What are the tax consequences of IOLTA participation?
According to the Internal Revenue Service, IOLTA participation imposes no tax consequences to the client or the lawyer. Each IOLTA account will bear the tax identification number of the Rhode Island Bar Foundation to ensure that all accumulated interest is reported as income of the IOLTA program. What is an IOLTA Comparability Rule? An IOLTA Comparability Rule requires attorneys to place their IOLTA accounts in a financial institution that pays those accounts the highest interest rate generally available at that institution to other customers when IOLTA accounts meet the same minimum balance or other account qualifications, if any. How many other states have adopted Comparability Rules? To date, a total of 23 states have adopted comparability rules. In those states, IOLTA income has more than doubled and has often increased by three to five times the amount received prior to adoption of comparability rules. Will banks stop offering IOLTA accounts to attorney customers in opposition Com
. According to the Internal Revenue Service, maintaining IOLTA accounts imposes no tax consequences to the client or the lawyer. See Revenue Ruling 81-209. Each IOLTA account bears the tax identification number of the NC IOLTA Board of Trustees to ensure that all accumulated interest is reported as income of the IOLTA program. If your bank needs IOLTA’s tax id number, please contact the IOLTA office.
