IOU's Can Be Used To Pay Taxes

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(Sacramento, CA)
Tuesday, July 7, 2009

Californians can pay personal or corporate income taxes with an I-O-U – or registered warrant - as they’re officially called. That’s the word from Denise Azimi at the Franchise Tax Board: 

“The government code section expressly allows taxpayers to pay their state income tax bills or payments if you have estimated tax payment with a registered warrant, so yeah, it’s expressly stated in the law.”

Azimi says you’d have to endorse the I-O-U over to the board, then mail it with your tax bill or estimated payment voucher.  If you do that, you’re forgoing the interest the state will pay – which is 3.75 percent.   Republican Assemblyman Joel Anderson wants to take the idea a step further.  He’s pushing a bill that would allow vendors who do business with the state to pay other taxes and fees – such as DMV charges – with IOU’s.  The bill has bipartisan support and has been approved by a key committee.  Some banks are also accepting IOU’s – but only through the end of the week.  The Controller expects to issue more than three billion dollars worth of IOU’s this month.