Lawyers’ Trust Accounts Board Helping to Secure Equal Access to Justice
Frequently Asked Questions
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The IOLTA Board appreciates its partnership with all financial institutions approved to offer IOLTA accounts. If your question is not answered below, please contact Isabelle Wozniak, IOLTA’s Director of Finance, by email at Isabelle.Wozniak@pacourts.us or by phone at 717-238-2001 ext. 7003.
An IOLTA account is an interest-bearing Trust Account into which attorneys deposit qualifying client funds received in the ordinary course of the practice of law. The interest from the account is remitted to the IOLTA Board to be used for the charitable purposes of the IOLTA program. Qualified funds include moneys received from any client which are too small in amount or are expected to be held for too short a period of time to generate net economic benefit for the client.
Financial institutions eligible to maintain IOLTA accounts are banks, bank and trust companies, trust companies, credit unions, savings banks, savings and loan associations, or foreign banking corporations insured by the Federal Deposit Insurance Corporation, or an alternate share insurer, that have been approved by the Supreme Court of Pennsylvania.
To be approved, financial institutions must sign an agreement with the Court that (1) it will pay an interest rate on IOLTA Accounts that is comparable to the rate offered to other bank customers that are similarly situated and (2) the financial institution will report checks that are presented against insufficient funds on Trust Accounts, including IOLTA accounts, maintained by attorneys. Information concerning overdraft reporting and the bank approval process can be obtained from the Pennsylvania Lawyers Fund for Client Security, (800) 962-4618.
Attorneys or law firms should present an Enrollment Form to their financial institution. Once the account is established and the form has been completed, the form must be sent to the IOLTA Board with the bank’s next remittance report or faxed to 717-238-2003.
It is not necessary for each attorney in a law firm to establish his or her own IOLTA account. In order to minimize service charges and maximize interest to the Program, law firms are encouraged to open a single IOLTA account for use by the entire firm.
The term “IOLTA” must be included in the account title; for example, “(name of attorney or law firm) IOLTA account”. The term “IOLTA” need not be placed on checks or deposit slips.
The Internal Revenue Service has concluded that the IOLTA Program is the beneficial owner of the interest accrued and that as a non-profit organization under section 501 (c)(3) of the Internal Revenue Code, there is no tax liability to the Program. Therefore, it is not necessary that either Forms W-9 or 1099 be used in connection with IOLTA accounts. If your institution’s system requires the entry of a TIN, please use the TIN assigned to the Pennsylvania IOLTA Board, not the TIN of the attorney or firm which established the account or that of a client. If your system cannot suppress issuance of Form 1099’s, then please send the forms to the Pennsylvania IOLTA Board, not to the participating attorney or law firm.
Attorneys are required to use their good faith judgment to determine whether funds are qualified for deposit in an IOLTA account. Financial institutions have no duty to inquire or determine whether deposits consist of qualified funds.
A participating financial institution must ensure that the balances in IOLTA and MJ-IOTA accounts earn no less than the highest yield that those same balances would earn in any other interest bearing deposit product that permits an unlimited number of transactions. As an alternative to meeting this standard, a financial institution may opt to participate in one of the preferred interest rate programs offered by the IOLTA Board (Safe Harbor, Platinum Leader, etc.) which serve to reduce the institution’s compliance obligation and also create a reliable source of funding for grants to legal aid organizations.
Payment from an IOLTA account upon the order of the attorney maintaining the account shall be a valid and sufficient release of any claims by any person or entity against any financial institution for any payments so made. Any remittance of interest to the IOLTA Program by a financial institution shall be a valid and sufficient release and discharge of any claims by any person or entity against the financial institution for any payment so made, and no action shall be maintained against any financial institution solely for opening, offering or maintaining an account, or for remitting any interest to the IOLTA Program.
In order to be in compliant, each institution must file with the IOLTA Board a Compliance Certification Form. Institutions must file a new Compliance Certification Form when information previously provided to the IOLTA Board becomes inaccurate. Download the Compliance Certification Form.
Except for forms which are required for submission to the Board and the attorney or law firm that maintains the account, all papers, records, documents or other information identifying an attorney, client or beneficial owner of an IOLTA account shall be confidential and shall not be disclosed by a financial institution except with the consent of the attorney maintaining the account or as permitted by law or Supreme Court rule.
Institutions may use whatever calculation method they employ for other interest-bearing accounts.
Each financial institution which maintains IOLTA accounts must remit at least quarterly any interest earned on the account to the IOLTA Program. Institutions should remit interest on a consolidated basis from all IOLTA accounts maintained either in the form of an automated clearinghouse (ACH) transfer to the Pennsylvania Interest on Lawyers Trust Account Board on or before the 10th business day following the close of the period. The Program maintains its principal account with AmeriServ Bank. For further information, please see the instructions in on the Interest Remittance Report or contact Pennsylvania Interest on Lawyers Trust Account Board at 717-238-2001.
Reports containing the following information should be transmitted electronically to iolta.remit@pacourts.us. Excel format is preferred. Download the Template. At the time interest is remitted, a report showing at least the name and account number of the account, gross interest earned, service charges or fees deducted, if any, and the amount of interest remitted from the account must be sent to the IOLTA Program, as well as to the attorney who maintains the IOLTA account. Additionally, the report should indicate the rate of interest credited and the average daily balance, if available, for the IOLTA account for the reporting period.
Financial institutions may impose reasonable service charges for the administration of IOLTA Accounts. A financial institution may not deduct service charges from the principal balance in an IOLTA Account. Reasonable service charges can be deducted against the total amount of interest to be paid on the IOLTA Account to which the service charges apply.
Interest remitted to the IOLTA Program should be net of any service charges assessed. For certain accounts, deducting service charges from interest accrued may result in a deficiency of interest. In such cases, institutions may not deduct the balance of the unpaid service charge from the principal in the account, nor may the excess service charges be deducted from the IOLTA interest earned on other accounts at the financial institution.
All costs associated with check printing, overdraft charges, wire transfers, charges for a temporary extension of credit and similar bank charges shall not be assessed against the principal balance in or interest earned on any accrued interest earned on an IOLTA Account. The lawyer maintaining the account shall be responsible for these costs. As a general rule, a lawyer may not co-mingle the lawyer’s own funds with Rule 1.15 Funds. However, the lawyer may deposit funds in an IOLTA Account in order to cover costs which may not be charged to the income or principal held in the IOLTA Account. The lawyer must maintain accurate records regarding those funds.
Should an institution discover an overpayment or other error in its remittance, it should write to the Board concerning the error as soon as possible. Reconciliation of the problem will be prompt, however, since the Board awards grants annually, refunds will not be made for periods of time longer than twelve months from the date of the written request.