Q2 Trust Accounting: What Changed While You Weren’t Looking

Welcome to the first issue of the Legal Bookkeeping Online newsletter. Once a month, we send you what actually changed in legal bookkeeping, what to do about it this week, and one free tool you can use today. That’s it.

Three things have shifted in the last six months that every trust-account attorney should know about.

Here they are.

1. Paper checks to the IRS are gone. Your trust and estate payments need EFTPS.

Since September 30, 2025, the IRS has stopped issuing paper checks for federal tax payments. Trusts and estates cannot use IRS Direct Pay (that was never an option for fiduciary returns), so your two paths are EFTPS or a bank wire.

EFTPS is the practical choice for most firms, but it is not instant. Enrollment requires a PIN that the IRS mails to the trust’s address of record, and that takes about a week. If you have a Form 1041 payment due in the next sixty days and you are not yet enrolled, start today.

What to do this week: Enroll any trust or estate entity you manage at eftps.gov using the EIN and a linked bank account. Once enrolled, set up a memorized transaction in QuickBooks for the outbound payment so month-end categorization stays clean. EFTPS itself does not integrate with QBO bank feeds, so the memorized transaction is what keeps your books tidy.

2. NC IOLTA grantmaking is frozen through June 30, 2026. Scrutiny on IOLTA is rising nationally.

North Carolina passed Senate Bill 429 last July, and a provision inside it halted NC IOLTA grantmaking for a full year. Legal Aid of North Carolina has already closed nine offices as a result.

If you practice in North Carolina, this does not change your obligation to maintain a compliant IOLTA account. If anything, it raises the stakes. Elevated legislative attention on IOLTA means state bars are paying closer attention too, and not just in NC. Several states are watching.

What to do this week: Run your 3-way reconciliation between your bank statement, your book balance, and your client ledger. Do it this month, do it next month, and do it the same way every month. When a regulator asks for documentation, consistency across twelve months of reconciliations is your defense. If you have never run a proper 3-way, start with the last three bank statements and work forward.

3. California CTAPP reporting closed March 30. If you missed it, act this week.

The CTAPP annual reporting deadline for the 2025 reporting year passed on March 30, 2026. If you missed it, you may have been involuntarily enrolled as inactive, which means you cannot practice law in California until you are reinstated.

The fix is not complicated, but it is time-sensitive.

What to do this week: Log in to My State Bar Profile and check your Compliance Dashboard. If you see a CTAPP noncompliance flag, complete the outstanding reporting in your profile, then fill out page one of the CTAPP Noncompliance Reinstatement Form. Pay any fees owed through the Annual Fee page. Reinstatement is contingent on all three steps.

If you are compliant, use this week to set a calendar reminder for February 2027 so next year’s filing is not a scramble.

Quick tip

Run your IOLTA 3-way reconciliation on the same day every month. The first business day works well because your bank statement is usually ready. What matters to a bar auditor is not a perfect month. It is twelve months of the same steady rhythm.

Free resource

2026 Trust Account Reconciliation Checklist: A one-page PDF you can print and use on your next reconciliation. Covers the three balances, the common discrepancies, and the documentation to keep on file.

[Download Here]

Need a second set of eyes?

If your trust account has not been reconciled cleanly in a while, or you want a professional review before your next bar renewal, we offer a free 30-minute trust account review. No sales pitch, just a look at where you stand.

Book your free 30-minute review: Book my review → 

Legal Bookkeeping Online helps solo attorneys and small law firms to keep their books audit-ready. Certified in QuickBooks Online, Xero, and Clio.