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IRS Continues Crackdown on 'Non Profit'
Debt Consolidation Agencies
by Daniel Johnson
After a round of audits, the Internal Revenue
Service has announced that it will revoke the tax-exempt status
of 41 credit counseling agencies around the country. These
agencies, which offer consumers debt consolidation or debt
management plans are, in the words of IRS Commissioner Mark W.
Everson, not "operating for the public good."
Many of the agencies were found to serve the
private interest of for-profit companies, while others charged
large up-front fees for questionable programs. Large
upfront fees and high monthly fees in excess of $50 per month
should serve as a warning signal to prospective consumers.
An important conclusion to draw from this ordeal
is that whether an organization is for profit or non profit is
somewhat irrelevant in determining whether or not it is
beneficial to consumers. The key for any consumer is to
carefully research any organization before entering into a debt
consolidation agreement.
When researching potential credit
counseling agencies, be sure to check with the Better Business
Bureau, learn about the debt consolidation "product" and the
terms being offered, and be sure you understand any applicable
fee structure before signing up.
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