16 May 2006

Credit Counseling Audits Update

I spoke to the Financial Services Professionals about this very audit this morning.

The IRS will revoke the tax exemptions of 41 nonprofit organizations (comprising $410 million of the $1 billion revenues generated annually by the credit-counseling industry) that counsel people who have amassed large credit-card debts.

A link to the full report from the IRS on the matter and other links can be found at the Tax Profs Blog.

The main consequences of losing non-profit status are ineligibility to provide credit counseling that allows people to file for bankruptcy, ineligibility for "fair share" payments from credit card companies that receive payment pursuant to credit counseling plans, and ineligibility to provide services at all in states that have adopted the Uniform Debt Management Services Act (not yet adopted in Colorado).

No comments: