Organization involved in debt settlement and negotiation is not exempt.

Nonprofit and Church Legal Trends - Free Edition - March April 2007 (free edition)

Debt settlement and credit counseling organizations have been under a lot of scrutiny lately. Many of them are being turned down for exemption. In a case reviewed in this issue of the memo, some of the reasons for the denial are unique to the credit counseling industry. But some are general enough to hold lessons for all exempt organizations.

For example, the fees charged to clients were not below cost, there were no contributions from any source nor was there a fundraising program, there was no plan to provide educational or charitable programs, and most of the employee’s time was spent selling services.