Many Credit Counselors Losing Non-Profit Status

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Many

Credit Counselors Losing Non-Profit Status

If you've

ever needed help with your debt payments, you may have used

the services of a non-profit credit counseling service. Perhaps

that non-profit status made you feel the agencies were more

credible, not simply trying to make a buck off of your poor

financial health. If so, the Washington

Post reports that many of these credit counseling firms

are losing that tax-exempt status, due to complaints that they

are overcharging and pressuring customers, and due to the Internal

Revenue Service's view that they are paying no taxes while giving

fat salaries to agency CEOs and funneling money out to for-profit

affiliates.

So

far, not one credit counseling agency has kept its tax-exempt

status, out of over 30 that the IRS has audited.

The

article goes on to mention that at the same time credit counselors

are losing their tax-exempt status, last year's new bankruptcy

law mandates that many new bankruptcy filers will have to use

"approved" credit counselors as part of their bankruptcy

program. If the IRS can't find even one credit counselor that

provides enough educational services to deserve its non-profit

status, who will counsel bankruptcy filers?

Published 01/16/06 (Modified 05/07/12)