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SB332 SUB1 Senate Bill 332 History

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Key: Green = existing Code. Red = new code to be enacted
COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 332

(By Senator Minard)

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[Originating in the Committee on the Judiciary;

reported February 25, 2008.]

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A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §11-28-1, §11-28-2, §11-28-3, §11-28-4 and §11-28-5, all relating to required disclosures for loans in anticipation of a tax refund; exceptions; offenses; and penalties.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §11-28-1, §11-28-2, §11-28-3, §11-28-4 and §11-28-5, all to read as follows:
ARTICLE 28. REFUND ANTICIPATION LOAN DISCLOSURE ACT.
§11-28-1. Definitions.
For the purposes of this article, the following words have the following meanings:
(a)"Applicant" means a customer who applies for a refund anticipation loan through a facilitator.
(b)"Borrower" means an applicant who receives a refund anticipation loan through a facilitator.
(c) "Customer" means an individual for whom tax preparation services are performed.
(d) "Facilitator" means a person who receives or accepts for delivery an application for a refund anticipation loan, delivers a check in payment of refund anticipation loan proceeds or in any other manner acts to allow the making of a refund anticipation loan. "Facilitator" does not include a bank, thrift, savings association, industrial bank or credit union operating under the laws of the United States or this state, an affiliate that is a servicer for such an entity or any person who acts solely as an intermediary and does not deal with an applicant in the making of the refund anticipation loan.
(e)"Person" means an individual, a firm, a proprietorship, an association, a corporation or another entity.
(f) "Refund anticipation loan" means a loan, whether provided through a facilitator or by another entity such as a financial institution, made at approximately the same time an income tax return is filed, in anticipation of and whose payment is secured by a customer's federal or state income tax refund or by both.
(g) "Refund anticipation loan fee" means any fee, charge or other consideration imposed by a lender or a facilitator for a refund anticipation loan. The term does not include any fee, charge or other consideration usually imposed by a facilitator in the ordinary course of business for nonloan services, such as fees for preparing tax returns and fees for the electronic filing of tax returns.
(h) "Refund anticipation loan fee schedule" means a list or table of refund anticipation loan fees that includes three or more representative refund anticipation loan amounts. The schedule shall separately list each fee or charge imposed, as well as a total of all fees imposed, related to the making of a refund anticipation loan. The schedule shall also include, for each representative loan amount, the estimated annual percentage rate calculated under the guidelines established by the federal Truth in Lending Act (15 U. S. C. §1601 and following).
(i) "Tax return" means a return, declaration, statement, refund claim or other document required to be made or filed in connection with state or federal income taxes.
§11-28-2. Advertising and disclosures.
(a) Any facilitator who advertises the availability of a refund anticipation loan shall not directly or indirectly represent the loan as a customer's actual refund. Any advertisement that mentions a refund anticipation loan shall state conspicuously that it is a loan and that a fee or interest will be charged by the lending institution. The advertisement shall also disclose the name of the lending institution.
(b) (1) Prior to an applicant's completion of the refund anticipation loan application, a facilitator that offers to facilitate a refund anticipation loan shall show to the applicant a clear disclosure containing all of the following information:
(A) The refund anticipation loan fee schedule.
(B) The fact that a refund anticipation loan is a loan and is not the applicant's actual income tax refund.
(C) The fact that a customer can file an income tax return electronically without applying for a refund anticipation loan.
(D) The average amount of time, according to the Internal Revenue Service, within which a customer who does not obtain a refund anticipation loan can expect to receive a refund if a customer's return is filed or mailed as follows:
(i) Filed electronically and the refund is deposited directly into a customer's bank account or mailed to the customer.
(ii) Mailed to the Internal Revenue Service and the refund is deposited directly into a customer's bank account or mailed to a customer.
(E) That the Internal Revenue Service does not guarantee that it will pay the full amount of the anticipated refund and it does not guarantee a specific date that a refund will be deposited into a customer's bank account or mailed to a customer.
(F) That the borrower is responsible for the repayment of the refund anticipation loan and the related fees in the event that the tax refund is not paid or paid in full.
(G) The estimated time within which the loan proceeds will be paid to the borrower if the loan is approved.
(H) The fee that will be charged, if any, if the applicant's loan is not approved.
(2) Prior to an applicant's consummation of the refund anticipation loan transaction, a facilitator shall provide to the applicant, in either written or electronic form, the following information:
(A) The estimated total fees for obtaining the refund anticipation loan.
(B) The estimated annual percentage rate for the applicant's refund anticipation loan, using the guidelines established under the federal Truth in Lending Act (15 U. S. C. §1601 and following).
(C) The various costs, fees and finance charges, if applicable, associated with receiving a refund by mail or by direct deposit directly from the Internal Revenue Service, a refund anticipation loan, a refund anticipation check or any other refund settlement options facilitated by the facilitator.
(c) Any facilitator who offers to facilitate, or who facilitates, a refund anticipation loan may not engage in any of the following activities:
(1) Requiring a customer to enter into a loan arrangement in order to complete a tax return.
(2) Misrepresenting a material factor or condition of a refund anticipation loan.
(3) Failing to process the application for a refund anticipation loan promptly after an applicant applies for the loan.
(4) Engaging in any transaction, practice or course of business that operates a fraud upon any person in connection with a refund anticipation loan.
(d) When an application involves more than one customer, notification pursuant to this section need only be given to one customer.
§11-28-3. Right of rescission.
A borrower who obtains a refund anticipation loan may rescind the loan, on or before the close of business on the next day of business, by either returning the original check issued for the loan or providing the amount of the loan in cash to the lender. The facilitator may not charge the borrower a fee for rescinding the loan or a refund anticipation loan fee if the loan is rescinded but may charge the customer a fee for establishing and administering a bank account to electronically receive and distribute the refund.
§11-28-4. Effect on other local or municipal laws.
(a) This article preempts and is exclusive of all municipal or county ordinances relating to refund anticipation loans.
(b) This article is exclusive of all other state laws and rules relating to advertising or disclosures regarding refund anticipation loans or potential licensing of facilitators.
(c) Nothing in this article shall be construed to have any effect on any action or matter currently pending in any court of this state or the federal courts or actions or matters accruing prior to the effective date of this article.
§11-28-5. Penalty.
Any person who knowingly violates any provision of this article is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than five hundred dollars for each violation.


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(NOTE: The purpose of this bill is to provide regulations and disclosure requirements for loans applied for in anticipation of an income tax return.

This article is new; therefore, strike-throughs and underscoring have been omitted.)

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