The Internal Revenue Service and Federal Trade Commission announced a joint advisory Monday, warning consumers to be wary of the total costs incurred when seeking help from tax-exempt credit counseling organizations.

The IRS is currently investigating the business practices of nonprofit credit-counseling services, which advise millions of people in debt every year.

The investigation is looking into the legitimacy of the agencies’ nonprofit status, which exempt them from dozens of state and federal regulations.

“State charity officials are working with other state and federal agencies to remedy abuses in this area, and to assure that nonprofit credit counseling organizations operate in accordance with the charitable trust or nonprofit corporation laws under which they are formed,” said Mark Pacella, president of the National Association of State Charity Officials.

Credit Counseling Services of America, which has offices in Madison, has been in operation for fifteen years. Spokespersons say they are glad not to be involved in the investigation and that such an investigation hurts everyone who actually is obeying the rules, but federal regulation of “questionable” nonprofit organizations’ activities is long overdue.

A look at tax records and other documents show that some executives of Cambridge Credit Counseling and Consolidated Credit Counseling have relationships with companies that accept money for various services, indicating a divergence of funds from excessive fees imposed by the credit agency.

“Many of these groups provide a valuable service to consumers, but some use the tax code to skirt consumer-protection laws,” IRS Commissioner Mark W. Everson said in a statement.

However, Cambridge and Consolidated have both said there is nothing improper about their business relationships.

“Consumers who are struggling financially need to be careful not to lose even more money to someone offering a quick and easy way to fix credit problems,” FTC Chairman Timothy J. Muris said in a statement. “We want all consumers seeking help to take some common sense precautions.”

Wisconsin, which brings in credit counseling business from all over the nation, currently has a cease-and-desist order against Cambridge. However, the state is not involved in the IRS investigation.

“The fact that [these companies] are not-for-profit or for-profit is irrelevant,” said Jean Plale, Wisconsin Department of Financial Institutions director of licensing. “They all need to be licensed if they want to set up business in Wisconsin.”

The state DFI is responsible for regulating almost 73 debt-counseling offices in Wisconsin. State law prohibits offices from charging more than $50 to set up a budget for a client and no more than $25 to set up a budget if the client uses that agency to administer the debt payment plan. The monthly fee for an agency that distributes the client’s payments to creditors cannot exceed $120.

Agencies doing business in Wisconsin must pay a one-time $200 background investigation fee and a $200 annual license fee.

According to the National Consumer Law Center and the Consumer Federation of America, an estimated 9 million people sought the help of credit counseling services in 2002. At least 1 million of these have consolidated their debts and are now making a single payment each month to the agencies, which then distribute the money to creditors.