IRS May Revoke Non-Profit Status Of SomeConsumer Counselors

Register now

WASHINGTON - (11/10/04) Recent rulings by the IRS may be anindication that the agency is considering changing the nonprofit,tax-exempt status of the consumer credit counseling industry,according to the Coalition for Responsible Credit Practices, whichhas been pushing for such a change. “Based on its analysis oftwo IRS determination letters recently made public, the Coalitionfor Responsible Credit Practices believes the IRS is about to begina wide-spread rejection of credit counseling agencies'‘nonprofit’ or charitable, tax-exempt status,”the coalition said. “Such sweeping rejection woulddramatically change the credit counseling industry and impacthundreds of thousands of consumers, as well as lenders and otherbusinesses.” In the letters, the IRS rejected theapplications of two CCAs seeking nonprofit status, spelling out anumber of criteria for its rejection–chartacteristics thatthe coalition says have been associated with many such independentagencies in recent months including: lack of adequate educationefforts, close ties between the nonprofits and for-profitcompanies, executive compensation issues and other private-benefitissues.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER