Quote of note:

"Our examinations substantiated that these organizations have not been operating for the public good and don't deserve tax-exempt status," Everson said. "These folks are preying on people who are the most vulnerable" by "herding" them into debt-repayment plans that have high fees and often deepen their financial troubles, Everson said. In many cases, Everson added, the fees consumers paid benefited executives or relatives of executives of the credit-counseling firms.

"They have poisoned an entire sector of the charitable community," Everson added.

Profit Motive to Cost Credit Counselors Tax-Exempt Status
By Caroline E. Mayer
Washington Post Staff Writer
Tuesday, May 16, 2006; D01

The Internal Revenue Service said yesterday it plans to revoke the tax-exempt status of every one of the 41 credit-counseling organizations on which it has completed an audit, saying many of these firms appeared to be primarily motivated by profit, not by helping debt-burdened consumers.

IRS Commissioner Mark W. Everson also said the agency had begun criminal investigations of some of the firms but declined to elaborate.

Another 22 firms are still undergoing audits, part of a three-year-old crackdown on the credit-counseling industry that was sparked by hundreds of consumer complaints of deceptive business practices, including high fees, high-pressure tactics and inadequate educational services.

The IRS has been trying to determine if credit-counseling agencies have been misusing their tax-exempt status to take advantage of financially strapped consumers.