IOLTA/IOTA FAQs

IOLTA and IOTA are acronyms for “Interest on Lawyers’ Trust Accounts” and “Interest on Trust Accounts” respectively. The IOLTA program was established by the Ohio General Assembly in 1985, followed by IOTA in 1995. The interest earned on these accounts generates revenue for the state’s legal aid fund. IOTA and IOLTA provisions are fully set out in Ohio Revised Code Sections 3953.231, 4705.09 and 4705.10.

Under the IOLTA/IOTA program, lawyers and title agents must place pooled escrow funds in interest-bearing accounts with interest remitted by financial institutions to the state treasurer for deposit into the legal aid fund.

Every lawyer licensed to practice in the state of Ohio who holds client funds (filing fees, unearned retainers, settlements, etc.) must establish an IOLTA. If a lawyer is associated with or employed by a law firm, the firm’s IOLTA may be used. If a lawyer does not hold and disburse clients’ funds and neither the lawyer nor the lawyer’s firm maintains a pooled funds escrow or trust account in Ohio, she or he is exempt from Ohio’s IOLTA provisions.

Title insurance agents: In addition, all title insurance agents (regardless of whether or not they are lawyers) and title insurance companies (that receive escrow funds and maintain the funds in a pooled escrow account) must establish an IOTA.

An attorney or title agent may establish an IOLTA or IOTA at any bank, savings & loan association, credit union or savings bank that is authorized to transact business in the state of Ohio. Most, but not all, financial institutions in the state currently participate in Ohio’s IOLTA/IOTA program. You may contact the Foundation to confirm whether the bank where you would like to establish an account is a participating bank. This website also provides additional advice on choosing a financial institution for your account.

IOLTA and IOTA must be established at an eligible, participating financial institution. The participating bank should have a uniform process for establishing a new IOLTA or IOTA that complies with statutory requirements. This process, at a minimum, should establish an IOTA in the name of the title insurance agent or company and be identified as an “Interest on Trust Account” or IOTA, and should establish an IOLTA in the name of the attorney, firm or association that established it and should be identified as an “Interest on Lawyers Trust Account” or IOLTA. The name of these accounts may contain additional identifying information to distinguish it from other accounts.

The interest earned on all IOLTA and IOTA generates revenue for Ohio’s legal aid fund. By depositing IOLTA/IOTA funds in a Prime Partner financial institution, attorneys are increasing the dollars available to support civil legal aid services in the state, and ultimately, increasing access to justice for all Ohioans.

The federal tax identification number (EIN) assigned to all Ohio IOLTA/IOTA is 31-1126612. Financial institutions should not assign an individual’s or firm’s tax I.D. number to the account. There are no tax consequences to a lawyer or escrow agent, the client of a lawyer or escrow agent, a participating law firm or title company or the recipient legal aid organization.

Once an account is established at a participating bank, the attorney must notify the Foundation by visiting the Foundation’s website. Lawyers do not need to notify the Supreme Court when establishing an IOLTA or IOTA. Account information will be requested by the Court during its biennial registration.

IOLTA are established for funds that are nominal in amount or are to be held for a short period of time. If net interest could be earned for the client, then the funds should be deposited in a separate account for the client’s benefit.

Examples of some types of funds to be deposited into IOLTA or IOTA include:

• Retainers received from clients, until they are actually earned;
• Funds which belong in part to the client and in part to the lawyer;
• Funds of the client that are being held for disbursement at a later time;
• Personal injury settlements and awards;
• Deposits required to close property transactions;
• Prepaid court costs.

The above is a list of examples of funds that are to be deposited into an IOLTA or IOTA. There may be other types of funds that should also be deposited into IOLTA or IOTA. Unless an escrow or client’s trust account is established for the sole benefit of that client, all pooled client trust accounts must be either an IOLTA or IOTA.

The Board of Commissioners on Grievances and Discipline has offered Advisory Opinions on how attorneys should handle these fees. These opinions are informal, nonbinding opinions in response to prospective or hypothetical questions regarding the application of the Supreme Court Rules for the Government of the Bar of Ohio, the Supreme Court Rules for the Government of the Judiciary, Rules of Professional Conduct, the Code of Judicial Conduct and the Attorney’s Oath of Office. You may access these opinions from the Supreme Court of Ohio’s Web site. Op. 89-07 – deposit of retainer in separate identifiable bank account and Op. 96-4 – Flat fee in criminal defense representation deposited into business account.

Attorneys may allow clients the ability to pay costs and expenses related to the representation of the client with the client’s credit card. However, the attorney is responsible for any brokerage charges or fees associated with the use of a credit card. This fee, like other service charges, must be paid from the attorney’s operating account and not from the interest earned on the client’s trust account. If a client gives an attorney $10,000 using a credit card, then $10,000 must remain in the client’s trust account for the agreed upon use of these funds. You may access Op 2007-3 from the Supreme Court of Ohio’s website.

An IRS rule created by the Housing Assistance Act of 2008, Rule 6050W, may impact IOLTA accounts if the account accepts credit card payments. If an attorney or law firm accepts credit card payments and processes credit card transactions through a third party processing entity, that entity must provide information concerning those payments and transactions to the IRS. The information is reported on Form 1099-K, and a copy must be provided to the merchant. The rule applies to all bank accounts, including IOLTA accounts. The name and tax identifying number appearing on the 1099-K must match exactly the name and number appearing on the attorney or law firm’s tax return. A 28 percent withholding penalty on all credit card transactions is authorized if the identifying information on the 1099-K does not match exactly with what is on the merchant’s federal tax return.

The rule may have ethical implications when applied to IOLTA accounts: if client funds are not immediately available due to the enforcement of the withholding penalty, the responsible attorney may face ethical violations. Attorneys and law firms should have received notice from the credit card processor if information does not match. If notice was not received, attorneys and law firms are encouraged to contact the credit card processor immediately to verify that information matches as required by Rule 6050W, and to correct any mismatches immediately.

The financial institution remits the interest from IOLTA and IOTA to the State Treasurer with a monthly report detailing the account’s average balance, service charges, interest rate, interest earned and interest remitted reported to the Foundation.

Funds held in a lawyer’s IOLTA or IOTA may become Attorney Unclaimed Funds, a new category of unclaimed funds. Effective April 12, 2021, the Ohio Revised Code includes Attorney Unclaimed Funds and authorizes the Ohio Access to Justice Foundation to use these funds to support civil legal aid and access to justice.

Attorney Unclaimed Funds include:

• Unclaimed IOLTA funds held pursuant to R.C. 4705.09
• Unclaimed IOTA funds held pursuant to R.C. 3953.231; and
• Unclaimed residual settlement funds, whether for named or unnamed plaintiffs.

See R.C. 169.01(L).

The Division of Unclaimed Funds has created a unique property code for Attorney Unclaimed Funds – TR88. Use this code when reporting such funds to the Division of Unclaimed Funds.

Please visit the Foundation’s Attorney Unclaimed Funds FAQ for more information or contact:

Tammy Ringhiser
Financial Director, Ohio Access to Justice Foundation
unclaimedfunds@ohiojusticefoundation.org

Charles Farris
Compliance/Audit Manager, Division of Unclaimed Funds
Charles.Farris@com.state.oh.us

FDIC regulations make it clear that funds deposited into an IOTA or IOLTA belong to the individual clients represented and will be insured up to the $250,000 aggregate per client, regardless of the total dollars in the account and regardless of the law firm’s or title company’s other deposits in that institution, as long as certain steps are followed see 12 C.F.R. 370.4 and 12 C.F.R. 370.2(h)(3)(i).

Yes. The payment should be deposited directly into the lawyer’s IOLTA. Lawyers, however, should be aware of the fees that these payment services charge and should discuss the fees with their clients prior to payment and reach an agreement with the client as to who will be responsible for the fees.

Yes, the Supreme Court of Ohio’s rules of Professional Conduct require attorneys licensed in the state to register their IOLTA/IOTA with the Court during the biennial registration and update the Foundation of any changes in between registration.

Upon admission to the bar, and then every two years, you will receive a Certificate of Registration from the Supreme Court of Ohio. This form includes a section to register your IOLTA/IOTA. In between biennial registrations, the attorney is to register new accounts, provide account updates and/or IOLTA/IOTA status changes by visiting the Ohio Access to Justice Foundation’s website or contacting the Foundation directly. The Foundation offers an online registration option for attorneys to update their IOLTA/IOTA status changes. You will need your attorney registration number and if you need to report the opening of an account, you will need the account number and name of financial institution where the account has been established.

An attorney is required to provide the Court with his or her registration number, IOLTA name and number and the name and location of the financial institution with which the account is established. You must list all IOLTA/IOTA with which you are associated.

If you are working for a firm and that firm maintains an IOLTA/IOTA, you are permitted to use your firm’s IOLTA/IOTA. When registering your firm’s account, you need to obtain the number of the firm’s trust account and the name and location of the financial institution with which the account is established.

Upon first being admitted to the practice of law in Ohio, you may not have established your own IOLTA/IOTA yet or you may not know your firm’s account information. On the Certificate of Registration, you should complete the account registration section with the information that you do know, your personal information and your firm’s name and location. Once you have established your own account or know your firm’s account number, then you should forward that information to the Foundation. The Foundation offers an online registration option for attorneys to update their IOLTA/IOTA status changes. You will need your attorney registration number and if you need to report the opening of an account, you will need the account number and name of financial institution where the account has been established.

In the IOLTA/IOTA section of the Certificate of Registration, please check the appropriate box on the form indicating the reason that you do not need to maintain an IOLTA. No additional information or steps are required.