On April 29, 2011, the Internal Revenue Service ("IRS") issued Private Letter Ruling ("PLR") 201117036 denying recognition of tax-exempt status under Section 501(c)(3) of the Internal Revenue Code ("Code") to a nonprofit credit counseling agency ("CCA") because its primary activity would have been the provision of pre-bankruptcy certification and post-bankruptcy counseling for fees.
The Massachusetts Securities Division, under the direction of Secretary Galvin, has proposed new regulations relating to the regulation of investment advisers, including hedge fund managers.
On December 20, 2010, the Securities and Exchange Commission (SEC or Commission) voted to propose Rules 15Ba1-1 through 15Ba1-7 (collectively, the Proposed Rules) to, among other things, establish a permanent registration regime with the Commission for municipal advisors and impose certain record-keeping requirements on such advisors.
The United States Court of Appeals for the First Circuit recently found in Zimmerman v. Puccio that a tax-exempt, nonprofit credit counseling agency operated as a “credit repair organization” within the meaning of the Credit Repair Organizations Act (“CROA”), 15 U.S.C. 1679-1679j, and that certain principals of the organization were personally liable under CROA.
This memorandum provides a summary analysis of the extent to which charitable organizations, their officers, directors or trustees, employees, and volunteers are exposed to liability under Massachusetts and federal law.
In order to thoroughly understand their legal requirements and pitfalls, credit counseling agencies, debt management plan providers, and debt settlement companies must first have a basic understanding of the federal and state laws that apply to the activities of their companies.