May 12, 2009 - Introduced by Representatives Roys, Hintz, Berceau, Bernard
Schaber, Black, Dexter, Grigsby, Hebl, Richards, Schneider, Seidel, Sinicki,
Smith, Soletski, Young, Zepnick
and Hixson, cosponsored by Senators Lassa,
Coggs
and Taylor. Referred to Committee on Financial Institutions.
AB265,1,6 1An Act to repeal 422.310 (title), 422.310 (1) (d) and 422.310 (1) (f); to renumber
2422.310 (1) (e) and 422.310 (1) (g); to renumber and amend 422.310 (1)
3(intro.), 422.310 (1) (a) to (c), 422.310 (1) (h), 422.310 (2) and 422.310 (3); and
4to create subchapter VI of chapter 422 [precedes 422.601] of the statutes;
5relating to: the regulation of income tax refund anticipation loans and
6providing a penalty.
Analysis by the Legislative Reference Bureau
Current law requires a creditor to make specified disclosures before a "refund
anticipation loan" (RAL) is made to a customer. An RAL is defined as an agreement
under which a creditor arranges to be repaid for a loan directly from the proceeds of
a customer's income tax refund. Current law defines "creditor" to include a merchant
who regularly engages in arranging an RAL for a customer, as well as the merchant
who makes the RAL. The disclosure requirements are enforced by the Department
of Financial Institutions (DFI).
This bill creates additional requirements, also enforced by DFI, for a creditor
who makes or arranges an RAL. In addition to the disclosures required under
current law, the bill requires a creditor to disclose the fee charged if an RAL is not
approved. The bill also requires a creditor to disclose that: 1) the Internal Revenue
Service and the Department of Revenue do not guarantee refunds; 2) an RAL is a loan
and is not the customer's actual refund; and 3) a customer may rescind an RAL, as

described below. Additionally, the bill requires disclosure of a chart indicating the
estimated amount of time that a customer is expected to receive either a refund or
loan for different filing and payment options, as well as for each loan program offered
or arranged by the creditor. The chart must also indicate whether up-front payment
of a tax preparation fee is required for each filing and payment option and each loan
program. Also, the creditor must disclose how much of a refund a customer is
expected to receive after charges and fees for the RAL are deducted from the
customer's tax refund. Under the bill, the foregoing disclosures, as well as the
disclosures required under current law, must be in a type size no smaller than 10
point. The bill also incorporates into the statutes certain requirements under DFI's
rules, including requirements regarding the timing of the disclosures, as well as the
manner for disclosing annual percentage interest rates of RALs. In addition, the bill
incorporates into the statutes a DFI rule that requires a creditor to make certain
disclosures that are required under federal law at the time that the creditor actually
makes a loan.
The bill also allows a customer to rescind an RAL before the close of business
on the next business day after the RAL is made. The bill provides that the only fee
a creditor may charge a customer for rescinding an RAL is a fee equal to the
administrative cost of establishing an account with a financial institution to
electronically receive the customer's refund. The bill prohibits a creditor from doing
any of the following: 1) misrepresenting a material fact of condition of an RAL; 2)
failing to process promptly an RAL application; 3) offering or arranging an RAL in
which the amount of the loan, including charges and fees related to the loan, tax
preparation, or electronic filing, exceed the customer's anticipated refund; and 4)
taking or arranging a security interest in any property other than the customer's tax
refund.
The bill provides that a creditor who violates the bill is liable to a customer in
amount equal to the greater of: 1) twice the finance charge imposed for the RAL; or
2) the actual damages sustained by the customer due to the violation. The amount
under the first component of the foregoing formula is subject to a minimum of $100
and a maximum of $1,000. Current law creates similar liability for violations of the
disclosures required under current law.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB265, s. 1 1Section 1. 422.310 (title) of the statutes is repealed.
AB265, s. 2 2Section 2. 422.310 (1) (intro.) of the statutes is renumbered 422.601 (intro.)
3and amended to read:
AB265,3,5 4422.601 Advance disclosures. (intro.) In addition to any other requirements
5under this subchapter subch. III, a creditor who makes or arranges a refund

1anticipation loan
shall disclose all of the following in writing to a customer in type
2size no smaller than 10 point
on a form that is signed by the customer before the
3customer enters into a is asked to sign either an application containing an
4agreement for the refund anticipation loan, or, if there is no application, an
5agreement for the
refund anticipation loan:
AB265, s. 3 6Section 3. 422.310 (1) (a) to (c) of the statutes are renumbered 422.601 (1) to
7(3), and 422.601 (2) and (3), as renumbered, are amended to read:
AB265,3,108 422.601 (2) Any charge or fee for electronically filing an income tax return,
9including any charge or fee for checking tax return information, entering data for tax
10return information, or transmitting a tax return by computer modem
.
AB265,3,12 11(3) The total dollar amount of all charges and fees under pars. (a) subs. (1) and
12(b) (2).
AB265, s. 4 13Section 4. 422.310 (1) (d) of the statutes is repealed.
AB265, s. 5 14Section 5. 422.310 (1) (e) of the statutes is renumbered 422.601 (5).
AB265, s. 6 15Section 6. 422.310 (1) (f) of the statutes is repealed.
AB265, s. 7 16Section 7. 422.310 (1) (g) of the statutes is renumbered 422.610 (7).
AB265, s. 8 17Section 8. 422.310 (1) (h) of the statutes is renumbered 422.601 (8) (intro.) and
18amended to read:
AB265,3,2319 422.601 (8) (intro.) The estimated annual percentage rate, based on the size
20of the refund anticipation loan, the refund anticipation loan fees , and the anticipated
21maturity date of the refund anticipation loan. The anticipated maturity date shall
22be the date disclosed under par. (f). sub. (6g) (a) 3. The requirement to disclose the
23estimated annual percentage rate shall be fulfilled by doing one of the following:
AB265, s. 9 24Section 9. 422.310 (2) of the statutes is renumbered 422.603 (4) and amended
25to read:
AB265,4,6
1422.603 (4) A creditor may not impose Impose a different fee or charge for
2electronically filing an income tax return, including any fee or charge for checking
3tax return information, entering data for tax return information, or transmitting a
4tax return by computer modem,
on a customer who obtains a refund anticipation loan
5that is different than the fee or charge the creditor imposes on a customer who does
6not obtain a refund anticipation loan.
AB265, s. 10 7Section 10. 422.310 (3) of the statutes is renumbered 422.606 and amended
8to read:
AB265,4,10 9422.606 Violations. A violation of this section subchapter is subject to s.
10425.304.
AB265, s. 11 11Section 11. Subchapter VI of chapter 422 [precedes 422.601] of the statutes
12is created to read:
AB265,4,1313 chapter 422
AB265,4,1414 subchapter VI
AB265,4,1515 Refund anticipation loans
AB265,4,1716 422.601 (3g) The fee charged, if any, if the customer's refund anticipation loan
17is not approved.
AB265,4,19 18(3r) Any fees for establishing an account with a financial institution to
19electronically receive the refund.
AB265,4,20 20(6g) A chart titled "timeline" that shows all of the following:
AB265,4,2221 (a) The estimated amount of time that the customer is expected to receive his
22or her tax refund for all of the following options:
AB265,4,2423 1. The customer files a paper return and the Internal Revenue Service mails
24a refund check to the customer.
AB265,5,2
12. The customer files a paper return and the Internal Revenue Service directly
2deposits a refund check into the customer's account with a financial institution.
AB265,5,53 3. The customer electronically files a tax return and the Internal Revenue
4Service mails a refund check to the customer. The estimated amount of time under
5this subdivision may not exceed 14 days.
AB265,5,96 4. The customer electronically files a tax return and the Internal Revenue
7Service directly deposits a refund check into the customer's account with a financial
8institution. The estimated amount of time under this subdivision may not exceed 14
9days.
AB265,5,1210 (b) The estimated amount of time that a customer is expected to receive a
11refund anticipation loan under each refund anticipation loan program that the
12creditor offers or arranges.
AB265,5,1413 (c) An indication whether the creditor requires up-front payment of a tax
14preparation fee for each option and program disclosed under pars. (a) and (b).
AB265,5,18 15(6r) That the Internal Revenue Service and the department of revenue do not
16guarantee that they will pay the full amount of an anticipated refund and do not
17guarantee a specific date that a refund will be deposited into the customer's financial
18institution account or mailed to the customer.
AB265,5,20 19(7m) That a refund anticipation loan is a loan and is not the customer's actual
20income tax refund.
AB265,5,22 21(8) (a) Calculating the rate pursuant to 12 CFR 226.17 (c) (2) for the anticipated
22amount of the refund and the length of time disclosed under sub. (6g) (a) 3.
AB265,6,223 (b) Distributing a chart titled "representative range of loan amounts" with
24headings for total loan amount, amount financed, finance charge, estimated
25payment period, and annual percentage rate. The representative loan amounts shall

1be in $300 increments starting with $300 and ending with $3,000 and represent the
2anticipated refund amount.
AB265,6,7 3(9) The following statement: "If your refund anticipation loan is approved, you
4will be responsible to pay $.... (creditor inserts amount disclosed under sub. (3)) in
5charges and fees for the loan, which we will automatically deduct from your tax
6refund. After we deduct these charges and fees, you will receive approximately $....
7(creditor inserts amount)."
AB265,6,9 8(10) That the customer has the right to rescind the refund anticipation loan
9transaction as provided in s. 422.605.
AB265,6,15 10422.602 Disclosures at loan consummation. At the time that a refund
11anticipation loan is actually made, a creditor shall make the disclosures required
12under 12 CFR 226.18. For the purpose of calculating the annual percentage rate at
13the time the refund anticipation loan is actually made, the disclosure shall be based
14upon the actual amount of the loan and the length of time disclosed under s. 422.601
15(6g) (a) 3.
AB265,6,17 16422.603 Prohibitions. A creditor who makes or arranges a refund
17anticipation loan to or for a customer may not do any of the following:
AB265,6,18 18(1) Misrepresent a material fact or condition of a refund anticipation loan.
AB265,6,20 19(2) Fail to process an application for a refund anticipation loan promptly after
20the customer applies for the loan.
AB265,6,23 21(3) Offer or arrange for a refund anticipation loan that, including any charges
22or fees related to the loan, tax preparation, or electronically filing a tax return,
23exceeds the amount of the customer's anticipated tax refund.
AB265,7,2 24422.604 Security interests. With respect to a refund anticipation loan, a
25creditor may not take or arrange for taking a security interest in any property of the

1customer other than the proceeds of the customer's tax refund and the account into
2which that tax refund is deposited to secure payment of the loan.
AB265,7,9 3422.605 Recission. A customer may rescind a refund anticipation loan, before
4the close of business on the next day of business after the loan is made, by either
5returning the original check issued for the loan or providing the amount of the loan
6in cash, money order, or cashier's check to the creditor who made or arranged for the
7loan. The creditor may not charge the customer any fee for rescinding the loan,
8except for a fee equal to the administrative cost of establishing an account with a
9financial institution to electronically receive the refund.
AB265, s. 12 10Section 12. Initial applicability.
AB265,7,1311 (1) This act first applies to refund anticipation loans, as defined in section
12421.301 (37m) of the statutes, for which applications are received on the effective
13date of this subsection.
AB265, s. 13 14Section 13. Effective date.
AB265,7,1615 (1) This act takes effect on the first day of the 4th month beginning after
16publication.
AB265,7,1717 (End)
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