BILL REQ. #:  S-0683.1 

Read first time 02/02/2005.   Referred to Committee on Financial Institutions, Housing & Consumer Protection.

     AN ACT Relating to tax refund anticipation loans; adding a new chapter to Title 19 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   This chapter may be known and cited as the tax refund anticipation loan act.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "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 a taxpayer in the making of the refund anticipation loan.
     (2) "Person" means an individual, a firm, a partnership, an association, a corporation, or other entity.
     (3) "Lender" means a person who extends credit to a borrower in the form of a refund anticipation loan.
     (4) "Taxpayer" means an individual who files a federal income tax return.
     (5) "Borrower" means a taxpayer who receives the proceeds of a refund anticipation loan.
     (6) "Refund anticipation loan" means a loan borrowed by a taxpayer from a lender based on the taxpayer's anticipated federal income tax refund.
     (7) "Refund anticipation loan fee" means the charges, fees, or other consideration imposed by the facilitator or the lender for a refund anticipation loan. This term does not include any charge, fee, or other consideration usually imposed by the facilitator in the ordinary course of business for nonloan services, such as fees for tax return preparation and fees for electronic filing of tax returns.
     (8) "Refund anticipation loan fee schedule" means a listing or table of refund anticipation loan fees charged by the facilitator or the lender for three or more representative refund anticipation loan amounts. The schedule shall list separately each fee or charge imposed, as well as a total of all fees imposed, related to the making of refund anticipation loans. 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. Sec. 1601 et seq.

NEW SECTION.  Sec. 3   At the time a borrower applies for a refund anticipation loan, a facilitator shall clearly disclose to the borrower, separately from the loan application:
     (1) The refund anticipation loan fee schedule;
     (2) A written statement containing the following elements:
     (a) That a refund anticipation loan is a loan, and is not the borrower's actual income tax refund;
     (b) That the taxpayer can file an income tax return electronically without applying for a refund anticipation loan;
     (c) The average times according to the internal revenue service within which a taxpayer who does not obtain a refund anticipation loan can expect to receive a refund if the taxpayer's return is (i) filed electronically and the refund is directly deposited to the taxpayer's bank account or mailed to the taxpayer, and (ii) mailed to the internal revenue service and the refund is directly deposited to the taxpayer's bank account or mailed to the taxpayer;
     (d) 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 taxpayer's financial institution account or mailed to a taxpayer;
     (e) That the borrower is responsible for repayment of the loan and related fees in the event that the tax refund is not paid or paid in full;
     (f) The estimated time within which the loan proceeds will be paid to the borrower if the loan is approved; and
     (g) The fee that will be charged, if any, if the borrower's loan is not approved.

NEW SECTION.  Sec. 4   Any person who knowingly and willfully violates this chapter is guilty of a misdemeanor and shall be fined up to five hundred dollars for each offense.

NEW SECTION.  Sec. 5   This chapter shall preempt and be exclusive of all local acts, statutes, ordinances, and regulations relating to refund anticipation loans. This section shall be given retroactive and prospective effect.

NEW SECTION.  Sec. 6   Sections 1 through 5 of this act constitute a new chapter in Title 19 RCW.