Full Text of SB3523 97th General Assembly
SB3523eng 97TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning tax refunds.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Currency Exchange Act is amended by changing | 5 | | Section 3.1 as follows:
| 6 | | (205 ILCS 405/3.1) (from Ch. 17, par. 4805)
| 7 | | Sec. 3.1.
Nothing in this Act shall prevent a currency | 8 | | exchange from
rendering State or Federal income tax service; | 9 | | nor shall the rendering of
such service be considered a | 10 | | violation of this Act if such service be
rendered either by the | 11 | | proprietor, any of his employees, or a licensed, regulated tax | 12 | | service approved by the Internal Revenue Service. For the | 13 | | purpose of this Section, "tax service" does not mean to make or | 14 | | offer to make a refund anticipation loan as defined by the Tax | 15 | | Refund Anticipation Loan Reform Disclosure Act.
| 16 | | (Source: P.A. 97-315, eff. 1-1-12.)
| 17 | | Section 10. The Tax Refund Anticipation Loan Disclosure Act | 18 | | is amended by changing Sections 1, 5, 10, and 15 and by adding | 19 | | Sections 20, 25, 30, 35, and 40 as follows:
| 20 | | (815 ILCS 177/1)
| 21 | | Sec. 1. Short title. This Act may be cited as the Tax |
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| 1 | | Refund
Anticipation
Loan Reform
Disclosure Act.
| 2 | | (Source: P.A. 92-664, eff. 1-1-03.)
| 3 | | (815 ILCS 177/5)
| 4 | | Sec. 5. Definitions. The following definitions apply in | 5 | | this Act:
| 6 | | "Consumer" means any natural person who, singly or jointly | 7 | | with another consumer, is solicited for, applies for, or | 8 | | receives the proceeds of a refund anticipation loan or refund | 9 | | anticipation check. | 10 | | "Creditor" means any person who makes a refund anticipation | 11 | | loan or who takes an assignment of a refund anticipation loan. | 12 | | "Facilitator" means a person who
individually or in | 13 | | conjunction or cooperation
with
another person : (i) solicits | 14 | | the execution of makes a refund anticipation loan , processes, | 15 | | receives, or
accepts for delivery an
application or agreement | 16 | | for a refund anticipation loan or refund anticipation check; | 17 | | (ii) services or collects
upon , issues a check in payment of | 18 | | refund
anticipation
loan or refund anticipation check; | 19 | | proceeds, or (iii) in any other manner facilitates acts to | 20 | | allow the making of a refund
anticipation loan or refund | 21 | | anticipation check . If there is no third party facilitator | 22 | | because a creditor directly solicits the execution of, | 23 | | receives, or accepts an application or agreement for a refund | 24 | | anticipation loan or refund anticipation check, that creditor | 25 | | shall be considered a facilitator.
"Facilitator" does not |
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| 1 | | include a bank, savings bank, savings and loan association, or | 2 | | credit
union, or licensee under the Consumer Installment Loan | 3 | | Act operating under
the laws of the United States or this State | 4 | | and does not include any person
who acts solely as an
| 5 | | intermediary and does not deal with the public in the making of | 6 | | the refund
anticipation loan.
| 7 | | "Person" means an individual, a firm, a partnership, an | 8 | | association, a corporation, or another entity. "Person" does | 9 | | not, however, mean a bank, savings bank, savings and loan | 10 | | association, or credit union operating under the laws of the | 11 | | United States or this State. | 12 | | "Refund anticipation check" means a check, stored value | 13 | | card, or other payment mechanism: (i) representing the proceeds | 14 | | of the consumer's tax refund; (ii) which was issued by a | 15 | | depository institution or other person that received a direct | 16 | | deposit of the consumer's tax refund or tax credits; and (iii) | 17 | | for which the consumer has paid a fee or other consideration | 18 | | for
such payment mechanism. | 19 | | "Borrower" means a person who receives the proceeds of a | 20 | | refund anticipation
loan.
| 21 | | "Refund anticipation loan" means a loan that is secured by | 22 | | or that the creditor arranges arranged to be repaid directly | 23 | | from
the proceeds
of the consumer's a borrower's income tax | 24 | | refund or tax credits refunds . "Refund anticipation loan" also | 25 | | includes any sale, assignment, or purchase of a consumer's tax | 26 | | refund at a discount or for a fee, whether or not the consumer |
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| 1 | | is required to repay the buyer or assignee if the Internal | 2 | | Revenue Service denies or reduces the consumer's tax refund.
| 3 | | "Refund anticipation loan fee" means the charges, fees, or | 4 | | other
consideration
charged or
imposed directly or indirectly | 5 | | by the creditor facilitator for the making of or in connection | 6 | | with a refund anticipation loan. This term includes any charge, | 7 | | fee, or other consideration for a deposit account, if the | 8 | | deposit account is used for receipt of the consumer's tax | 9 | | refund to repay the amount owed on the loan. A
"refund
| 10 | | anticipation loan
fee" does not include charges, fees, or other | 11 | | consideration charged or imposed
in the ordinary
course of | 12 | | business by a facilitator for services that do not result in
| 13 | | the making
of a loan,
including fees for tax return preparation | 14 | | and fees for electronic filing of tax
returns.
| 15 | | "Refund anticipation loan interest rate" means the | 16 | | interest rate for a refund anticipation loan calculated as | 17 | | follows: the total amount of refund anticipation loan fees | 18 | | divided by the loan amount (minus any loan fees), then divided | 19 | | by the number of days in the loan term, then multiplied by 365 | 20 | | and expressed as a percentage. The total amount of the refund | 21 | | anticipation loan fee used in this calculation shall include | 22 | | all refund anticipation loan fees as defined in this Section. | 23 | | If a deposit account is established or maintained in whole or | 24 | | in part for the purpose of receiving the consumer's tax refund | 25 | | to repay the amount owed on a refund anticipation loan: (i) the | 26 | | maturity of the loan for the purpose of determining the refund |
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| 1 | | anticipation loan interest rate shall be assumed to be the | 2 | | estimated date when the tax refund will be deposited in the | 3 | | deposit account; and (ii) any fee charged to the consumer for | 4 | | such deposit account shall be considered a loan fee and shall | 5 | | be included in the calculation of the refund anticipation loan | 6 | | interest rate.
If no deposit account is established or | 7 | | maintained for the repayment of the loan, the maturity of the | 8 | | loan shall be assumed to be the estimated date when the tax | 9 | | refund is received by the creditor. | 10 | | (Source: P.A. 92-664, eff. 1-1-03.)
| 11 | | (815 ILCS 177/10)
| 12 | | Sec. 10. Disclosure requirements. At the time a consumer | 13 | | borrower applies for a
refund
anticipation loan or check , a | 14 | | facilitator shall disclose to the consumer borrower on a
| 15 | | document that is separate from the loan application:
| 16 | | (1) the fee for the refund anticipation loan or refund | 17 | | anticipation check fee schedule ;
| 18 | | (1.5) for refund anticipation loans, disclosure of the | 19 | | refund anticipation loan interest rate. The refund | 20 | | anticipation loan interest rate shall be calculated as set | 21 | | forth in Section 5 the Annual Percentage Rate utilizing a | 22 | | 10-day time period ;
| 23 | | (2) the estimated fee for preparing and electronically | 24 | | filing a tax
return;
| 25 | | (2.5) for refund anticipation loans, the total cost to |
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| 1 | | the consumer borrower for utilizing a refund
anticipation | 2 | | loan;
| 3 | | (3) for refund anticipation loans, the estimated date | 4 | | that the loan proceeds will be paid to the consumer | 5 | | borrower
if the
loan
is approved;
| 6 | | (4) for refund anticipation loans, that the consumer | 7 | | borrower is responsible for repayment of the loan and | 8 | | related
fees
in the
event the tax refund is not paid or not | 9 | | paid in full; and
| 10 | | (5) for refund anticipation loans, the availability of | 11 | | electronic filing for the income tax return of the consumer
| 12 | | borrower and
the average time announced by the federal | 13 | | Internal Revenue Service within which
the consumer
| 14 | | borrower can expect to receive a refund if the consumer's | 15 | | borrower's return is filed
electronically and the consumer
| 16 | | borrower does not obtain a refund anticipation loan.
| 17 | | (Source: P.A. 92-664, eff. 1-1-03; 93-287, eff. 1-1-04.)
| 18 | | (815 ILCS 177/15)
| 19 | | Sec. 15. Posting of fee schedule and disclosures. Penalty. | 20 | | (a) A facilitator shall display a schedule showing the | 21 | | current fees for refund anticipation
loans, if refund | 22 | | anticipation loans are offered, or refund anticipation checks, | 23 | | if refund anticipation checks are offered, facilitated at the | 24 | | office. | 25 | | (b) A facilitator who offers refund anticipation loans |
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| 1 | | shall display on each fee schedule examples of the refund | 2 | | anticipation loan
interest rates for refund anticipation loans | 3 | | of at least 5 different amounts, such as $300, $500, $1,000, | 4 | | $1,500, $2,000, and $5,000. The refund anticipation loan | 5 | | interest rate shall be calculated as set forth in Section 5 of | 6 | | this Act. | 7 | | (c) A facilitator who offers refund anticipation loans | 8 | | shall also prominently display on each fee schedule: (i) a | 9 | | legend, centered,
in bold, capital letters, and in one-inch | 10 | | letters stating: "NOTICE CONCERNING REFUND
ANTICIPATION LOANS" | 11 | | and (ii) the following verbatim statement: "When you take out a
| 12 | | refund anticipation loan, you are borrowing money against your | 13 | | tax refund. If your tax refund is
less than expected, you will | 14 | | still owe the entire amount of the loan. If your refund is | 15 | | delayed,
you may have to pay additional costs. YOU CAN GET YOUR | 16 | | REFUND IN 8 TO 15 DAYS
WITHOUT PAYING ANY EXTRA FEES AND TAKING | 17 | | OUT A LOAN. You can have your
tax return filed electronically | 18 | | and your refund direct deposited into your own financial | 19 | | institution account
without obtaining a loan or paying fees for | 20 | | an extra product.". | 21 | | (d) The postings required by this Section shall be made in | 22 | | no less than 28-point type on a
document measuring no less than | 23 | | 16 inches by 20 inches. The postings required by this Section
| 24 | | shall be displayed in a prominent location at each office where | 25 | | the facilitator is facilitating
refund anticipation loans. | 26 | | (e) A facilitator may not facilitate a refund anticipation |
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| 1 | | loan or refund anticipation check unless (i) the disclosures | 2 | | required by this Section are displayed and (ii) the fee | 3 | | actually charged for the
refund anticipation loan or refund | 4 | | anticipation check is the same as the fee displayed on the
| 5 | | schedule. | 6 | | Any person who violates this Act is guilty of a petty
| 7 | | offense and shall be fined $500 for each offense. In addition, | 8 | | a facilitator who
violates this
Act shall be liable to any | 9 | | aggrieved borrower in an amount equal to 3 times
the refund
| 10 | | anticipation loan fee, plus a reasonable attorney's fee, in a | 11 | | civil action
brought in the
circuit court by the aggrieved | 12 | | borrower or by the Attorney General on behalf of
the aggrieved | 13 | | borrower.
| 14 | | (Source: P.A. 92-664, eff. 1-1-03.)
| 15 | | (815 ILCS 177/20 new) | 16 | | Sec. 20. Advertising and marketing. | 17 | | (a) A facilitator may not market or advertise a refund | 18 | | anticipation loan without including this
language verbatim: | 19 | | "(Name of product) is a loan. You can get your refund in 8 | 20 | | to 15 days without a loan or extra
fees if you use e-file and | 21 | | direct deposit.". | 22 | | For print advertisements, this information must be printed | 23 | | in type size one-half as large as the
largest type size in the | 24 | | advertisement. For radio and television advertisements, this | 25 | | information
must receive at least 7 seconds of airtime. |
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| 1 | | (b) A facilitator may not market or advertise a refund | 2 | | anticipation check without including this
language verbatim: | 3 | | "The (name of product) costs (fee for RAC). You can get | 4 | | your refund in the same amount of
time without this fee if you | 5 | | use e-file and direct deposit.". | 6 | | For print advertisements, this information must be in type | 7 | | size one-half as large as the largest
type size in the | 8 | | advertisement. For radio and television advertisements, this | 9 | | information must
receive at least 7 seconds of airtime. | 10 | | (815 ILCS 177/25 new) | 11 | | Sec. 25. Prohibited activities. No person, including any | 12 | | officer, agent, employee, or representative, shall: | 13 | | (a) Charge or impose any fee, charge, or other | 14 | | consideration in the making or facilitating of a refund | 15 | | anticipation loan or refund anticipation check apart from the | 16 | | fee charged by the creditor or financial institution that | 17 | | provides the loan or check. This prohibition does not include | 18 | | any charge or fee imposed by the facilitator to all of its | 19 | | customers, such as fees for tax return preparation, if the same | 20 | | fee in the same amount is charged to the customers who do not | 21 | | receive refund anticipation loans, refund anticipation checks, | 22 | | or any other tax related financial product. | 23 | | (b) Fail to comply with any provision of this Act. | 24 | | (c) Directly or indirectly arrange for any third party to | 25 | | charge any interest, fee, or charge related to a refund |
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| 1 | | anticipation loan or refund anticipation check, other than the | 2 | | refund anticipation loan or refund anticipation check fee | 3 | | imposed by the creditor, including but not limited to: (i) | 4 | | charges for insurance; (ii) attorneys fees or other collection | 5 | | costs; or (iii) check cashing. | 6 | | (d) Include any of the following provisions in any document | 7 | | provided or signed in connection with a refund anticipation | 8 | | loan or refund anticipation check, including the loan | 9 | | application or agreement: | 10 | | (i) A hold harmless clause; | 11 | | (ii) A waiver of the right to a jury trial, if | 12 | | applicable, in any action brought by or
against the | 13 | | consumer; | 14 | | (iii) Any assignment of wages or of other compensation | 15 | | for services; | 16 | | (iv) A provision in which the consumer agrees not to | 17 | | assert any claim or defense arising out of the contract, or | 18 | | to seek any remedies pursuant to Section 35 of this Act; | 19 | | (v) A waiver of any provision of this Act. Any such | 20 | | waiver shall be deemed null, void, and of no effect; | 21 | | (vi) A waiver of the right to injunctive, declaratory, | 22 | | or other equitable relief; or | 23 | | (vii) A provision requiring that any aspect of a | 24 | | resolution of a dispute between the
parties to the | 25 | | agreement be kept confidential. This provision shall not | 26 | | affect the right of the parties to agree that certain |
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| 1 | | specified information is a trade secret or otherwise | 2 | | confidential, or to later agree, after the dispute arises, | 3 | | to keep a resolution confidential. | 4 | | (e) Take or arrange for a creditor to take a security | 5 | | interest in any property of the consumer other than the | 6 | | proceeds of the consumer's tax refund to secure payment of a | 7 | | refund anticipation loan. | 8 | | (f) Directly or indirectly, individually or in conjunction | 9 | | or cooperation with another person, engage in the collection of | 10 | | an outstanding or delinquent refund anticipation loan for any | 11 | | creditor or assignee, including soliciting the execution of, | 12 | | processing, receiving, or accepting an application or | 13 | | agreement for a refund anticipation loan or refund anticipation | 14 | | check that contains a provision permitting the creditor to | 15 | | repay, by offset or other means, an outstanding or delinquent | 16 | | refund anticipation loan for that creditor or any creditor from | 17 | | the proceeds of the consumer's tax refund. | 18 | | (g) Facilitate any loan that is secured by or that the | 19 | | creditor arranges to be repaid directly from the proceeds of | 20 | | the consumer's State tax refund from the Illinois State | 21 | | treasury. | 22 | | (815 ILCS 177/30 new) | 23 | | Sec. 30. Rate limits for non-bank refund anticipation | 24 | | loans. | 25 | | (a) No person shall make or facilitate a refund |
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| 1 | | anticipation loan for which the refund anticipation loan | 2 | | interest rate is greater than 36% per annum. The refund | 3 | | anticipation loan interest rate shall be calculated as set | 4 | | forth in Section 5. Any refund anticipation loan for which the | 5 | | refund anticipation loan interest rate exceeds 36% per annum | 6 | | shall be void ab initio. | 7 | | (b) This Section does not apply to persons facilitating for | 8 | | or doing business as a bank, savings bank, savings and loan | 9 | | association, or credit union chartered under the laws of the | 10 | | United States or this State. | 11 | | (815 ILCS 177/35 new) | 12 | | Sec. 35. Applicability to certain entities. No obligation | 13 | | or prohibition imposed upon a creditor, a person, or a | 14 | | facilitator by this Act shall apply to a bank, savings bank, | 15 | | savings and loan association, or credit union operating under | 16 | | the laws of the United States or this State. | 17 | | (815 ILCS 177/40 new) | 18 | | Sec. 40. Violation. A violation of this Act constitutes an | 19 | | unlawful practice under the Consumer Fraud and Deceptive | 20 | | Business Practices Act. | 21 | | Section 15. The Consumer Fraud and Deceptive Business | 22 | | Practices Act is amended by adding Section 2NNN as follows: |
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| 1 | | (815 ILCS 505/2NNN new) | 2 | | Sec. 2NNN. Violations of the Tax Refund Anticipation Loan | 3 | | Reform Act. Any person who violates the Tax Refund Anticipation | 4 | | Loan Reform Act commits an unlawful practice within the meaning | 5 | | of this Act. | 6 | | Section 97. Severability. The provisions of this Act are | 7 | | severable under Section 1.31 of the Statute on Statutes.
| 8 | | Section 99. Effective date. This Act takes effect upon | 9 | | becoming law. |
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