We have been looking into our IOLTA accounts because it came to our attention that the reporting tax ID number is supposed to be the LFT TIN. However, the LFT MUST not be linked in anyway as an owner since they are only the beneficial owner of the interest. Our concern is that our "name line 1" is supposed to match the reporting tax ID to avoid an IRS TIN mismatch. We are still sending the interest to the LFT, and the account is set to do not report. The interest, (though not reported) is technically tied to the Lawyer/ Law office. If we do not have the LFT TIN listed as the reporting TIN, our system will not flag it as an IOLTA account. Is the TIN mismatch something we are thinking too much into? How do other institutions set up IOLTA accounts?

Correction: It is the LTF. Lawyers Trust Fund...

The interest is being paid to the LFT. I am assuming that they are a tax-exempt organization and hence you set it to not report. I am confused. If you are not filing information returns, how would you ever get an IRS TIN mismatch?

Exempt recipients. You are not required to file Form 1099-INT for payments made to certain payees including, but not limited to, a corporation, a tax-exempt organization, any individual retirement arrangement (IRA), Archer medical savings account (MSA), Medicare Advantage MSA, health savings account (HSA), a U.S. agency, a state, the District of Columbia, a U.S. territory, a registered securities or commodities dealer, a nominee or custodian, a broker, or notional principal contract (swap) dealer.

From an audit standpoint, should we be concerned? Should the IOLTA indicator be explanation enough to show why the "name line one" does not match the TIN, and that the owner of the TIN is not linked to the account in any way?

Why would an auditor even question this? I was in audit for 20 years, both internal and external, and would not give it another thought.