Oklahoma Bar Foundation Financial Institution Guidelines for Mandatory IOLTA
IOLTA is an acronym for Interest On Lawyers’ Trust Accounts. It is a benevolent program authorized by the Oklahoma Supreme Court, where Oklahoma lawyers and law firms are required to place client or third party funds that are nominal in amount or to be held for a short period of time in an interest-bearing pooled trust account with the interest going to the Oklahoma Bar Foundation (“OBF”) IOLTA Program, termed an IOLTA trust account. Interest is earned by pooling these funds in an IOLTA account. Participation is mandatory for all Oklahoma attorneys and law firms holding client or third party funds in connection with representation.
Client funds capable of earning a positive net return for the client or third party may not be placed in an IOLTA account and should be placed in a separate trust account for the benefit of the client or third party. Attorneys and law firms are responsible for the determination of which funds qualify for placement in IOLTA Accounts. [In determining whether an account could provide a positive net return to the client, the attorney or law firm should consider the following factors; the interest the funds would earn, the cost of establishing and administering the account, including the cost of the lawyer’s service and the cost of preparing any required tax reports, and the ability of the financial institution to calculate and pay interest to the individual client, taking the current economic climate into consideration.]
Proceeds of interest earned on IOLTA trust accounts are used in not-for-profit grants that help support civil legal services for the poor and elderly, programs that help to improve access to justice, law-related education programs for Oklahoma school children and the public, high school mock trial programs, advocacy legal services for abused, neglected and deprived children, advocacy for vulnerable adults, and many other vitally needed law-related charitable programs and activities throughout Oklahoma. Well over $9 million has been provided for charitable services such as those listed, and we thank you for your part in making these vital services possible.
IOLTA programs are operational in all 50 states, Washington DC, the U.S. Virgin Islands, and throughout Canada. All lawyers and law firms that practice within the State of Oklahoma and hold client or third party funds in connection with a representation are required to participate in the Oklahoma IOLTA program. Attorneys that do NOT handle client trust funds are not required to establish an IOLTA trust account.
1. The lawyer or law firm customer must provide your institution with an “IOLTA Compliance Statement” enrollment form, instructing your institution to establish a new interest-bearing IOLTA trust account or to convert existing trust account(s) to an interest-bearing IOLTA account, with the Oklahoma Bar Foundation named as the sole recipient of interest earned on the account. Interest should be calculated as normally computed in accordance with your standard accounting practice. Interest must not be less than the rate paid on other accounts of the same class within the institution. Forms can be obtained on line at www.okbarfoundation.org.
The IOLTA program provides an important charitable service in Oklahoma. As discussed in more detail below, financial institutions are asked to waive minimum balance requirements and routine maintenance fees on the IOLTA participant accounts to partner with IOLTA in providing vitally needed benevolent programs all across our state.
2. The Oklahoma Bar Foundation is a Section 501(c)(3) nonprofit charitable organization. Treasury Reg. Section 1.6049-4(c)(1) provides that an information return is not required with respect to payments made to an organization exempt from taxation. Payments that are not subject to information reporting are not subject to backup withholding, and an IRS Form 1099INT is not required. A signed Form W-9 certifying that the OBF is exempt from backup withholding will be provided upon request.
The tax identification number of the Oklahoma Bar Foundation is: 73-0710244. Financial institutions should place IOLTA participant accounts into a non-tax or exempt status within the institution’s computer system. Financial institutions that lack the capability of overriding or preventing the creation of Forms 1099INT on exempt IOLTA accounts should show “Oklahoma Bar Foundation, IOLTA” as recipient of the interest earned by the account, and show the address and taxpayer identification number of the Oklahoma Bar Foundation on the Form 1099INT.
The term “IOLTA” should appear in the account’s styling for deposit insurance coverage. However, the term IOLTA should not appear on other account paperwork (e.g. checks and deposit slips).
Interest earned by an IOLTA account must be remitted directly to the OBF. Interest earned by the IOLTA participant account must not be paid to the attorney/law firm or client and should not be included in the gross income of the attorney/law firm or client. Payment of the interest to the OBF does not constitute a charitable contribution deductible by the attorney/law firm or client. See Rev. Rul. 87-2, 1987-1 CB 18.
3. Because the IOLTA program is a charitable program benefiting the public in Oklahoma, the financial institution is asked to waive all applicable service charges on IOLTA participant accounts and minimum balance requirements. Alternatively, the financial institution may choose to make an annual donation to the IOLTA program in an amount equal to the total service charges for all IOLTA accounts at the close of each calendar year. Contributions made by financial institutions to the IOLTA program qualify for Community Reinvestment Act (CRA) reporting.
Financial institutions agreeing to waive all applicable service fees and minimum balance requirements on all IOLTA participant accounts will be honored on the IOLTA Honor Roll maintained by the OBF and published on membership web pages. Added recognition can be obtained as IOLTA Prime Partner Bank through preferred interest rates at 60% of the FFR or 60 basis points. Being a participant as a Prime Partner Banks will help attract new banking business and reflects the institution’s commitment to charitable causes throughout Oklahoma, as well as providing an important service to Oklahoma lawyers holding client funds, who are required to participate in IOLTA. For information about other levels of support or questions about the IOLTA Honor Roll, please contact the OBF at the telephone number listed below.
Financial institutions that do not waive service charges should adhere to the following guidelines. Interest earned by an IOLTA account should be remitted to OBF net of only those additional service charges that might be imposed due to the change of the account to an interest bearing IOLTA account (“Additional Service Charges”). Additional Service Charges for an IOLTA account must not exceed the interest earned by the account, and such Additional Service Charges must be netted from each individual account and not from the total interest earned by all IOLTA accounts maintained with the financial institution (negative netting from other accounts is not acceptable).
All other service charges, if any, continue to remain the financial responsibility of the attorney/law firm as an operational expense of the law practice. These include all other service charges and transaction fees routinely imposed on a non-interest bearing account including, but not limited to: All NSF charges, stop payment charges, negative collected charges, FDIC insurance charges, wire transfer fees, fees for certified or cashier’s checks, electronic service fees, check and deposit slip printing costs and all other charges. All other service charges may be posted normally to the account and continue to remain the financial responsibility of the attorney/law firm as a normal operating cost of the practice.
4. Interest should be remitted/reported monthly or at least quarterly. The reporting method should remain consistent for each individual lawyer/law firm IOLTA depositor within your institution. Contact the Oklahoma Bar Foundation office at email@example.com for electronic reporting instructions and IOLTA reporting forms or at (405) 416-7070.
5. The report should be submitted for periods when no interest is earned, at least quarterly, so OBF is aware the account was reported and not accidentally overlooked.
7. The Foundation should be notified in writing at the termination of or upon a change in any IOLTA account.
8. If your financial institution is remitting for multiple lawyers/firms, please report information separately on each lawyer/firm account; however, the payment to the OBF may be in a lump sum issued on only one check. A cashier’s check is not necessary or required. Any applicable fees netted must only be applied to the account incurring the fee and must not be offset against another participant lawyer or law firm account (negative netting from other accounts is not acceptable).
9. NOW and Super NOW account eligibility for lawyer client trust account funds accumulated pursuant to the IOLTA Program are permitted by the Federal Deposit Insurance Corporation and the Federal Reserve System by letter to the counsel for the Foundation. Copies are available upon request.
10. Interest earned should be remitted/reported, at least quarterly, by check (a cashier’s check is not required) made payable to:
Oklahoma Bar Foundation, IOLTA
P O Box 96-0164 (OBF Lockbox Deposit Address)
Oklahoma City OK 73196-0164
11. Please forward any changes relating to your financial institution name, address & contact information and account information corrections, changes and/or account status to:
Oklahoma Bar Foundation, IOLTA
P O Box 53036 (OBF IOLTA Office Address)
Oklahoma City OK 73152-3036
12. Contact the Oklahoma Bar Foundation office at firstname.lastname@example.org for electronic reporting instructions and IOLTA reporting forms or at (405) 416-7070.
13. “IOLTA Honor Roll” and “Prime Partner IOLTA Banks”: The OBF will honor IOLTA financial institution participants through inclusion on a listing to appear on the Oklahoma Bar Foundation web site and various other bar related publications. Each financial institution on the list has voluntarily waived minimum balance requirements and service charges imposed on attorney and law firm participant IOLTA accounts to partner with OBF in providing charitable services throughout Oklahoma. Added recognition and benefits can be obtained as IOLTA Prime Partner Bank through preferred interest rates at 60% of the FFR or 60 basis points. Banks are encouraged to participate to provide needed banking services to attorney and law firm customers. Please contact the Oklahoma Bar Foundation office to obtain a copy of the “2011-2012 Bank Survey Form” to be added to the premier Prime Partner or IOLTA Honor Roll listings. For information about other levels of support or questions, please contact the OBF at (405) 417-7070 or email@example.com.
Questions relating to IOLTA Program administration procedures may be directed to the
Oklahoma Bar Foundation IOLTA Office at:
(405) 416-7070 in the greater Oklahoma City area
1 (800) 522-8065 OK Toll Free Number, OBF Office Ext. 7070
Fax: (405) 416-7089
or by e-mail at: firstname.lastname@example.org
OBF Staff Members look forward to your call & will be happy to assist you.
IOLTA Funds OBF Grantees providing legal services in the following categories:
- Children & Families
- Civil Legal Aid to low-income
- Domestic Violence
- Immigrants & Refugees
- Law-related educational programs grade school – college