Advertising and disclosure requirements

(a)

In general

Section 128 of the Truth in Lending Act (U.S.C. 1638) is amended by adding at the end the following new subsection:

(e)

Advertising and disclosure requirements for tax refund anticipation loans

(1)

Definitions

(A)

Income tax refund anticipation loan

The term income tax refund anticipation loan means any short-term extension of credit, whether in cash, through a stored value card, in the form of a down payment or deposit in connection with a transaction to which the consumer is a party, or otherwise, to a consumer in exchange for— (i)the sale or assignment of the consumer's anticipated income tax refund or rebate to the creditor or the income tax refund anticipation loan originator; or (ii)an arrangement authorized by the consumer pursuant to which such anticipated income tax refund or rebate secures, directly or indirectly, the repayment of such extension of credit or will be credited against any balance owed by the consumer on such extension of credit. (B)

Income tax refund anticipation loan originator

The term income tax refund anticipation loan originator— (i)means any person, including any income tax return preparer, electronic tax return filer, or check cashing service, who engages in income tax refund anticipation loan origination; (ii)includes any person who represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide or perform any of the activities described in any clause of subparagraph (C); and (iii)does not include who performs purely administrative or clerical tasks on behalf of a person who is described in any clause (i) or (ii). (C)

Income tax refund anticipation loan origination

The term income tax refund anticipation loan origination means— (i)accepting an income tax refund anticipation loan application for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain; (ii)assisting a consumer in obtaining or applying to obtain an income tax refund anticipation loan (whether or not such assistance is described as a loan to the consumer) for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain; or (iii)offering or negotiating terms of an income tax refund anticipation loan, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain. (D)

Income tax return preparer

The term income tax return preparer— (i)has the same meaning as in section 7701(a)(36) of the Internal Revenue Code of 1986; and (ii)includes any person who prepares for compensation, or who employs 1 or more persons to prepare for compensation, any return of tax imposed under State law. (E)

Compensation

For purposes of this title, the term compensation when used in connection with the preparation by any person of any return of tax for a consumer, includes any compensation or gain directly or indirectly received by such person for acting as an income tax refund anticipation loan originator for such consumer with regard to such return. (2)

Advertising requirements

(A)

Prohibition on confusing refund with loan

An advertisement for an income tax refund anticipation loan may not— (i)describe an income tax refund anticipation loan as a tax refund or rebate; or (ii)advertise or solicit tax preparation services as including the possibility of obtaining an immediate or rapid income tax refund or rebate if the immediate or rapid income tax refund or rebate involves an income tax refund anticipation loan origination. (B)

Information required to be provided in ads for income tax refund anticipation loans

Any advertisement for an income tax refund anticipation loan shall include the following information with respect to such loan: (i)Any fees imposed by the originator in connection with the origination of such loan. (ii)The annual percentage rate applicable with respect to such loan and any fees imposed by the creditor in connection with such loan. (iii)The name of the creditor, if other than the originator, with respect to such loan. (3)

Contract and disclosure requirements

(A)

Contract requirements

No income tax refund anticipation loan origination services may be provided by any income tax refund anticipation loan originator for any consumer unless a written and dated contract (for such services) which meets the requirements of subparagraph (B) has been signed by the consumer. (B)

Disclosure requirements

No contract referred to in subparagraph (A) meets the requirements of this paragraph unless the following information relating to the income tax refund anticipation loan is included in such contract (in writing) and is verbally communicated to the consumer (regardless of whether any of such information is also required under this chapter to be provided by the creditor to the consumer): (i)The purpose and the amount of all fees associated with the loan that will be imposed by the originator, the creditor, and any other person involved in the transaction. (ii)The estimated amount of the Federal or State tax refund. (iii)The fact that the consumer will be responsible for the repayment of the entire loan amount and all related costs and fees regardless of whether— (I)the individual receives a refund; (II)the amount of the actual refund is greater than or less than the amount of the estimate of the refund; or (III)any mistake or miscalculation was made by the income tax return preparer in the preparation of the tax return or in determining the amount of the refund. (iv)The date by which, on average, a refund could be expected to be received using a refund direct deposit program if the consumer filed the return electronically. (v)Information on obtaining low- or no-cost income tax preparation, electronic filing and direct deposit of refund services from Volunteer Income Tax Assistance Program (VITA) for low- to moderate-income individuals and military personnel and their families or Tax Counseling for the Elderly (TCE), which will allow the consumer to receive a refund in usually no more than 10 days. (vi)A website and a toll-free telephone number for locating the nearest Volunteer Income Tax Assistance Program or Tax Counseling for the Elderly office. (4)

Enforcement

Section 130 shall be applied for purposes of this paragraph substituting income tax refund anticipation loan originator for creditor each place such term appears in such section.

(b)

Prompt model disclosure form publication

The Board of Governors of the Federal Reserve System shall publish model disclosure forms for implementation of the amendment made by subsection (a) with regard to income tax refund anticipation loans, in accordance with section 105 of the Truth in Lending Act, before the end of the 6-month period beginning on the date of the enactment of this Act. (c)

Effective date

The amendment made by subsection (a) shall apply after the end of the 60-day period beginning on the date of the enactment of this Act.