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CA Issues IOUs to their Vendors

Posted by salestax on July 27, 2009

Well, we all know that CA is in financial woes; but, did you ever think that you’d see the day when a state didn’t have the ability to pay its vendors? Well, here it is: the State of CA is now issuing I.O.U.’s to its vendors. See the news release here:

The good news (hard to come by these days): if you’re a vendor that gets an IOU, you can use it to offset any sales/use taxes that you might owe to CA as a way to simultaneously clear your SUT liability and your A/R from the state.

Here’s my issue… if you pay your SUT liability by check & paper return, it’s surely easy to attach the IOU in place of a check – no problems there. But, how are you to use the IOU properly if you’re a taxpayer who likes to pay via the web using EFT/ACH processes. There is no explanation to that in this news release. If I find out, I’ll update this blog and let everyone know.

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