Financial institutions provide the substance of IOLTA.

WisTAF

 

Contingent on interest rates, IOLTA (Interest on Lawyers Trust Accounts) funds help sustain providers of invaluable legal services such as helping people combat discrimination, resolve disability claims, become independent from an abusive partner, and much more.

 

IOLTA interest remittance instructions and forms

The Wisconsin Trust Account Foundation, Inc. has created a Financial Institution IOLTA Account Manual for financial institutions in the IOLTA program. Please reference this manual for information regarding remittance and reporting requirements and forms or see the information below. 

Interest Rate Requirements
SCR 20:1.15(cm)(4)b states:

An IOLTA account shall bear the highest non-promotional interest rate or dividend that is generally available to non-IOLTA customers at the same branch or main office location where the IOLTA account meets or exceeds the same eligibility qualifications, if any, including a minimum balance, required at that same branch or main office location.  (For more information, please refer to the rule posted on WisTAF's Web site)

Financial institutions may not discriminate between IOLTA accounts and accounts of non-IOLTA customers when paying interest, unless it is to pay IOLTA accounts a higher rate (see Prime Partner program)

Tax identification number (TIN)
Your financial institution should use WisTAF’s Federal Tax ID# for each IOLTA account: 391555465

1099-INT for IOLTA accounts
1099 INT forms should not be issued for IOLTA accounts. Interest on IOLTA accounts is taxable to the Wisconsin Trust Account Foundation, Inc. (WisTAF) and there are no tax consequences for clients, lawyers, or law firms. The Internal Revenue Service has stated that the interest on nominal and short-term client advances which is paid over to a bar foundation pursuant to a court-established interest on trust accounts program is not includable in the gross income of clients. Because WisTAF is exempt from federal income tax under Section 501(a) of the Internal Revenue Code, 1099 forms or other reports of interest are not required to be prepared or submitted to the Internal Revenue Service for IOLTA accounts.

Fees and service charges
Consistent with Wisconsin Supreme Court Rule 20:1.15, there are a limited number of fees that can be charged against IOLTA interest. The allowable reasonable fees may be deducted from interest earned or dividends paid on an IOLTA account, such that charges shall be calculated in accordance with an IOLTA participating financial institution’s standard practice for non-IOLTA customers. If non-IOLTA customers are not charged some or all of the allowable fees, financial institutions are also required not to charge those fees to IOLTA accounts.  The only exception to this is an approved administrative fee (see below).

 Allowable fees

  • Activity fees are limited to per check charges and per deposit charges
  • Other allowable fees are limited to FDIC fees, sweep fees, and fees in lieu of minimum balance
  • Administrative fees are allowed but must be approved by WisTAF’s Executive Director. Please contact the Executive Director at (608) 257-2841 to request approval for an administrative fee.​

Negative netting prohibited
Fees in excess of the interest earned or dividends paid on the IOLTA account for any month or quarter shall not be taken from interest or dividends of any other IOLTA accounts. Fees in excess of the interest earned or dividends paid on a monthly basis shall not be taken from interest or dividends of another month’s interest in that same quarterly reporting period.  No fees that are authorized under this policy shall be assessed or deducted from the principal of any IOLTA account. All other fees are the responsibility of, and may be charged to, the lawyer or law firm maintaining the IOLTA account though IOLTA participating financial institutions may elect to waive any or all fees on IOLTA accounts. For more information about charging the lawyer or law firm a non-allowable fee, please contact Wisconsin’s Office of Lawyer Regulation (OLR) at (877) 315-6941     ext. 2. 

Business analysis accounts
The practice of using business analysis accounts for IOLTA accounts is a practice that could possibly violate attorney ethics rules by allowing the attorney/law firm to receive business benefits based on client funds they hold in trust. WisTAF strongly discourages banks from offering business analysis products as IOLTA eligible products in order to inadvertently appear of impropriety on an attorney’s or law firm’s part in handling funds held in trust for their clients. Please refer to SCR 20:1.15 (cm)(4)c for a description of the types of accounts allowed as IOLTA accounts.

Closing IOLTA accounts
If one or more of your financial institution’s IOLTA accounts closes, please note this with the letter “C” in the IOLTA remittance report under the “Account Status” field. Once WisTAF receives this notification, we will update IOLTA database records accordingly. Please ensure that all interest on the account has been paid to WisTAF before closing the account. See Record Layout of Template below for specific information.

IOLTA Remittance frequency and requirements
An IOLTA participating financial institution must remit and report interest on at least a quarterly basis. Monthly reporting is encouraged, when reasonable. An IOLTA participating financial institution must do the following:

  • Remit to WisTAF the interest or dividends, less allowable reasonable fees as allowed, on the average monthly balance in the account. See Payment of Interest via ACH transmittal section below for specific information.
  • Provide to WisTAF an electronic remittance report showing, for each IOLTA account, the name of the lawyer or law firm for whose account the remittance is sent; the rate and type of interest or dividend applied; the amount of allowable reasonable fees deducted, if any; the average account balance for the period for which the report is made; and the amount of remittance attributable to each IOLTA account.
  • Provide to the depositing lawyer or law firm a remittance report in accordance with the participating financial institution’s normal procedures for reporting account activity to depositors.
  • Respond to reasonable requests from WisTAF for information needed for purposes of confirming the accuracy of an IOLTA participating financial institution’s remittance report

Payment of interest via ACH transmittal
WisTAF requires that your financial institution set up an Automated Clearing House (ACH) disbursing (holding) account where the sum of the interest accrued for all of your IOLTA accounts will be deposited immediately prior to the remittance for a given period. Once you have established an ACH disbursing account for IOLTA use, please contact the WisTAF office at service@wistaf.org to complete and submit an ACH Verification form.

Please note: Your financial institution’s ACH disbursing account can be a general ledger or a checking account. The account can be used for other vendors or customers – it need not be WisTAF exclusive. The ACH account cannot be an established trust account as the rule governing trust accounts does not allow for third party transactions.

Please deposit the total net IOLTA interest earned (on all IOLTA accounts) for the reporting period into your ACH disbursing account. Funds should be made available in the ACH disbursing account on the same day you submit your remittance report to WisTAF. WisTAF will initiate the ACH transfer of interest from your ACH disbursing account to WisTAF’s account. There is no need for the financial institution to initiate payment.

Your financial institution’s IOLTA contact will receive a confirmation email stating the date the IOLTA interest will be debited and the amount to be debited. This is an opportunity to contact WisTAF in case there is a debit discrepancy.

Electronic reporting
WisTAF requires that your IOLTA participating financial institution submit its IOLTA remittance report electronically each month or quarter, depending on the remittance frequency your financial institution has chosen. When your financial institution first joins the IOLTA program, WisTAF will email your IOLTA contact an electronic template file (in .csv file format) for you to complete and submit. Please click here for electronic reporting instructions. 

Uploading report securely
Once you have completed your financial institution’s IOLTA remittance report, save your report to a location on your hard drive or network. Go to the homepage of WisTAF’s Web site: www.wistaf.org and complete the following steps:

  • Register your financial institution to access the file upload page. To register, click the “Registration” link in the upper right hand corner of the WisTAF Web site homepage. Enter the required information.

Please note: user names and passwords must contain only alpha characters (a to z) and should not contain any spaces. Do not include numbers or special characters in your user name or password.

  • Enter the user name and password you created when you first registered to access the file upload page. The login area can be found in the upper right hand corner of the WisTAF Web site homepage.
  • Once you have logged in, click on the “Upload files” link in the upper right area of the screen. Click the “Browse” button and locate the file you wish to upload (your completed remittance report in .csv file format). Next, click the “Upload document” button. You will now see your chosen file in the “My files” listing at the bottom of the page. Once you have uploaded your remittance report, WisTAF staff will download the file and process your remittance.
  • Your IOLTA contact will receive an email confirming that WisTAF has received your report and the date your financial institution’s ACH disbursing account will be debited.  

Financial Institution Participation
Participating in the IOLTA program is voluntary and an IOLTA participating financial institution may withdraw from the program at any time. If your financial institution wishes to no longer participate in the IOLTA program, please follow the steps below:

  • Immediately notify WisTAF of your financial institution’s decision in writing.
  • Notify your affected attorney/law firm customers that your financial institution will no longer be offering the IOLTA program.
  • Once your attorney/law firm customers have closed their accounts, please notify WisTAF of the date each IOLTA account was closed.

Financial Institution Mergers
If your financial institution is undergoing a merger with another financial institution, please follow the steps below:

  • Immediately notify WisTAF in writing of your financial institution’s decision.
  • Notify your affected attorney/law firm customers that your financial institution is merging with another financial institution.
  • Send WisTAF an updated list of trust accounts, should the trust account numbers change during the merger.

 

Questions on the IOLTA interest remittance process or forms? Contact WisTAF's Office Manager, Tehmina Islam at tislam@wistaf.org or call 608-257-6845.

UPCOMING MEETINGS & EVENTS
August 31, 2018
Finance Committee Teleconference
September 18, 2018
Grants & Evaluation Committee Meeting
September 28, 2018
Executive Committee Teleconference
October 12, 2018
WisTAF Board Meeting
WHAT'S NEW
WisTAF has begun accepting applications for 2019 Community Redevelopment Legal Assistance Grant Program
WisTAF has begun accepting applications for 2019 WisTAF Direct Legal Services Grant Program
Wisconsin Trust Account Foundation, Inc. Announces New Community Redevelopment Grant Funding Opportunity
Community Redevelopment Grant Program Description Now Available
Federal Open Market Committee (FOMC) raises the target range for the federal funds rate to 1-3/4 to 2 percent

More...

PRIME PARTNER SPOTLIGHT

A Prime Partner member of the Wisconsin IOLTA program since 2010, Peoples State Bank strives to be the most admired community bank in the State of Wisconsin. Peoples State Bank goes above and beyond IOLTA participation requirements by paying additional interest on its clients' IOLTA accounts - helping to expand access to civil legal services in Wisconsin.


Contact us
WisTAF
825 Williamson Street, Suite A, Madison, WI 53703
Phone: 608.257.6845 or 877.749.5045 (toll-free)
Email: service@wistaf.org

Board & Staff
WisTAF
Board of Directors
WisTAF
Rebecca Murray, Executive Director
WisTAF
Tehmina Islam, Office Manager
WisTAF
Carlos Arenas, Program Manager
WisTAF

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