Eliminating Credit Card Debt Advice

As the IRS continues to crack down on the tax-exempt status of credit counseling agencies, some in the industry worry the scrutiny will further threaten so-called fair share payments from creditors, a main revenue source for the industry.

Creditors often allow agencies that enroll debtors in debt management plans to keep a percentage, or fair share, of the money collected. But the IRS is casting a skeptical eye, saying it’s not...in the debtor’s best interest to enroll in a DMP, and relying too heavily on the tool is a violation of tax-exempt status.

The compliance guidelines list as red flags governance by a “board dominated by creditors, banks, credit card companies or others with a financial interest in the organization” and funding sources labeled as “voluntary contributions and/or grants received in exchange for DMP services.”

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# posted by Sponduliqs @ 11:50 AM