March 23, 2012
By Salvatore J. Armao, CPA/PFS, CFP, CFE
This month’s article deals with new web-based filing requirements for Forms LM-2, LM-3, and LM-4 and Congress’s extension of the two-percent payroll tax cut.
The Office of Labor-Management Standards (OLMS) Electronic Forms System (EFS) is a web-based system for completing and submitting Labor Organization Annual Financial Reports.
EFS replaces the old Adobe-based Forms LM-2, LM-3 and LM-4. EFS allows any labor organization with Internet access the ability to complete, sign, and electronically file an LM-2, LM-3, or LM-4 without purchasing a digital signature or downloading special software. EFS provides many features to help ease the process of completing annual reporting forms and allows unions that maintain electronic accounting records to import financial data from their accounting programs directly into the forms using the same import files they are using now.
To use EFS, a union selects a representative to register with EFS online, whereupon they acquire a unique Private Identification Number (PIN). The representative can then distribute this PIN to only those individuals who need access to prepare, review or sign the LM Forms. Unions will need to obtain a new PIN every year to maintain authorized access to union files. Further, if an active PIN becomes compromised, OLMS can cancel that PIN and issue a new one.
Because the system is web-based, the form can be easily accessed by multiple individuals in different locations, making preparing and digitally signing the form much simpler. To sign the report, an officer will be required to attest to the data on the report and use his or her name and password for verification. Once signed, the completed report can be electronically submitted to OLMS.
After much negotiation, Congress has extended the two-percent payroll tax cut for employees through the end of 2012.
Individuals contribute to Social Security through payroll taxes or self-employment taxes. Both are comprised of two parts: (1) the Old-Age, Survivors, and Disability Insurance (OASDI) tax and (2) the Medicare Hospital Insurance (HI) tax. OASDI tax normally requires employers and employees each to pay 6.2 percent of wages. Self-employed individuals pay both portions (normally equal to 12.4 percent). The 2012 Job Act reduces those rates to 4.2 percent and 10.4 percent, respectively, for 2012.
The Joint Committee on Taxation estimates that approximately 170 million wage earners and self-employed individuals will benefit from the payroll tax reduction in 2012, on average, a $1,000 increase in take-home pay for the year. The extension benefits both employees and those self-employed. Please make sure your accountant is on top of these changes in law so that your union can benefit from them.