Report: Millions Could Get Tax IOU

Thursday, Jan 15, 2009  |  Updated 12:31 PM PDT
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Report: Millions Could Get Tax IOU

Millions of taxpayers may not get their tax refunds on time

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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.

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