WASHINGTON – Credit counseling agencies that do not comply with the law, have been put on notice. The Internal Revenue Service has released a report on tax-exempt credit counseling agencies and announced it plans to take further steps to make sure these organizations comply with the law.
Over the past two years, the IRS has been auditing 63 credit counseling agencies that represent more than half of the revenue in the industry. So far, the IRS has completed audits of 41 of the agencies, and all of the audits have resulted in revocation, proposed revocation or other termination of tax-exempt status.
According to the IRS, the revocations result from these organizations failing to provide the level of public benefit required to qualify for tax-exemption. The federal agency says "many of the credit counseling agencies offered little or no counseling or education and appeared to be primarily motivated by profit. In many instances, these agencies also served the private interests of related for-profit businesses, officers and directors."
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