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Info for Lawyers

1) What is the Interest of Lawyers Trust Accounts (IOLTA) Program?
2) How does the Oregon Law Foundation use IOLTA interest?
3) How do I tell if funds should be in an IOLTA or an individual           account?
4) What are the tax consequences of IOLTA participation?
5) How does IOLTA affect clients?
6) How do banks handle service charges and fees on IOLTA?
7) What do I need to open an IOLTA?
8) What are the IOLTA reporting requirements?
9) How do I select a bank?
10) How can I find out more about IOLTA?

1) What is the Interest of Lawyers Trust Accounts (IOLTA) Program?

The Interest on Lawyers' Trust Accounts (IOLTA) program is an innovative way to help provide access to legal representation regardless of income. Lawyers place into pooled interest-bearing trust accounts client funds that are too small in amount or held for too short of a time to earn interest for a client, net of bank charges and administrative costs. Banks pay the interest from these accounts to the Oregon Law Foundation (OLF), a charitable, tax-exempt entity.

The Oregon IOLTA program has been mandatory for all lawyers since 1988, the result of a vote by Oregon State Bar members. The Oregon Supreme Court approved the necessary rule changes, effective May 1, 1989.

Oregon Rule of Professional Conduct (ORPC) 1.15-1 and 1.15-2 give guidance on client trust accounts and IOLTA.


2) How does the Oregon Law Foundation use IOLTA interest?

The Oregon Law Foundation uses the interest to award grants to programs across the state. Our mission is to support programs that:

  • Provide legal services for Oregonians of lesser means
  • Expand public education about the law
  • Promote diversity and inclusion within the legal profession

3) How do I tell if funds should be in an IOLTA or an individual account?

Follow the criteria found at ORPC 1.15-2 (c)(d). If a client’s funds are too small in amount or held for too short of a time to earn interest for the client, net of bank charges and administrative costs, place them in an IOLTA.

If a lawyer later determines that a particular client’s funds in an IOLTA account would have earned net interest, the lawyer can request a refund of what the client would have earned pursuant to ORPC 1.15-2 (f).


4) What are the tax consequences of IOLTA participation?

There are no tax consequences to the attorney or the client from using an IOLTA. The IRS stated in Revenue Ruling 81-209 and amplified in Revenue Ruling 87-2 that the interest earned on nominal and short-term client funds and paid over to a bar foundation pursuant to a court-established program, is not includable in the gross income of any client or lawyer.


5) How does IOLTA affect clients?

IOLTA has no effect on clients. Lawyers only place funds in IOLTA that otherwise would not produce net income for a client. Therefore, the client suffers no loss from IOLTA interest paying to the OLF.


6) How do banks handle service charges and fees on IOLTA?

Banks apply service charges on IOLTA—monthly maintenance fees, per item check charges, items deposited charges, and per deposit charges—only against the interest paid to the OLF.

The lawyer is responsible for all other fees or transaction costs including fees for wire transfer, electronic transfer, non-sufficient funds, bad checks, stop payment, account reconciliation, negative collected balances, and check printing. Lawyers may absorb these costs or pass them to the client(s) being served by the transaction (in accordance with attorney/client agreements).


7) What do I need to open an IOLTA?

To open an IOLTA, you may need the following information:

  1. The OLF’s tax ID, 93-0817536, must be attached to the account for interest to go to the OLF.
  2. Notice to Financial Institutions, www.oregonlawfoundation.org/docs/FinancialInstInfo.pdf. The OSB does not require this form; however, some banks request documentation before opening an IOLTA. Even when not requested, this form can help a bank understand what kind of account you are requesting.

After the account is open the bank will remit any interest to the Oregon Law Foundation.


8) What are the IOLTA reporting requirements?

ORS 9.675 requires all active bar members to certify annually whether they have Oregon IOLTA(s) and disclose the bank(s) and account number(s) of those IOLTAs. This includes members who do not have a trust account or are employed by a firm that holds an IOLTA. Lawyers can certify compliance through the OSB member portal.


9) How do I select a bank?
Financial institutions play a significant role in the success of the IOLTA program. The amount of funding generated through IOLTA each year is dependent upon several factors, including interest rates and bank-imposed service fees. You can help the Oregon Law Foundation by establishing your IOLTA at (or moving your IOLTA to) an OLF Leadership Bank that pays above market interest on IOLTA.

10) How can I find out more about IOLTA?

Visit the Oregon Law Foundation online: www.oregonlawfoundation.org