IRS Taking a Close Look at Credit Counseling Agencies
WASHINGTON - Several credit counseling agencies are at risk of losing their non-profit status by the end of the year. The New York Times reports that "the aggressive practices of some counseling providers" has come to the attention of Congress and have been scrutinized by the Federal Trade Commission and the Internal Revenue Service. In addition, IRS officials say they will propose revoking the nonprofit status of at least 20 credit counseling agencies by the end of the year. The IRS is currently auditing 40 credit counseling companies to see if they should keep their tax-exempt status. The new bankruptcy law that went into effect Oct. 17 includes a credit counseling provision that requires bankruptcy filers to attend within six months of filing for bankruptcy protection a counseling session, averaging 90 minutes that can be taken in person, by telephone or online. It also requires a similar financial education session after a consumer files.