, the EIN is issued
immediately.
DRAFT
EIN NUMBERS
• Once the EIN Number is received it should be
sent to NAGE National to the attention of
James Farley ([email protected]), NAGE, 159
Burgin Parkway, Quincy, MA 02169.
DRAFT
EIN APPLICATION
http://www.irs.gov/
pub/irs-pdf/fss4.pdf
DRAFT
BONDING
• Under the CBL, LMRDA, and SCRA all units except
those whose property and/or annual receipts do
not exceed $5,000.00 in value must be bonded.
• Every officer, agent, or employee of any Local
Unit handling funds or other property shall be
bonded.
• The bond of each person shall be fixed at the
beginning of the Unit’s fiscal year and shall be in
an amount not less than 10% of the funds
handled by the person and his predecessor.
• See CBL Article XI Bonding of Officers and
Employees
DRAFT
BONDING
• Bonding is an insurance agreement used to
protect unions from loss caused by acts of
fraud or other dishonesty by officers,
employees, or other representatives.
• If a person who is not bonded handles union
funds, he or she is violating the law. The
person who assign him or her those duties is
also violating the law.
DRAFT
BONDING
• Your Local may purchase a bond only from a surety
company that hold a grant of authority from the
Secretary of the Treasury as an acceptable surety on
Federal bonds.
• Bonding is relatively affordable, for example a
$20,000 bond may cost $200 for three years of
coverage.
• For bonding purposes, NAGE National uses The
McLaughlin Company, 1725 Desales Street NW,
Washington, DC 20036. 1-800-233-2258.
• For more information on bonding visit
http://www.dol.gov/olms/regs/compliance/tip5.htm
DRAFT
FILING WITH
THE DEPARTMENT OF LABOR
• A new local must file an initial Form LM1 with
the Department of Labor (DOL).
• All other locals must annually file an LM3 or
LM4 depending on the assets and income of
the local.
• File the LM 4 – if your local’s annual receipts
are less than $10,000
• File the LM 3 – if your local’s annual receipts
are from $10,000 - $250,000
DRAFT
FILING WITH
THE DEPARTMENT OF LABOR
• The report is due within 90 days of the end of each
local’s fiscal year – November 30th.
• The reports may be mailed or completed online.
• LM4:
http://www.dol.gov/olms/regs/compliance/lm4_do
wnloadpg.htm
• LM3:
http://www.dol.gov/olms/regs/compliance/lm3_do
wnloadpg.htm
DRAFT
LM 4 REPORT
DRAFT
DRAFT
FILING WITH IRS
• Tax exempt organizations whose annual gross
receipts are $50,000 or less are required to
electronically submit Form 990-N known as the EPostcard unless they chose to file a Form 990 or
990 EZ instead.
• Must be filed by the 15th day of the 5th month
after end of tax/fiscal year – by January 15th.
• If you fail to file, the IRS will send you a reminder.
If you fail to file for three years, the local will lose
its tax exempt status.
DRAFT
FILING WITH THE IRS
• File electronically http://epostcard.form990.org/
• What you will need to file:
– The Local EIN Number
– Local legal name and mailing address
– Any other name the Local uses
– Name and address of the principal officer (the
President)
– Website if the Local has one
– Confirmation that gross receipts are less than $50,000
DRAFT
990 EZ
Because 990 EZ requires more
detailed information, we
suggest you file the E-postcard
if possible.
990-EZ is available at
http://www.irs.gov/pub/irspdf/f990ez.pdf
Regular 990 is even more
burdensome.
DRAFT
Financial Reporting To Members
• Filed LM Reports should be made available to
members for review.
• Members may inspect
supporting records
for just cause.
• Just cause standard is minimal but is meant to
prevent harassment of union officials by
members.
DRAFT
JUST CAUSE TO INSPECT RECORDS
• Just Cause has been found where:
– The union member had some reasonable basis to
question the accuracy of the LM Report or the
documents on which it is based. (7th Circuit).
– Circumstances exist that would put a reasonable union
member on notice of a possible discrepancy between
the records required to be kept and the union’s
reports. (5th Circuit).
– When a certain item in the union’s report is
disproportionately high. (9th Circuit).
DRAFT
Requirements Under the National
Constitution and By-Laws
• Article IV Section 10
– Local Units shall be authorized to provide stipends
to local officers and stewards in an amount
authorized by the Local Unit (Executive Board) not
to exceed four hundred dollars ($400.00) per
month. Any stipend in excess of four hundred
dollars ($400.00) per month must be approved in
writing by the National President.
DRAFT
Requirements Under the National
Constitution and By-Laws
• Article IV, Section 13:
– Records of the Local Units, including bank statements,
financial records, checks, correspondence, grievances,
grievance records, noted and minutes of official
meetings, shall be maintained for six (6) years from
the end the most recent fiscal years.
• Article X, Section 1:
– The financial records of the National Office and Local
Units shall be kept on a fiscal year basis. The fiscal
year shall begin September first (1st) and end on
August thirty-first (31st).
DRAFT
Requirements Under the National
Constitution and By-Laws
• Article X, Section 9
– Local Units shall be required to submit bank
statements, canceled checks, and any other
information as may be requested periodically by
the Audit Committee pursuant to Article VII
Section 4(E). The Local Unit shall submit this
material to the Audit Committee within thirty (30)
days from the date of the request.
DRAFT
Requirements Under the National
Constitution and By-Laws
• Article X, Section 10
– Local units shall maintain a separate bank account
for the business of the Local Unit and shall not
commingle union monies with any personal
accounts. No bank debit/ATM cards will be
utilized for Local Unit’s bank account(s). Any Local
Unit may request a waiver from the National
President to justify use of ATM/Debit Card for a
Local Unit’s business. All checks drafted by the
Local Units will be signed by two (2) officers of the
Local Unit.
DRAFT
Requirements Under the National
Constitution and By-Laws
• Article X, SECTION 11.
– A. Financial records of Local Units, including check
books, bank statements, receipts, invoices, and
related correspondence and documents, shall be
stored in a locked drawer, cabinet, or other secure
area within the permanent office of the Local Unit.
– B. Petty cash funds are discouraged. Any petty cash
fund utilized by a Local Unit shall not exceed the sum
of one hundred dollars ($100.00), from which all
expenditures must be properly documented.
– C. Financial records shall be maintained for six (6)
years from the end of the most recent fiscal year.
DRAFT
LOANS TO MEMBERS
Loans to members are prohibited under the
NAGE National Constitution and By-Laws.
Article V, SECTION 10.
No Local Unit or the National Union shall
directly or indirectly make any loan to any
member or employee.
DRAFT
BEST PRACTICES
• Treasurer or designated local officer will ensure that the local is
in compliance with the National rules and applicable laws
• Manage expenses in compliance with the By-Laws
• Keep records for 6 years
• Deposit per capita checks timely
• Make sure two signatures on checks
• National guidelines prohibit ATM or debit cards
• Provide financial report at every meeting
• Always be prepared for an audit
• Timely file LM and 990 E-Postcards
• Ensure Local is in compliance with bonding requirements
DRAFT
QUESTIONS
DRAFT
NEXT WEBINAR
August 2014
Will focus on legislative process, representation
through legislation and political action, and a
review of the Hatch Act.
DRAFT