IRS REVOKING EXEMPTIONS OF CREDIT COUNSELORS
January 13, 2006
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The Internal Revenue Service (IRS) has concluded that more than 30 credit-counseling firms—accounting for more than half of the industry’s revenue—are not entitled to tax-exempt status, the Washington Post reported today. Five firms, mostly small ones, have already had their tax-exempt status revoked, while the rest have been notified of the agency’s intention, according to the agency. The proposed and final revocations are the results so far of 60 audits the IRS has been conducting for more than two years into credit-counseling organizations. The audits were prompted by hundreds of consumer complaints of deceptive business practices, including high fees, high-pressure tactics and inadequate educational services. The IRS has been trying to determine if credit-counseling agencies were misusing their tax-exempt status to take advantage of financially strapped consumers. Read more.
