HB-5903, As Passed House, April 30, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 5903

A bill to require disclosure of certain information in

connection with refund anticipation loans; to prescribe certain

duties and obligations of the parties to a refund anticipation

loan; and to prescribe penalties.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. (1) This act shall be known and may be cited as the

"refund anticipation loan act".

Sec. 3. As used in this act:

(a) "Annual percentage rate" means the rate as computed under

the federal truth in lending act, 15 USC 1601 to 1667f.

(b) "Facilitator" means a person that individually or in

conjunction or cooperation with another person processes, receives,

or accepts for delivery an application for a refund anticipation

loan or a check in payment of refund anticipation loan proceeds or

in any other manner materially facilitates the making of a refund

anticipation loan. The term does not include any of the following:

(i) A financial institution.

(ii) An affiliate that is a servicer for a financial

institution.

(iii) A person certified, registered, or licensed to engage in

the practice of public accounting under article 7 of the

occupational code, 1980 PA 299, MCL 339.720 to 339.736.

chartered bank or a state or federally chartered savings and loan

association, savings bank, or credit union.

(d) "Lender" means a person that makes a refund anticipation

loan.

(e) "Person" means an individual, partnership, association,

corporation, limited liability company, or other legal entity.

(f) "Refund anticipation loan" means an extension of credit to

a taxpayer that a person arranges to be repaid directly from the

proceeds of the taxpayer's federal or state personal income tax

refund.

(g) "Refund anticipation loan fee" means the charges, fees, or

other consideration charged or imposed by a person acting as a

lender or facilitator for the making of a refund anticipation loan.

The term does not include any charge, fee, or other consideration

usually charged or imposed by a facilitator in the ordinary course

of business for tax return preparation, electronic filing of tax

returns, or other nonloan services.

(h) "Taxpayer" means an individual who files a federal or

Michigan personal income tax return.

Sec. 5. Before a taxpayer completes an application for a

refund anticipation loan, the facilitator shall clearly disclose

all of the following in writing to the taxpayer on a form separate

from the application:

(a) A listing or table of refund anticipation loan fees and

the annual percentage rates charged by the facilitator or lender

for 3 or more representative refund anticipation loan amounts. For

each refund anticipation loan amount, the schedule shall list

separately the amount of each fee and the amount of interest

charged by the facilitator or lender and the total amount of fees

and interest charged.

(b) That the refund anticipation loan is an extension of

credit and not the taxpayer's actual personal income tax refund.

available without applying for a refund anticipation loan.

(d) The average time announced by the appropriate taxing

authority within which the taxpayer can expect to receive a refund

if the taxpayer does not obtain a refund anticipation loan and the

taxpayer's return is filed using either of the following methods:

(i) Electronically and the refund is directly deposited in the

taxpayer's bank account.

(ii) By mail and the refund is directly deposited in the

taxpayer's bank account or mailed to the taxpayer.

(e) That the internal revenue service with respect to a

federal personal income tax return, or the department of treasury

with respect to a Michigan personal income tax return, does not

guarantee either of the following:

(i) That the full amount of the anticipated refund will be

paid.

(ii) A specific date on which the taxpayer will receive the

refund.

(f) That the taxpayer is responsible for repayment of the

refund anticipation loan and related fees in the event the tax

refund is not paid or is not paid in full.

(g) The estimated time within which the proceeds of the refund

anticipation loan will be paid to the taxpayer if the loan is

approved.

(h) The fees charged by the facilitator or lender if the

refund anticipation loan is not approved.

Sec. 7. Before entering into a refund anticipation loan

agreement, the facilitator shall clearly disclose both of the

following to the taxpayer:

(a) The estimated total fees for the refund anticipation loan.

(b) The estimated annual percentage rate for the refund

anticipation loan.

Sec. 9. A facilitator that facilitates or offers to facilitate

a refund anticipation loan shall not do any of the following:

(a) Require a consumer to enter into a refund anticipation

loan arrangement in order to complete a tax return.

(b) Misrepresent a material factor or condition of granting a

refund anticipation loan.

loan after an applicant applies for the refund anticipation loan.

(d) Engage in any fraudulent transaction, practice, or course

of business with any person in connection with a refund

anticipation loan.

Sec. 11. A borrower who obtains a refund anticipation loan may

rescind the refund anticipation loan, on or before the close of

business on the business day following the day the loan is made, by

returning the original check issued to the borrower for the loan or

paying the amount of the refund anticipation loan by money order or

certified check to the lender or the facilitator. A facilitator

shall not charge the borrower a fee for rescinding a refund

anticipation loan and shall return any fee charged for making a

refund anticipation loan if the refund anticipation loan is

rescinded under this subsection. However, a facilitator or lender

is not required to return to a customer who rescinds a refund

anticipation loan under this subsection a fee charged to the

customer by the facilitator or lender for establishing and

administering a bank account to electronically receive and

distribute the customer's tax refunds.

Sec. 13. A person, including, but not limited to, a

facilitator or a member, officer, director, agent, or employee of a

facilitator, that violates or participates in a violation of this

act is guilty of a misdemeanor punishable by a fine of not more

than $500.00 or imprisonment for not more than 93 days, or both.

Sec. 15. A political subdivision of this state shall not adopt

any rule, regulation, code, or ordinance to restrict or limit any

requirements under this act relating to refund anticipation loans.