1. LOCAL OFFICIAL FINANCIAL RESPONSIBILITIES UNDER NAGE CONSTITUTION AND BY-LAWS AND DEPARTMENT OF LABOR/IRS RULES DRAFT

2. 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 By- Laws. Comply with government regulations and reporting requirements. DRAFT

3. Managing Local Funds Bank Account EIN Numbers Bonding Filing with Department of Labor Filing with IRS Financial Reporting to Members Requirements Under the Constitution Best Practices DRAFT

4. 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

5. 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-&-Non- Profits/Employer-Identification-Numberhttp://www.irs.gov/Charities-&-Non- Profits/Employer-Identification-Number Through internet application, the EIN is issued immediately. DRAFT

6. EIN NUMBERS Once the EIN Number is received it should be sent to NAGE National to the attention of James Farley (jfarley@nage.org), NAGE, 159 Burgin Parkway, Quincy, MA 02169.jfarley@nage.org DRAFT

7. EIN APPLICATION http://www.irs.gov/ pub/irs-pdf/fss4.pdf DRAFT

8. 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

9. 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

10. 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 http://www.dol.gov/olms/regs/compliance/tip5.htm DRAFT

11. 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

12. FILING WITH THE DEPARTMENT OF LABOR The report is due within 90 days of the end of each local’s fiscal year – November 30 th. The reports may be mailed or completed online. LM4: http://www.dol.gov/olms/regs/compliance/lm4_do wnloadpg.htm http://www.dol.gov/olms/regs/compliance/lm4_do wnloadpg.htm LM3: http://www.dol.gov/olms/regs/compliance/lm3_do wnloadpg.htm http://www.dol.gov/olms/regs/compliance/lm3_do wnloadpg.htm DRAFT

13. LM 4 REPORT DRAFT

15. 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 E- Postcard unless they chose to file a Form 990 or 990 EZ instead. Must be filed by the 15 th day of the 5 th month after end of tax/fiscal year – by January 15 th. 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

16. FILING WITH THE IRS File electronically http://epostcard.form990.org/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

17. 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/irs- pdf/f990ez.pdf http://www.irs.gov/pub/irs- pdf/f990ez.pdf Regular 990 is even more burdensome. DRAFT

18. 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

19. 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. (7 th 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. (5 th Circuit). – When a certain item in the union’s report is disproportionately high. (9 th Circuit). DRAFT

20. 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

21. 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 (1 st ) and end on August thirty-first (31 st ). DRAFT

22. 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

23. 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

24. 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

25. 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

26. 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

27. QUESTIONS DRAFT

28. NEXT WEBINAR August 2014 Will focus on legislative process, representation through legislation and political action, and a review of the Hatch Act. DRAFT