PLR 201005060: Credit Counseling Organization's Exempt Status Revoked

In PLR 201005060, the IRS revoked the tax-exempt status of a credit counseling organization. The IRS found that the organization was operated for the private benefit of a related organization and that the credit counseling organization had the substantial nonexempt purpose of relieving the debt of individuals who spent had over-spent. Instead, the IRS determined that the organization's exempt activities were minimal, if at all. The IRS also found that certain employees of the organization were essentially telemarketing sales representatives whose purpose was to enroll participants in their debt management program.

Posted by Jenny Robertson, Associate Editor, Wealth Strategies Journal.