Credit Counseling Agencies have new tax Requirements

The new tax law requires an organization to meet the following new rules in addition to other non-profit legal requirements:

Services – Must provide credit counseling services tailored to the specific needs and circumstances of the consumer;
Loans – Cannot make loans to debtors;
Credit Repair – Can only provide incidental services to improve consumer credit records and credit history, and cannot charge a separate fee for such services;
Ability to Pay – Cannot refuse services based on ability to pay or ineligibility/unwillingness of consumer to enroll in a debt management plan (“DMP”);
Fee Policy – Must charge reasonable fees and provide waivers if consumer is unable to pay;
Board Composition – Majority of members must represent broad interests of the public; maximum of 49 percent can be employed by organization or benefit from it;
Ownership – Cannot own more than 35 percent of an entity that is involved in the credit counseling or similar business; and
Referrals – Cannot pay for referrals or receive amounts for providing referrals.

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