842
does not negotiate the making of loans on 
behalf of debtors, 
‘‘(iii) provides services for the purpose 
of improving a consumer’s credit record, 
credit history, or credit rating only to the 
extent that such services are incidental to 
providing credit counseling services, and 
‘‘(iv) does not charge any separately 
stated fee for services for the purpose of 
improving any consumer’s credit record, 
credit history, or credit rating. 
‘‘(B) The organization does not refuse to 
provide credit counseling services to a consumer 
due to the inability of the consumer to pay, the 
ineligibility of the consumer for debt manage-
ment plan enrollment, or the unwillingness of 
the consumer to enroll in a debt management 
plan. 
‘‘(C) The organization establishes and im-
plements a fee policy which—
‘‘(i) requires that any fees charged to 
a consumer for services are reasonable, 
‘‘(ii) allows for the waiver of fees if 
the consumer is unable to pay, and
843
‘‘(iii) except to the extent allowed by 
State law, prohibits charging any fee based 
in whole or in part on a percentage of the 
consumer’s debt, the consumer’s payments 
to be made pursuant to a debt manage-
ment plan, or the projected or actual sav-
ings to the consumer resulting from enroll-
ing in a debt management plan. 
‘‘(D) At all times the organization has a 
board of directors or other governing body—
‘‘(i) which is controlled by persons 
who represent the broad interests of the 
public, such as public officials acting in 
their capacities as such, persons having 
special knowledge or expertise in credit or 
financial education, and community lead-
ers, 
‘‘(ii) not more than 20 percent of the 
voting power of which is vested in persons 
who are employed by the organization or 
who will benefit financially, directly or in-
directly, from the organization’s activities 
(other than through the receipt of reason-
able directors’ fees or the repayment of 
consumer debt to creditors other than the
844
credit counseling organization or its affili-
ates), and 
‘‘(iii) not more than 49 percent of the 
voting power of which is vested in persons 
who are employed by the organization or 
who will benefit financially, directly or in-
directly, from the organization’s activities 
(other than through the receipt of reason-
able directors’ fees). 
‘‘(E) The organization does not own more 
than 35 percent of—
‘‘(i) the total combined voting power 
of any corporation (other than a corpora-
tion which is an organization described in 
subsection (c)(3) and exempt from tax 
under subsection (a)) which is in the trade 
or business of lending money, repairing 
credit, or providing debt management plan 
services, payment processing, or similar 
services, 
‘‘(ii) the profits interest of any part-
nership (other than a partnership which is 
an organization described in subsection 
(c)(3) and exempt from tax under sub-
section (a)) which is in the trade or busi-
845
ness of lending money, repairing credit, or 
providing debt management plan services, 
payment processing, or similar services, 
and 
‘‘(iii) the beneficial interest of any 
trust or estate (other than a trust which is 
an organization described in subsection 
(c)(3) and exempt from tax under sub-
section (a)) which is in the trade or busi-
ness of lending money, repairing credit, or 
providing debt management plan services, 
payment processing, or similar services. 
‘‘(F) The organization receives no amount 
for providing referrals to others for debt man-
agement plan services, and pays no amount to 
others for obtaining referrals of consumers. 
‘‘(2) ADDITIONAL REQUIREMENTS FOR ORGANI-
ZATIONS DESCRIBED IN SUBSECTION (c)(3).—
‘‘(A) IN GENERAL.—In addition to the re-
quirements under paragraph (1), an organiza-
tion with respect to which the provision of cred-
it counseling services is a substantial purpose 
and which is described in paragraph (3) of sub-
section (c) shall not be exempt from tax under 
subsection (a) unless such organization is orga-
846
nized and operated in accordance with the fol-
lowing requirements: 
‘‘(i) The organization does not solicit 
contributions from consumers during the 
initial counseling process or while the con-
sumer is receiving services from the orga-
nization. 
‘‘(ii) The aggregate revenues of the 
organization which are from payments of 
creditors of consumers of the organization 
and which are attributable to debt manage-
ment plan services do not exceed the appli-
cable percentage of the total revenues of 
the organization. 
‘‘(B) APPLICABLE PERCENTAGE.—
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(ii), the applicable per-
centage is 50 percent. 
‘‘(ii) TRANSITION
RULE.—Notwith-
standing clause (i), in the case of an orga-
nization with respect to which the provi-
sion of credit counseling services is a sub-
stantial purpose and which is described in 
paragraph (3) of subsection (c) and ex-
empt from tax under subsection (a) on the