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Glossary of Terms

Affiliate

Subordinate body (for example, Council, Local, Chapter, Retiree Chapter, Retiree Sub-Chapter, Organizing Committee and any entity managed by one or more affiliates.)

Allowances

Payments made to officers for out-of-pocket expenses incurred while conducting affiliate business. These payments are also known as stipends. Receipts are not required to document these payments. W-2’s must be issued to all officers who are paid allow­ances/stipends during the calendar year and filed with the IRS. Payroll taxes must be withheld and payroll tax forms must be filed for all allowance payments to officers.

Audit

Examination of the affiliate’s financial records conducted by Trus­tees or Certified Public Accountant(s) (CPA).

Bank Debit Card or ATM Card

Cards issued by a bank allowing an individual to draw cash out of an Automatic Teller Machine (ATM) or make purchases that are charged directly to bank account. Bank Debit and ATM Cards are prohibited and may not be used by AFSCME affiliates.

Bank Reconciliation

Reconciliation upon receipt of each statement of the balance on the bank statement to the balance in the check register.

Budget

Projection of income and expenses for the coming year.

Cash Book

Financial record book used to record all receipts and disbursements. Recorded amounts should be totaled monthly.

Constitution

Document that governs an affiliate’s structure and system of gov­ernance.

Dues Rebate

Portion of local union dues remaining from the union dues that were collected by the Council on behalf of the local union after International and Council per capita taxes (PCT) have been deducted.

EIN

Employer Identification Number. This is also known as TIN (Tax­payer ID Number). Every union affiliated with AFSCME must have an EIN issued by the IRS and that number must be on file with the Auditing Department of the International Union. Failure to have an EIN or to place it on file with the Business Office jeop­ardizes the affiliate’s status as a non-profit organization.

Expenditure Authorization

Approval of all disbursements by the affiliate. All expenditures must be authorized by constitution, law, contract or vote.

Expense Advance

Payment made to an individual for affiliate expenses that have not yet been incurred. If the individual receives an advance against expenses (e.g., for the convention), the individual must submit an expense report and receipts for all expenses other than per diem incurred. If the expenses exceed the amount of the original advance, a check may be issued to the individual for the additional cost. If the expense is less than the amount of the advance, the dif­ference must be collected from the individual immediately and deposited in the affiliate’s account. An expense report should be submitted within 30 days of the conclusion of the business travel to document the expense advance.

Expense Report

Document explaining each expenditure made by an individual for which reimbursement is to be made by the union. Each item to be reimbursed will require supporting documentation, such as receipts, and adequate explanation of the union purpose for the costs incurred.

Financial Standards Code

Minimum bookkeeping standards, rules and procedures established to ensure that all affiliates fairly and fully account for the finances of the affiliate. All affiliates are required to comply with the provi­sions of the Code.

Financial Statement

A listing of income and expenses as well as a statement of assets owned and bills owed. Should be prepared by all affiliates each month.

Form I-9 (DIS)

Form used by employers to demonstrate that each employee is a U.S. citizen or legal resident.

Form LM-2, LM-3 or LM-4 (DOL)

U.S. Department of Labor financial report which must be filed by affiliates with private sector employee(s). Due within 90 days after the end of the affiliate’s fiscal year. LM-2 -- income greater than $250,000. LM-3 -- income less than $250,000. LM-4 -- income less than $10,000.

Form SS-4 (IRS)

Application for Employer Identification Number. The preferred method of applying however is online at www.irs.gov. The application should be filed by affiliate with the IRS immediately upon being chartered.

Form W-2 (IRS)

Wage and Tax Statement. Summary of all wages, allowances, reimbursed dues and lost time payments. W-2 must show total wages or payments, federal income taxes withheld, Social Security and Medicare taxes withheld and state taxes withheld.

Form W-3 (IRS)

Transmittal of Income and Tax Statements (W-2s) to the Social Security Administration due by February 28th each year.

Form W-4 (IRS)

Employee’s Withholding Allowance Certificate. Completed by all individuals receiving wages, allowances, reimbursed dues and lost time payments to allow for the correct amount of federal income tax withholding.

Form 940 (IRS)

Annual Federal Unemployment Tax Return due on or before January 31st each year. All lost time, allowance/stipend and reim­bursed dues payments must be included as wages.

Form 941 (IRS)

Quarterly Payroll Tax Return which must be filed for all wage payments, including lost time, allowance/stipend and reimbursed dues payments.

Form 990-N “e-postcard” (IRS)

Annual electronic filing requirement for small exempt organiza­tions. Affiliates are required to file a Form 990-N if their normal gross receipts averaged $50,000 or less over the last three (3) years.

Form 990 & 990-EZ (IRS)

Informational Return of Organizations Exempt from Income Tax. Affiliates not eligible to file Form 990-N “e-postcard” are required to file IRS Form 990-EZ if they have prior year gross receipts totaling over $50,000 and less than $200,000 and prior year total assets totaling less than $500,000. Affiliates with annual receipts of $200,000 or more or total assets of $500,000 or more are required to file IRS Form 990.

Form 990-T (IRS)

Tax form required of not-for-profit organizations who are involved in taxable activities.

Form 1096 (IRS)

Annual Summary and Transmittal of Forms 1099-MISC to the IRS due by February 28th each year.

Form 1099-MISC(IRS)

Form used to report all taxable non-salary payments of $600 or more made to all individuals during the calendar year. A 1099 cannot be issued for wages (e.g., allowances, stipends, reimbursed dues and lost time payments).

Form 1120-POL (IRS)

U.S. Income Tax Return for Certain Political Organizations. Affiliates are required to file IRS Form 1120-POL if they have investment income in excess of $100 for the tax year and also make political contributions in excess of $100 for the tax year. Does not apply to affiliates having a qualified “Separate Segregated Fund” for use in making political contributions.

Lost Time

Payment made to an officer or member as compensation for taking uncompensated leave from their job to perform union duties. Lost time is considered to be payment of wages. Federal income, Social Security, Medicare and state income taxes must be withheld and payroll tax forms must be filed for all lost time payments.

LUAFR

Local Union Annual Financial Report submitted to report the financial activity for the previous fiscal year and to assist the Inter­national in evaluating the financial practices of the Local Union.

Minimum Dues

Minimum monthly fee charged to all members of AFSCME Inter­national to participate in and benefit from services provided by the International, Council and Local Union. The Minimum Dues rate, established by the International Constitution, increases each January based on the average wage increase received by AFSCME members over the 12 month period ending the preceding July 31st.

Officer

Elected official of the affiliate who is a member of the Executive Board that governs and has decision-making authority on behalf of the affiliate.

PCT

Per Capita Tax. The portion of union dues paid to the International Union and Councils to service the membership on a national and state or council level.

Per Diem Non-Taxable

Meal allowance for overnight out-of-town union-related business, up to the maximum federal rate allowed. The maximum daily non-taxable rates authorized to be paid by the federal government depend on the city of the overnight stay. An expense report with documentation of overnight stay must be filed to allow these pay­ments to be treated as “accountable” and therefore non-taxable.

Per Diem Taxable

General daily allowance to cover incidental costs, for which no accounting is required. Also, out of town per diem in excess of the allowable federal rate is taxable to the extent that the payment exceeds the federal guidelines. All taxable per diem payments must be included in the recipients annual W-2

Reimbursed Expenses Accountable Plan

Payment(s) made to an individual for charges incurred on behalf of the affiliate. If the payment represents reimbursement to the indi­vidual for actual expenses paid, documented and submitted to the affiliate, the payment to the individual is treated as a non-taxable reimbursed expense. The individual must submit paid receipts for all expenses incurred. By submitting paid receipts to the affiliate, the individual has accounted for expenses and neither the individual nor the affiliate is required to report the payments or the expenses to the IRS.

Reimbursed Expenses Non-Accountable Plan

Payment(s) made to an individual as compensation for costs incurred or expected to be incurred in performing union services for which no expense report or other accounting for these funds is required. All payments made under the “Non-Accountable Plan” are considered compensation and are treated as taxable income to the recipient. Examples of these payments include auto allow­ances, officer allowances, stipends and convention advances for which no accounting is required or expected.

Surety Bond Certificate of Coverage

Certificate issued by the bond underwriter that states the coverage level of the affiliate based on the total assets and receipts reported on the Surety Bond Report. The Certificate of Coverage can be obtained from the Auditing Department upon request.

Surety Bond Premium

Amount each affiliate is charged for their surety bond coverage.

Surety Bond Report

Report to be completed by each affiliate listing the total of all bank accounts and investments as of the prior calendar year end plus all cash receipts of the affiliate during the prior calendar year. All affiliates must file a Surety Bond Report with the International Union as required by the International Constitution.

Trustees

Trustees are elected “Officers” but are not members of the Execu­tive Board. They have neither voice nor vote on matters before the Executive Board. Trustees are responsible for conducting the annual or more frequent audits of the affiliate’s financial records required by the affiliate’s constitution, or for seeing that outside experts are employed to conduct such audits.

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