State will accept IOUs as payment for sales taxes owed

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California tax authorities will allow vendors who’ve received IOUs from the state to turn them in as payment for sales and use taxes they owe.

The Board of Equalization voted Tuesday to accept the IOUs.

‘The law does not currently require BOE to accept state-issued registered warrants as payment, but the law also does not prohibit BOE from doing so,’ the board said, explaining its decision.

The Franchise Tax Board had previously agreed to accept IOUs as payment for corporate and personal income taxes owed.

Despite the tentative budget agreement in Sacramento this week, it isn’t yet clear whether the state will be able to redeem outstanding IOUs before their Oct. 2 maturity date. That may depend on whether the state can borrow from Wall Street after a budget is approved by the Legislature.

In the meantime, state Controller John Chiang continues to churn out the scrip so that he can conserve cash for ‘priority’ payments as mandated by the Constitution.

For more details on the BOE’s decision go here.

-- Tom Petruno