(1) The department may accept checks and money orders for the payment of drivers' licenses, certificates of title and vehicle registrations, vehicle excise taxes, gross weight fees, and other fees and taxes collected by the department. Whenever registrations, licenses, or permits have been paid for by checks or money orders that have been dishonored by nonacceptance or nonpayment, the department shall:
(a) Cancel the registration, license, or permit;
(b) Send a notice of cancellation by first-class mail using the last known address in department records for the holder of the certificate, license, or permit, and complete an affidavit of first-class mail; and
(c) Assess a handling fee, set by rule.
(2) It is a traffic infraction to fail to surrender a certificate of title, registration certificate, or permit to the department or to an authorized agent within ten days of being notified that the certificate, registration, or permit has been canceled.
(3) County auditors, agents, and subagents appointed by the director may collect restitution for dishonored checks and money orders and keep the handling fee.
(4) A person who has recently acquired a vehicle by purchase, exchange, gift, lease, inheritance, or legal action is not liable or responsible for the payment of uncollected fees and taxes that were paid for by a predecessor's check or money order that was subsequently dishonored. The department may not deny an application to transfer ownership for the uncollected amount.
(5) The director may adopt rules to implement this section. The rules must provide for the public's convenience consistent with sound business practice and encourage annual renewal of vehicle registrations by mail, authorizing checks and money orders for payment.