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Thread: I.O.U.

  1. #1
    Young blood
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    Default I.O.U.

    suckers....


    If you expect you'll be getting a refund from California when you file your 2008 state income tax return, be prepared: you may instead receive a "registered warrant." Translation: an IOU.

    California is rapidly running out of money. Blame it on the state budget deficit that continues to bleed billions of dollars from California's reserves. Facing inadequate credit to make up the difference, California's Controller John Chiang warns that by the end of February, the nation's most populous state may not be able to pay some of its debts, and instead be reduced to issuing those creditors IOUs.

    "My office has projected that, in approximately 60 days, there will be insufficient cash available to meet all expenditures reflected in the 2008-09 Budget Act," stated a Tuesday letter from Controller Chiang to the directors of all state agencies. "To ensure that the State can meet its obligations to schools, debt service, and others entitled to payment under the State Constitution, federal law, or court order. California may begin, as early as February 1, 2009, issuing registered warrants...commonly referred to as IOUs...to individuals and entities in lieu of regular payments."

    California has not resorted to IOUs since the 1992 budget crisis when Pete Wilson was governor. Back then, some 100,000 state employees got IOUs instead of paychecks for two months until the state approved a budget. The 1992 crisis came during summer, well past the tax season, but at least 12,000 tax refunds were also issued as IOUs, according to a contemporaneous report in the Los Angeles Times.

    State workers filed a lawsuit, arguing the IOUs violated the federal Fair Labor Standards Act. They were awarded damages. In this current cash crisis, The Controller's office expects that hourly state employees would continue to receive paychecks. But IOUs could be issued to elected state officials, including legislators and judges, and their appointed staff, some 1700 in all, "as well as tax refunds owed to individuals and businesses," according to Chaing aide Hallye Jordan.

    The Controller himself remains in a Texas hospital where he was taken after falling ill during a visit with family. Chiang has remained in communication with his staff by phone, Jordan told NBC Los Angeles Tuesday evening.

    The Controller's office will not take the emergency steps outlined in the letter to state agencies, Jordan said, if California can resolve its budget crisis in the next few weeks. But no new budget package has been proposed since the one presented by Democratic lawmakers was rejected by Governor Arnold Schwarzenegger as inadequate. "We've made very little progress the past couple of weeks," said Aaron McClear, an aide to Gov. Schwarzenegger, while the Governor was away from the capital on a holiday vacation.

    Even without a deficit resolution, issuing IOUs is not the only option for tax refunds. The state could simply delay payment. Under the law, it has until May 30, Jordan said.

    In 1992, banks honored the state's IOUs, cashing them on demand, and then receiving an additional 5% from the state when it made good on the obligations. In effect, the IOUs served the state as unsecured bridge loans from banks. But this time around, with credit tight and banks still feeling the impact of the fall meltdown in the financial services industry, it is not yet clear how banks will respond.

    "Nobody's making any decision whether 'Bank X' will take the IOUs as money or not," said Brian Tobin, a Culver City based tax preparer. At the request of NBC Los Angeles, Tobin reviewed a copy of Chiang's letter. Tobin noted that in past years, California's Franchise Tax Board has processed electronic refunds in as short a period as a week. This raises the possibility that taxpayers with simple returns who file as soon as possible after New Year's may be able to receive refunds before the proposed February start date for issuing IOUs.

    Those who could be most affected are taxpayers who routinely plan for large refunds as a means of saving for anticipated expenses, such as property taxes which are also due in April. But with notice coming at year's end, there is not time for those taxpayers to adjust their withholding or take other steps to try to capture their return in advance from the state's coffers. "They've got their money taken out of your paycheck. That's it," Tobin said.

    One final irony, Tobin sees: electronic deposit refunds are inexpensive to do. Instead sending out IOUs is a more costly procedure for a state looking to save money.

  2. #2
    Old Gay Guy gaypalmsprings's Avatar
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    Default Re: I.O.U.

    It sucks. It's our money, so we deserve it back now. If you owe money, wait till the last second to pay it.

  3. #3
    Member Carnie100's Avatar
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    Default Re: I.O.U.

    This fucking blows.
    Quote Originally Posted by lizng View Post
    Nickelback to me is like walking into an ethnic restaurant and asking to have some unoriginal American cuisine like chicken tenders with a side of ranch dressing.

  4. #4
    Old Gay Guy gaypalmsprings's Avatar
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    Default Re: I.O.U.

    no doubt some people were planning on spending some of the tax refunds at Coachella

  5. #5
    old school BlueDevil50's Avatar
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    Default Re: I.O.U.

    wow...that's crap. i filed mine on 1/30 so hopefully they already started getting my money back to me, i need that to just buy my tickets.

  6. #6
    old school Geno_g's Avatar
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    Default Re: I.O.U.

    That's been my way of buying my tickets and getting my car into the shop for the last two years, fuck this shit, they take out my taxes right away, well I want my refund right away too.

  7. #7
    Old Gay Guy gaypalmsprings's Avatar
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    Default Re: I.O.U.

    they say they stopped payments today

  8. #8
    old school Geno_g's Avatar
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    Default Re: I.O.U.

    I want to stop payments of my taxes for the money I make at my job, now...

  9. #9
    Coachella Junkie Pixiessp's Avatar
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    Default Re: I.O.U.

    Oh my! I haven't even made my appt. yet. I am planning to do that tomorrow, but with much less exuberance.
    Quote Originally Posted by insbordnat View Post
    If you're in a relationship that causes Ancestry.com to crash, it's probably inappropriate.

  10. #10
    MENACING Courtney's Avatar
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    Default Re: I.O.U.

    Quote Originally Posted by Geno_guerrero View Post
    they take out my taxes right away, well I want my refund right away too.
    You don't technically need to have any taxes taken out of your paycheck, do you? I mean, I thought that they're not due until April of the year following, so paycheck deductions are more an optional aid to people with poor money management stills, right?

    I would be interested in learning whether this is true.

  11. #11
    MENACING Courtney's Avatar
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    Default Re: I.O.U.

    I have no idea how I will file taxes this year because of collecting unemployment insurance for Oct-Nov. I feel like there may be special forms or something. I need to find a good computer program or tax accountant.

  12. #12
    old school Geno_g's Avatar
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    Default Re: I.O.U.

    If you claim nothing for taxes around April you will owe a lot of money...

  13. #13
    old school Geno_g's Avatar
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    Default Re: I.O.U.

    I just found out it's only the state refunds, I thought it was federal too, fuck it I only get like $2 buck back from the state and they can keep it for CA debts...

  14. #14
    MENACING Courtney's Avatar
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    Default Re: I.O.U.

    Quote Originally Posted by Portions4Foxes View Post
    There are only 2 exceptions to withholding- if you had no tax liability the year prior and were given a full refund of all your withholdings or if you expect that to be true of the current tax year.

    Also, if you owe more than $1000 there's an up to $500 penalty, which will undoubtedly motivate you to have more withheld the next year to avoid the penalty.
    Oh haha nevermind then. I retract my previous conjectures.

  15. #15
    Coachella Junkie SFChrissy's Avatar
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    Default Re: I.O.U.

    Ca refund iou is a bit of a savings for me my fed is the phat one I'm cool...

    Courtney...if you opted to have your unemployment taxed not so much of a big deal but if not you may owe...

  16. #16
    Member TheWatcher's Avatar
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    Default Re: I.O.U.

    If you collected unemployment, you'll get a tax document from the state that you'll need to do your taxes. It's really not difficult to deal with. The instructions in your 1040x or 540x booklet will cover this. Just need to do a little reading.

    I collected unemployment for Nov-Dec, and didn't have taxes taken out since I am expecting a refund anyway. Don't know if I will owe them or get a refund. Federal will be a large refund. Maybe I can send the state of California an IOU if I owe them? I am having trouble coming up with a budget myself.

  17. #17
    Member All That I Am's Avatar
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    Default Re: I.O.U.

    Quote Originally Posted by gaypalmsprings View Post
    no doubt some people were planning on spending some of the tax refunds at Coachella
    That's where my coachella ticket comes from every year.
    this fucking sucks

    at least I don't think tickets will sell out
    I miss Bill Hicks.

  18. #18
    Coachella Junkie humanoid's Avatar
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    Default Re: I.O.U.

    do we get to charge the fuckers interest?


    I'm gonna start sending IOU's for all my bills
    '99-'11...

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