Senate File 409 - Introduced
SENATE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO SSB 1312)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to financial transactions including the sale of
2 specific items used in livestock and plant production,
3 providing for an exemption and refund of sales and use taxes,
4 providing for a maximum finance charge on consumer loans
5 secured by a certificate of title to a motor vehicle, making
6 penalties applicable, and including an effective and
7 retroactive applicability date provision.
8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 423.3, subsection 11, unnumbered
1 2 paragraph 1, Code 2005, is amended to read as follows:
1 3 The sales price exclusive of services of farm machinery and
1 4 equipment, including auxiliary attachments which improve the
1 5 performance, safety, operation, or efficiency of the machinery
1 6 and equipment, and including auger systems, curtains and
1 7 curtain systems, drip systems, fan and fan systems, shutters,
1 8 inlets and shutter or inlet systems, and refrigerators, and
1 9 replacement parts, if all of the following conditions are met:
1 10 Sec. 2. Section 537.2401, subsection 1, Code 2005, is
1 11 amended to read as follows:
1 12 1. Except as provided with respect to a finance charge for
1 13 loans pursuant to open end credit under section 537.2402 and
1 14 loans secured by a certificate of title of a motor vehicle
1 15 under section 537.2403, a lender may contract for and receive
1 16 a finance charge not exceeding the maximum charge permitted by
1 17 the laws of this state or of the United States for similar
1 18 lenders, and, in addition, with respect to a consumer loan, a
1 19 supervised financial organization or a mortgage lender may
1 20 contract for and receive a finance charge, calculated
1 21 according to the actuarial method, not exceeding twenty=one
1 22 percent per year on the unpaid balance of the amount financed.
1 23 This Except as provided in section 537.2403, this subsection
1 24 does not prohibit a lender from contracting for and receiving
1 25 a finance charge exceeding twenty=one percent per year on the
1 26 unpaid balance of the amount financed on consumer loans if
1 27 authorized by other provisions of the law.
1 28 Sec. 3. Section 537.2402, subsection 1, Code 2005, is
1 29 amended to read as follows:
1 30 1. If authorized to make supervised loans, a creditor may
1 31 contract for and receive a finance charge without limitation
1 32 as to amount or rate with respect to a loan pursuant to open=
1 33 end credit as permitted in this section except as provided in
1 34 section 537.2403.
1 35 Sec. 4. NEW SECTION. 537.2403 FINANCE CHARGE FOR
2 1 CONSUMER LOANS SECURED BY A MOTOR VEHICLE.
2 2 1. A lender shall not contract for or receive a finance
2 3 charge exceeding twenty=one percent per year on the unpaid
2 4 balance of the amount financed for a loan of money secured by
2 5 a certificate of title to a motor vehicle used for personal,
2 6 family, or household purpose except as authorized under
2 7 chapter 536 or 536A. A consumer who is charged a finance
2 8 charge in excess of the limitation in this section may seek
2 9 any remedies available pursuant to this chapter for an excess
2 10 charge.
2 11 2. It shall be a violation of this section and an unlawful
2 12 practice under section 714.16 to attempt to avoid application
2 13 of this section by structuring a loan of money secured by
2 14 certificate of title to a motor vehicle as a sale, sale and
2 15 repurchase, sale and lease, pawn, rental purchase, lease, or
2 16 other type of transaction with the intent to avoid application
2 17 of this section or any other applicable provision of this
2 18 chapter.
2 19 Sec. 5. REFUNDS. Refunds of taxes, interest, or penalties
2 20 which arise from claims resulting from the amendment of
2 21 section 423.3, subsection 11, in this Act, for the exemption
2 22 of sales of auger systems, curtains and curtain systems, drip
2 23 systems, fan and fan systems, shutters, inlets and shutter or
2 24 inlet systems, and refrigerators occurring between January 1,
2 25 1992, and the effective date of this Act, shall be limited to
2 26 twenty=five thousand dollars in the aggregate and shall not be
2 27 allowed unless refund claims are filed prior to October 1,
2 28 2005, notwithstanding any other provision of law. If the
2 29 amount of claims totals more than twenty=five thousand dollars
2 30 in the aggregate, the department of revenue shall prorate the
2 31 twenty=five thousand dollars among all claimants in relation
2 32 to the amounts of the claimants' valid claims. Claimants
2 33 shall not be entitled to interest on any refunds.
2 34 Sec. 6. EFFECTIVE DATE AND RETROACTIVE APPLICABILITY
2 35 PROVISION. This Act, being deemed of immediate importance,
3 1 takes effect upon enactment and applies retroactively to
3 2 January 1, 1992.
3 3 EXPLANATION
3 4 This bill relates to financial transactions involving
3 5 certain equipment and motor vehicle sales and loan
3 6 transactions.
3 7 The bill adds to the exemption from the sales and use taxes
3 8 of the sales of farm machinery and equipment to include auger
3 9 systems, curtains and curtain systems, drip systems, fans and
3 10 fan systems, shutters, inlets and shutter or inlet systems,
3 11 and refrigerators. The exemption of these additional items is
3 12 retroactive to sales occurring on or after January 1, 1992.
3 13 Because of the retroactivity, a provision for refund of taxes,
3 14 interest, and penalties is included in the bill. However, the
3 15 claims for refunds are limited to $25,000 in the aggregate,
3 16 and claims must be filed by October 1, 2005.
3 17 The bill relates to the maximum finance charge allowed for
3 18 consumer loans secured by a certificate of title to a motor
3 19 vehicle. The bill prohibits a lender from contracting for or
3 20 receiving a finance charge which exceeds 21 percent per year
3 21 on the unpaid balance of a loan for money which is secured by
3 22 a certificate of title to a motor vehicle. The remedies under
3 23 Code chapter 537 for excess charges are available to consumers
3 24 who are charged a finance charge in excess of 21 percent per
3 25 year for such a consumer loan. The bill provides that an
3 26 attempt to avoid application of the maximum finance charge on
3 27 a loan secured by a certificate of title to a motor vehicle by
3 28 structuring the transaction as a sale, sale and repurchase,
3 29 sale and lease, pawn, rental purchase, or lease with the
3 30 intent to avoid the maximum finance charge shall be considered
3 31 a violation of the maximum finance charge and shall be
3 32 considered a consumer fraud subject to civil penalties and
3 33 enforcement pursuant to Code section 714.16.
3 34 Under current law, a consumer is not obligated to pay an
3 35 excess charge and is entitled to a refund of any excess charge
4 1 paid. If a consumer entitled to a refund is refused the
4 2 refund, the consumer may recover from the creditor or other
4 3 person liable in a civil action the excess charge and a
4 4 penalty of not less than $100 or more than $1,000. Under
4 5 current law, a person who willfully and knowingly makes an
4 6 excess charge is guilty of a serious misdemeanor. A serious
4 7 misdemeanor is punishable by confinement for no more than one
4 8 year and a fine of at least $250 but not more than $1,500.
4 9 The bill takes effect upon enactment and applies
4 10 retroactively to January 1, 1992.
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