(1) If a fee required under the Motor Vehicle Registration Act or a tax required to be paid on any motor vehicle or trailer has been paid by check, draft, or other financial transaction, including an electronic financial transaction, and the check, draft, or financial transaction has been returned or not honored because of insufficient funds, no account, a stop-payment order, or any other reason, a county treasurer may cancel or refuse to issue or renew registration under the act.

(2) The county treasurer may take the action described in subsection (1) of this section no sooner than seven days after the notice required in subsection (3) of this section has been mailed.

(3) Prior to taking action described in subsection (1) of this section, the county treasurer shall notify the applicant or registrant of the proposed action and the reasons for such action in writing, by first-class, registered, or certified mail, mailed to the applicant's or registrant's last-known address as shown on the application for registration or renewal.

(4) If the county treasurer takes action pursuant to this section, the county treasurer shall reinstate the registration without delay upon the payment of certified funds by the applicant or registrant for any fees and taxes due and reasonable administrative costs, not to exceed twenty-five dollars, incurred in taking such action.

(5) Any person who is sent a notice from the county treasurer pursuant to subsection (1) of this section shall, within ten business days after mailing of the notice, return to the county treasurer the motor vehicle registration and license plates of the vehicle or trailer regarding which the action has been taken. If the person fails to return the registration and license plates to the county treasurer, the county treasurer shall notify the sheriff of the county in which the person resides that the person is in violation of this section. The sheriff may recover the registration and license plates and return them to the county treasurer.