HOUSE BILL No. 4645

 

April 24, 2007, Introduced by Reps. Tobocman, Hopgood, Bauer, Warren and Dean and referred to the Committee on Banking and Financial Services.

 

     A bill to amend 1939 PA 21, entitled

 

"Regulatory loan act,"

 

by amending section 1 (MCL 493.1), as amended by 2002 PA 393, and

 

by adding section 16.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

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

 

"regulatory loan act".

 

     (2) As used in this act:

 

     (a) "Advertising" means publishing or broadcasting, or causing

 

to be published or broadcast, material that has been prepared for

 

public distribution by means of newspapers, magazines, or

 

electronic media. Advertising does not include a stockholder

 


communication, such as an annual report, interim financial report,

 

registration statement, security, prospectus, application for

 

listing a security on a stock exchange, or proxy materials.

 

Advertising does not include a communication addressed to a person

 

who has previously executed a loan agreement relative to that

 

person's account.

 

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

 

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

 

     (c) (b) "Assets" means liquid assets, collectible loans made

 

in accordance with this act, and personal property acquired in the

 

general conduct of business transacted under this act.

 

     (d) (c) "Commissioner" means the commissioner of the office of

 

financial and insurance services in the department of consumer and

 

industry services labor and economic growth.

 

     (e) (d) "Control person" means a director or executive officer

 

of a licensee or a person who has the authority to participate in

 

the direction, directly or indirectly through 1 or more other

 

persons, of the management or policies of a licensee.

 

     (f) (e) "Executive officer" means an officer, member, or

 

partner of a licensee, including chief executive officer,

 

president, vice president, chief financial officer, controller,

 

compliance officer, or any other similar position.

 

     (g) "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 person described in section 20.

 

     (ii) An affiliate that is a servicer for a person described in

 

section 20.

 

     (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.

 

     (iv) A person that acts solely as an intermediary and does not

 

deal with a taxpayer in the making of a refund anticipation loan.

 

     (h) (f) "Financial licensing act" means any act listed in

 

section 2 of the consumer financial services act, 1988 PA 161, MCL

 

487.2052.

 

     (i) (g) "License" means a single license issued to a single

 

place of business.

 

     (j) (h) "Licensee" means a person licensed or required to be

 

licensed under this act.

 

     (k) (i) "Liquid assets" means cash, unrestricted deposits in

 

banks, and readily marketable securities at their then market

 

value.

 

     (l) (j) "Loan" or "regulatory loan" means a loan made by a

 

licensee to an individual for personal, family, or household use.

 

The term includes a refund anticipation loan.

 

     (m) (k) "Person" means an individual, partnership,

 

association, corporation, limited liability company, or other legal

 

entity.

 

     (n) "Refund anticipation loan" means a loan that a person

 

arranges to be repaid directly from the proceeds of a taxpayer's

 


federal or state personal income tax refund.

 

     (o) "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.

 

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

 

Michigan personal income tax return.

 

     Sec. 16. (1) Before a taxpayer completes an application for a

 

refund anticipation loan, the facilitator shall clearly disclose

 

all of the following in writing, in 14-point type and in the

 

primary language understood by the taxpayer, 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 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 a loan and not the

 

taxpayer's actual personal income tax refund.

 

     (c) That electronic filing of the taxpayer's tax return is

 

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 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 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.

 

     (2) 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 loan.

 

     (b) The estimated annual percentage rate for the loan.

 

     (3) A political subdivision of this state shall not adopt any

 


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

 

requirements under this section relating to refund anticipation

 

loans. This section supersedes and preempts any rule, regulation,

 

code, or ordinance of any political subdivision of this state

 

relating to refund anticipation loans.

 

     (4) As part of the report required under section 11, each

 

lender and facilitator shall disclose for the preceding calendar

 

year the number and dollar amount of refund anticipation loans

 

made, the average refund anticipation loan, and the average time to

 

dispense loan proceeds.

 

     (5) As used in this section, "lender" means a person that

 

makes a refund anticipation loan but does not include a person

 

described in section 20.