Most banks and credit unions in Wisconsin participate in the Interest on Lawyers' Trust Accounts (IOLTA) program. Here's how to do the same.
The first step in IOLTA participation is to complete a Wisconsin IOLTA Compliance Certification Form. (Please contact WisTAF for a copy.)
WisTAF works closely with financial institutions to verify their status and assists in aligning them with the Wisconsin Supreme Court's requirements governing IOLTA accounts. The Wisconsin Supreme Court requires WisTAF to publish a list of IOLTA participating financial institutions on our website. After receiving your financial institution’s Wisconsin IOLTA Compliance Certification Form, WisTAF will reach out with any pending questions. Once eligibility has been verified, we will send you an eligibility confirmation letter and, with appreciation, add your bank or credit union to the list of participating institutions.
Per Wisconsin Supreme Court Rule 20:1.15(b), each trust account must be clearly designated as a “Client Account,” a “Trust Account,” or words of similar import. The rule further specifies that using an acronym such as “IOLTA” without further elaboration does not properly identify a trust account. For more information on titling trust accounts, please contact Wisconsin’s Office of Lawyer Regulation at (877) 315-6941, ext. 2.
Financial institutions do not need to complete a 1099-INT form or W-9 form on IOLTA accounts.
The IOLTA account will carry the tax identification number of Wisconsin Trust Account Foundation, Inc. (39-1555465), which has beneficial ownership of the interest or dividends generated on IOLTA accounts. The Foundation is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. Accordingly, 1099 forms or other reports of interest or dividends should not be prepared or submitted to the IRS for IOLTA accounts. Because the Foundation's tax identification number will not match the lawyer/law firm's name on the account, unnecessary tax reporting on these accounts could cause difficulty. Financial institutions will simplify their administration of IOLTA and avoid difficulties with the Internal Revenue Service by using an appropriate code to suppress 1099 forms for IOLTA accounts.
However, if your data processing system cannot bypass tax reporting, be sure to identify Wisconsin Trust Account Foundation, Inc. as the payee/recipient of the interest or dividends (tax identification number 39-1555465). Financial institutions that must issue 1099 forms for IOLTA accounts should use their "second address" capability for this purpose and send the forms directly to the Foundation rather than the lawyer or law firm.
WisTAF requests that your financial institution complete the Financial institution contact form on a regular basis in order to help WisTAF keep accurate records of IOLTA and management contacts. WisTAF will email a form for completion periodically to your IOLTA contact to gather accurate contact information. Please notify WisTAF of any IOLTA contact changes as they arise throughout the year.
At the time an attorney client establishes an IOLTA trust account with your institution, they will need to complete two forms in cooperation with your financial institution: the Attorney IOLTA Trust Account Agreement (send a copy to WisTAF upon completion) and the Overdraft Notification Agreement (send a copy to the Office of Lawyer Regulation upon completion).
SCR 20:1.15(d)(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.)
While the IOLTA program requires financial institutions to pay IOLTA accounts no less than accounts of non-IOLTA customers would earn in interest, financial institutions may choose to pay IOLTA accounts a higher rate than required. This form of community service can also bring benefits to a financial institution, if the rates meet the threshold for the IOLTA Prime Partner program.
Each IOLTA participating institution shall certify to WisTAF annually that the financial institution meets the requirements of Wisconsin Supreme Court Rule (SCR) 20:1.15 for IOLTA accounts, and that it reports overdrafts on draft trust accounts and draft fiduciary accounts of lawyers and law firms to the office of lawyer regulation.
WisTAF will send all participating financial institutions compliance certification forms at the beginning of each calendar year requesting IOLTA comparability rate information and current rate and product information. Financial institutions are required to respond to reasonable requests from WisTAF for information needed for confirming the accuracy of an IOLTA participating financial institution’s compliance certification.
Compliance certification forms are due to the WisTAF office by February 15th of each calendar year or within 30 days of receipt of the form. Financial institutions that do not comply with the deadline may be removed from the “List of Eligible Participating Financial Institutions,” thereby notifying all attorney clients of the financial institution’s status.
Most participating institutions choose to waive fees on IOLTA accounts, to help more of our friends and neighbors throughout Wisconsin realize our nation's promise of equal justice under the law.
Some banks and credit unions also go the extra mile, leading as IOLTA Prime Partners and enjoying benefits which WisTAF provides to encourage this additional community service.
To explore providing more support for access-to-justice, visit our Lead: Become an IOLTA Prime Partner page.
Should your financial institution decide to stop participating in IOLTA, follow the steps below: