Who pays the IOLTA account fees and service charges?
The Arizona Supreme Court rule governing the IOLTA program allows financial institutions to keep a small fee from the interest earned on an IOLTA, but many financial institutions waive those fees to benefit the IOLTA program. The lawyer is responsible for all other fees, such as the cost of check printing. Who pays taxes on the IOLTA account interest? No one. The Internal Revenue Service has concluded that interest income from IOLTA accounts payable to a tax-exempt organization, such as the Foundation, is not taxable to (or deductible by) the client or the lawyer. Why do we need an IOLTA program? Without taxing the public, and at no cost to lawyers or their clients, the interest from pooled lawyer trust accounts provides legal aid to those who can’t afford to hire a lawyer, and law-related education programs for the public. The IOLTA program has generated more than $2 billion nationwide for some of our country’s most vulnerable residents. How does the Foundation spend the interest? The
