119 N.J.L.J. 505
                                        March 26, 1987

OPINION 598

Deposit of Withheld
Employment Taxes in Trust Account

    The inquirer, a sole practitioner with one employee, asks whether payroll taxes withheld for his employee's wages may be deposited into the attorney's trust account. The inquirer disagrees with the position of the Office of Attorney Ethics to the effect that the monies may not be so deposited, as set forth in a manual entitled Trust and Business Accounting for Attorneys written by the Director of the Office of Attorney Ethics in consultation with the Auditor-in-Charge. The manual was prepared in cooperation with the New Jersey State Bar Association, and we are informed it is used as instructional material in conjunction with a continuing education course.
    The term "payroll taxes" is a phrase used by the inquirer and basically refers to the deductions to be made from an employee's salary which are required by Federal and State laws and which relate to withholdings for Social Security, income taxes and State unemployment insurance. In this regard, it is to be noted that an employer is required to withhold and deduct from an employee's wages the employee's contribution as required by law, and is also required to pay as his or her direct obligation the employer's contribution as required by law. Therefore, it follows that there are two funds involved for which the employer becomes liable for payment to the respective governmental authorities: the employee's share and the employer's share.
    We agree with the Office of Attorney Ethics. Under our Professional Rules of Conduct, the attorney's trust account should not be used as a depository for either fund. RPC 1.15(a) states, in pertinent part, that:
    A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in a financial institution in New Jersey.

The Rule relates to monies in the possession of the lawyer "in connection with representation." There is no attorney-client relationship involved in the subject matter of the present inquiry. Therefore, in the absence of an attorney-client relationship, monies belonging to others should not be deposited in the attorney's trust account. Additionally, the Rule specifically prohibits the "commingling of funds"; i.e., the lawyer's own monies with that of clients.
    There is no question but that the inquirer's obligation for the employer's contribution represents his own funds, and to deposit those funds in his attorney's trust account would clearly constitute commingling.
    If it is contended that the employer is a trustee in behalf of the respective governmental authorities of the funds which constitute the employee's contribution, then the deposit of such funds in the attorney's trust account would be violative of R. 1:21-6(a), which provides with reference to required bank accounts that:
    (a)    Required Bank Accounts. Every attorney who practices in this state shall maintain in a financial institution in New Jersey, in the attorney's own name, or in the name of a partnership of attorney's, or in the name of the professional corporation of which the attorney is a member, or in the name

of the attorney or partnership of attorneys by whom employed:

    (1)    a trustee account or accounts separate from any business and personal accounts and from any fiduciary accounts that the attorney may maintain as executor, guardian, trustee, or receiver or in any other fiduciary capacity, into which trustee account or accounts funds entrusted to the attorney's care shall be deposited;...