Answer: Verify that you have met the threshold requirements for a refund. Then, write to COLTAF at 1600 Broadway, Ste 1400 Denver, Colorado 80202, and include the required information listed below.

Explanation:

Rule 1.15B(i) states that when a lawyer or LLP discovers that funds of a client or third person have mistakenly been held in a COLTAF account when circumstances actually justified the establishment of an individual trust account, the lawyer or LLP should request a refund from COLTAF. Interest refunds from COLTAF may create tax consequences for a client or third party. Lawyers and LLPs should discuss these tax consequences with their client or the third party before requesting a refund. Some clients or third parties may elect not to pursue a refund. To make an interest refund request, follow the guidance below.

Please note that COLTAF deducts from interest refunds an administrative fee of $10 per month that funds were held in the COLTAF account to cover COLTAF’s costs of administration and refund processing.

Threshold Requirements

  1. Verify that there was more interest generated on the funds held than the reasonably estimated cost of establishing, maintaining, and accounting for an individual trust account for the client or third party.
    1. The lawyer or LLP should contact their financial institution to ascertain the interest rate that was paid on their COLTAF account for each month that the funds in question were held in the COLTAF account. Tip: Do not assume that the most recent interest rate for the COLTAF account applied to each month. Banks frequently adjust their deposit product interest rates. You must verify the interest rate for each month that funds were held in the COLTAF account.
    2. Next, calculate, by month and in total, the interest paid on the balance that should have been held in an individual trust account. This calculation must assume simple, not compounding, interest.
    3. Calculate the time that would have been required for the lawyer, LLP, and/or appropriate members of staff to open and administer an individual trust account. This must include the time required to complete: account opening paperwork, at least quarterly reconciliation (more frequent if the firm’s practice is to reconcile more frequently), tax reporting, reports of account balances provided for the client or third-party, and any time that would have been spent disbursing interest payments.
    4. Apply the billable rate for each person who would have been involved in establishing and maintaining the individual trust account to the amount of time they would have spent on this. Add in applicable account maintenance and other fees charged by the financial institution where the individual trust account would have been held, such as a monthly account maintenance fee. Such fees must be for the account type in which the individual trust funds would have been held. Do not apply the fees associated with a COLTAF account, as COLTAF negotiates its own fee structures that do not apply to individual trust accounts. Sum all of these costs.
    5. Compare the calculation of total interest that would have been earned if an individual trust account had been established (from steps 1.1 to 1.2) to the total cost of establishing an individual trust account (from steps 1.3 to 1.4).
      1. If the total interest is less than the total cost, COLTAF will not issue a refund. No further action is needed because the requirements of Rule 1.15B(b)(i) have not been satisfied.
      2. If the total interest is greater than the total cost, COLTAF will consider an application for refund of interest and verify that the requirements of Rule 1.15B(b)(i) have been satisfied. Proceed to the next step.
    6. The lawyer or LLP must actually open an individual trust account for the benefit of the client or third party in order to receive an interest refund. If any funds belonging to the client or third party remain in the lawyer or LLP’s COLTAF account, all of those funds must be transferred to the individual trust account. If COLTAF makes an interest refund payment, the payment must be immediately placed in the individual trust account.
      1. Note: Individual trust accounts generate interest, which may create a tax consequence for the client or third party. Therefore, the individual trust account must be established with the tax ID of the client or third party to allow the financial institution to make appropriate reports of interest payments to the IRS. The lawyer or LLP should discuss with their client or third party the tax consequences involved before initiating an interest refund request. Clients or third parties may, in some instances, elect not to pursue a refund request.

Requesting a Refund

  1. Only the lawyer or LLP who is responsible for managing the client or third party funds may request a refund. The responsible lawyer or LLP must sign a letter to COLTAF requesting the refund. By signing the letter, the lawyer or LLP represents to COLTAF that the facts therein are true to the best of their knowledge.
  2. Direct correspondence to COLTAF ATTN: COLTAF Program Manager, 1600 Broadway, Ste 1400, Denver, Colorado 80202.
  3. In the letter, include your detailed calculations of interest from steps 1.1 to 1.2 and costs from steps 1.3 to 1.4. These calculations should generally be exhibits to the letter. COLTAF will verify your calculations. Estimates of staff and lawyer or LLP time required to establish and maintain an individual trust must be reasonable, and billable rates must be consistent with the firm’s billing practices.
  4. Include a statement verifying that the lawyer or LLP:
    1. has established an individual trust account for the benefit of the client or third party in question using the tax ID of the client or third party,
    2. has transferred any funds belonging to the client or third party from the lawyer or LLP’s COLTAF account to the individual trust account,
    3. will deposit any interest refund from COLTAF directly into the individual trust account,
    4. and will issue any applicable and necessary tax reports associated with the interest refund payment.
  5. Attach evidence of the establishment of an individual trust account in compliance with Rule 1.15B. This will generally take the form of an account statement, but may be in another form that establishes: the existence of an individual trust account, the name of the financial institution, and the transfer of an amount of funds equal to the balance for which an interest refund is requested (if applicable).
  6. Provide the name of the client or third party who will benefit from the interest refund. This is required to help COLTAF avoid making duplicative interest refund payments.
  7. Provide a mailing address for an interest refund check.
  8. Optional: Provide an email address and phone number for the responsible lawyer or LLP to allow COLTAF staff to provide faster updates on refund decisions and payment processing.

Please contact COLTAF staff before making a refund request if you have questions.

COLTAF strives to verify interest refund requests within five business days of receiving a request. However, processing times may vary based on many factors, including the amount of the refund request, the time period covered, etc. You can expedite processing by complying with all steps above. Missing or inaccurate information may result in delays or denial of an interest refund request. Decisions will be communicated in writing. COLTAF processes interest refund payments through a third-party payment processor. Processing times are generally 1-2 weeks after notice of approval of an interest refund request.

COLTAF may reduce or deny an interest refund request if the lawyer or LLP unreasonably delayed making the interest refund request. A refund request covering a period of more than two years creates a rebuttable presumption that the lawyer or LLP unreasonably delayed making the interest refund request. Lawyers or LLPs may request a waiver of the requirements listed above in their letter requesting an interest refund. However, the lawyer or LLP should explain why a waiver is appropriate under the circumstances and comports with the requirements of Rule 1.15B(b)(i). Requests to reduce COLTAF’s $10 per month administrative and processing fee must demonstrate that the individual trust account deposit product opened to hold the refund payment incurs fees of less than $10 per month.

Copies of refund request letters may be emailed to COLTAF@legalaidfoundation.org. This may allow for faster decisions and processing. However, a copy must be mailed as well.

COLTAF is authorized to establish these procedures by Colorado Rule of Professional Conduct 1.15B(i) and Colorado Licensed Legal Paraprofessional Rule of Professional Conduct 1.15B(i), and may update these procedures from time to time. These procedures were last updated on September 24, 2026.