CA may issue IOUs for tax refunds
SACRAMENTO, CA (KGO) -- With the state budget crisis ongoing, the state's Controller says California may be forced to send out IOUs instead of refunds.Hoping to get her state income tax refund as soon as possible, Akisha Marshall is getting a jump start on her filing.
ABC7 asked her, "How much do you depend on your refund?"
"A lot. It's just like a job check," she said laughingly.
Last year 2.7 million people got their state refund in February totaling $2 billion. But, this single mom and other Californians may have to wait for their refund this year.
It is Day 61 of the state's budget stalemate and the state will run out of cash next month. It is at the point where the Controller will have to issue IOUs to pay the bills, including state tax refunds.
"An IOU is a registered warrant issued on behalf of the state's treasury that lets the individual receiving the IOU know that they will receive their funds at a later date," explained Jacob Roper with the State Controller's Office.
When asked, "How much later?" Roper replied, "We don't know."
State lawmakers just came back from a long holiday break to continue budget negotiations. Republicans still do not want to raise taxes and Democrats do not want deeper cuts to social programs.
Both, though, agree IOUs are a terrible option.
The state has issued them only once before since the Great Depression.
"It's a horrible thing. It is morally irresponsible for us not have an agreement," said Budget Chairwoman Noreen Evans
"I think it's a terrible prospect. Obviously, I don't want to see it," added Budget Vice-Chairman Roger Niello.
Akisha does not want to see the IOUs happen either.
"My landlord isn't going to take it. The utility companies aren't going to take it. It just isn't good," she said.
When asked, "If taxpayers owe the state, can they issue you an IOU?" Roper replied, "Unfortunately, there's not an option in the law for that."
If the state has to issue IOUs, the money owed to you would earn interest. It is too early to tell what the rate would be, but it could go up to 5%.
politics, nannette miranda
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