That’s right. State officials now say that California’s financial situation is so serious that many taxpayers may receive IOUs instead of refunds for state taxes. Warnings of delayed tax refunds and warrants started as early as January, 2009.
The State of California is planning on issuing warrants instead of refund checks. A warrant is issued by a government agency when they are unable to pay currently and are redeemable at some point in the future, usually with interest. Only once since the Great Depression has the State of California had to issue warrants.
California is entering the 2009-10 fiscal year on July 1 with a deficit of nearly $24 billion. State tax revenues have fallen 27 percent in the past year. In February, the State passed a budget, but the legislation was dependent on the passage of several ballot propositions that were rejected by voters in May.
Other than arranging for a smaller tax refund, which is too late for most, is there anything a taxpayer can do in this situation?
Individuals working in California can choose to have their refunds applied to next year’s taxes and then request lower wage withholdings. Business can also choose to apply to next year’s taxes and reduce subsequent year’s estimated tax payments.
Some reports cite the recession will last longest in the Midwest, including Ohio. Although officials in Ohio have not discussed issuing warrants, both individuals and businesses should minimize tax refunds in case this happens here in Ohio.
Click here to learn more about Skoda Minotti’s tax planning and preparation services or contact us at 440-449-6800.
Topics: Akron Tax Accountant, Cleveland Tax Accountant