What does Internal Revenue Code Section 501(q) require for credit counseling organizations exempt under Code Section 501(c)(3) or 501(c)(4)?
In addition to general legal requirements of section 501(c)(3) or 501(c)(4) , an organization must meet the following rules:
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Services 每 Must provide credit counseling services tailored to the specific needs and circumstances of the consumer
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Loans 每 Cannot make loans to debtors unless no fees or interest
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Credit Repair 每 Can only provide incidental services to improve consumer credit records and credit history, and cannot charge a separate fee for such services
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Ability to Pay 每 Cannot refuse services based on ability to pay or ineligibility/unwillingness of consumer to enroll in a debt management plan (※DMP§)
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Fee Policy 每 Must charge reasonable fees and provide waivers if consumer is unable to pay
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Board Composition 每 Majority of members must represent broad interests of the public; maximum of 49 percent can be employed by organization or benefit from it
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Ownership 每 Cannot own more than 35 percent of an entity that is involved in the credit counseling or similar business
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Referrals 每 Cannot pay for referrals or receive amounts for providing referrals for debt management plans