Government Law Alert: Small business owner sues California over I.O.U.’s!

Legal news for California government lawyers. Business owner says California government issued i.o.u.’s are violating state and federal regulations.

California government law lawyers- Small business owner sues the California Government in the San Francisco Federal District Court over i.o.u.’s.

San Francisco, CA—A California small business owner filed a lawsuit against California’s controller and treasurer stating they have violated state and federal laws when they issues thousands of i.o.u.’s as temporary payment. The lawsuit, which is seeking class action status, was filed in the Federal District Court in San Francisco on Wednesday, July 29, 2009, as reported by The New York Times.

The plaintiff, Nancy Baird stated if she did not receive payment from her California issued i.o.u., which totaled $27,752.16, she would have to shut her doors to her embroidery and printing business. Baird’s i.o.u. was issued for polo shirts and uniforms her company supplied for a state-run youth camp. The lawsuit is requesting California to stop issuing i.o.u.’s, or registered warrants, and issue payment to all the i.o.u.’s already dispersed. Officials with the State Treasurer stated their actions in dispersing and redeeming the i.o.u.’s is lawful under all “legal and constitutional requirements.” California has dispersed nearly 222,000 i.o.u.’s which totaled an upwards of $1.1 million.

The Franchise Tax Board and the Board of Equalization, which collects numerous types of taxes, has stated they will accept the i.o.u.’s as payment for taxes. They also stated if the amount i.o.u. is larger then tax owed to the state, taxpayers will have to wait to receive the difference. There is a waiting period of 4-6 weeks for refunds of $50,000 or less, and refunds over $50,00 will take up to 120 days to receive payment.

Legal News Reporter: Nicole Howley-Legal news for California government lawyers.