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California State Controller announces state Tax IOU
California announces delay for tax refunds
Due to the state's persistent cash and budget problems, the State Controller announced on Friday, January 16, 2009 that without immediate budget solutions that fix the state's cash shortfall he will have to delay refunds for 30 days starting February 1, 2009 for Personal Income Tax and Business Entity taxpayers.
FTB is still processing returns as normal. However, it is likely this delay will affect state refunds for most early filers. Returns that have not completed processing before February 1, 2009 will have their refunds held for 30 days.
Don't Delay Get Your Refund Today: Online Tax e-file Sites
This applies to all refund types. Delayed Direct Deposit Refunds (DDR) will be electronically transmitted when funds are available.
FTB will update this website with FAQs as further information becomes available.
California may delay tax refunds amid budget impasse
With Gov. Arnold Schwarzenegger's veto of Democrats' $18-billion package of tax hikes and cuts, the state could begin issuing IOUs as soon as Feb. 1. GOP legislators join a suit against the package.
By Jordan Rau and Evan Halper January 7, 2009
Reporting from Sacramento -- State officials on Tuesday braced for the possibility of delaying tax refunds to millions of Californians, along with student grants and payments to vendors, as the latest round of budget negotiations between Gov. Arnold Schwarzenegger and Democratic legislators collapsed.With little more than a month's worth of cash left in the state treasury, the governor and lawmakers have been unable to agree on how to erase a budget gap projected to reach $41.6 billion by the middle of next year. Democrats announced Tuesday that two weeks of discussions had ended in an impasse and sent Schwarzenegger the $18-billion fiscal package they passed last month. The governor vetoed it, as he had promised to do.
The Legislature's independent budget analyst is warning that millions of taxpayers may not get their tax refunds on time because of the state's cash shortage.
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Legislative Analyst Mac Taylor issued a report Wednesday ahead of the governor's annual state address. It signaled California would fall into a cash abyss unless elected leaders act quickly on the state's $41.6 billion deficit.
Taylor writes that the state controller will need to delay or issue IOUs on tax refunds. He notes that IOUs could bear up to 5 percent in interest costs to the state. The last time the state issued IOUs was in 1992, when many banks cashed the registered warrants for a short time.
A spokeswoman for the California Bankers Association says banks have not made a decision whether they would accept IOUs.
Copyright Associated Press
First Published: Jan 14, 2009 12:57 PM PST
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