Beware of the following credit counseling agencies!
The Washington Post is reporting that the Internal Revenue Service is revoking the non-profit, tax-exempt status of four credit counseling agencies. This is the result of a crackdown on nonprofit credit-counseling agencies after hundreds of consumers complained to the IRS about fraudulent and deceptive marketing practices, including high fees, high-pressure tactics and inadequate educational services.
The IRS has said it is concerned that many nonprofit entities are misusing their tax-exempt status. Targeting 60 credit-counseling firms for audits, the IRS is looking at whether some have become profit-making entities by pressuring consumers to enroll in debt-management plans with fees that are siphoned off to for-profit companies controlled by the firms' executives.
The article continues:
"David Borinsky, a Baltimore lawyer who represents credit counselors and companies that provide data processing for them, told Kawecki that the "IRS has hit the industry over the head by a two-by-four," but it was now time for the IRS to issue specific rules for credit counselors. His comment was applauded by attendees at the credit-counseling trade organization's convention.
"Kawecki said new rules were unlikely. "I don't think that credit counseling is rocket science," she said. "It's basic bread and butter tax-exempt law. . . . You help people. You don't hurt people. You take care of people" and avoid using the firm for personal benefit, she said."
Here's what's amazing, though: nowhere in the article are the four credit-counseling agencies named! In fact, you can't find this list on the main IRS site either. So, I'm sorry to report, I can't tell you the four agencies who have been busted by the IRS. The best I can do is recommend that you double-check the non-profit status of any agency before you sign up to work with them.
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