Credit Counseling Agencies have new tax Requirements

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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