IOLTA (Interest on Lawyers Trust Accounts) was created in 1980, when the Congress modified federal banking laws allowing banks to pay interest on checking accounts. The first IOLTA account was created in Florida in 1981.
IOLTA is source of funding to provide access to justice for individuals and to improve our justice system. Every state, along with the District of Columbia and the Virgin Islands, operates an IOLTA program. These funds, together with private grants and donations enable nonprofit legal aid providers to help low-income people with various civil legal matters and provide education about our justice system. The United States IOLTA programs generated more than $124 million dollars nationwide in2009.
Every attorney and law firm in Nevada are required to create and maintain an interest-bearing trust account for the deposit of clients’ funds when the funds cannot otherwise earn enough income for the client to be more than the cost of securing that income. The trust accounts must be an interest on Lawyers Trust Account (IOLTA) at participating financial institutions. The client, and not the IOLTA program, will receive the interest if the funds are large enough or will be held for a long period of time. These funds will not be in IOLTA accounts. Each attorney or firm has the discretion to decide whether the client’s funds are nominal or are to be held for a short period of time.
Examples of types of funds to be deposited into IOLTA accounts include:
There may be other types of funds that should be deposited into IOLTA accounts.
The interest income from IOLTA accounts payable to a tax-exempt organization is not taxable to the client or the attorney nor is it deductible.