Alert August 07, 2012

Illinois Limits Interest Rates on Tax Refund Anticipation Loans

Illinois passed the Tax Refund Anticipation Loan Reform Act which limits interest rates on refund anticipation loans and requires loan facilitators to make certain disclosures among other things. The Act requires loan facilitators to display a schedule showing the fees for the refund anticipation loans and fee schedule examples of the interest rates on the loans in at least five different amounts. Loan facilitators are also required to “prominently display” on each fee schedule a “Notice Concerning Refund Anticipation Loans.”  The Act also prohibits refund anticipation loans with an interest rate greater than 36% per year.  Banks are generally excluded from the provisions of the Act.  The law is effective January 1, 2013.