Skip to comments.California Won't Accept Its Own IOUs
Posted on 08/09/2009 4:51:50 AM PDT by TigerLikesRooster
California Won't Accept Its Own IOUs
By MARIA DINZEO
SAN FRANCISCO (CN) - Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors' federal class action claims the state is trying to balance its budget on their backs.
Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California "paid" her with an IOU that two banks refused to accept - yet she had to pay California sales tax on the so-called "sale" of the uniforms.
The class consists mostly of small business owners, many of whom rely on income from government contracts to keep afloat. They say California has used them as "suckers" as it looks for a way to bankroll its operations while avoiding its own financial obligations.
(Excerpt) Read more at courthousenews.com ...
It s/b illegal for Calfornia to make purchases when it does not have money to make payment.
Maybe, if they can get it heard in a Federal court. State court? Not so much.
good thing that Dems and RINOs can walk on water.
I guess that California wants to decrease the number of folks willing to do business with it.
Now this is getting interesting
This is insane, people cannot cash these stupid IOU’s to pay employee’s, costs of materials, taxes.
Rush warned people about Arnold.
Liberalism is all about your money not theirs.
That simply means the state of California has defaulted on its debt.
Very unwise to hold California paper, whether it is an IOU or bond at this point.
But, even more disturbing: our federal monies, which are made of paper, have no intrinsic value (unlike gold or silver coinage) and is only valuable because the government tells us these scraps of linen paper are worth something... just like CA told people its IOUs were worth something.
Argentina, here we come!
I would argue before a court that California should not have a choice about taking their IOUs as payment. An IOU is an official recognition of debt and the “payment” would simply be a reduction in that debt. That should actually be a fairly easy win in any court.
We don’t know the whole story. What was the language on the notes? If the notes indicated they were not acceptable by the State for payments of various taxes, it might be difficult.
The vendor should have refused acceptance and continued to bill the state and adding late fees and interest.
No State Shall Make Anything but Gold and Silver Coin a Legal Tender in payment Of Debt
Uh Duh!! Like they are like worthless dude!
Just a complex way for the state to confiscate the assets of legitimate businesses while saying that it isn’t.
In other words, government gradually taking over the means of production. (see communist manifesto)
So the way I see this any contractor who has good sense will stop taking government contracts.
How long can California survive when people stop working for them?
right there's the problem...
The Phila. city schools are issuing IOU’s to vendors. Our family does business with the schools (musical instrument accessories) but we won’t do any business with them at this point unless we’re paid up front.
That isn’t necessarily a bad thing.
Is this Arnold’s fault, or the fault of the California voter?
OTOH, The state is claiming that the IOUs are a valid form payment for tax purposes, so it is illogical that it would be invalid to pay your California taxes with them.
So much for my plan to get rich on these things. If the state won't take them, they must not be worth the paper they are printed on. Glad I didn't buy any at 5% of par. I still might be willing to take a chance at about 1%. They might be framed collectibles some day.
Wow that’s a tough one. Suppose one of your competitors will do bussiness on those terms. When (if) good times return you’re out of a lucrative govt deal.
As conservatives, we should be on Calif’s side on this one. As a sovereign state, it should have a right under the constitution to hose folks. There is a reason states can’t file for bankruptcy protection.
And folks should bear the consequences of selling to an insolvent entity on credit.
Bump for later.
She has yet to receive any money so how can the State tax that???
What’s the big deal? All those small businesses can run right down to the bank and get a loan to cover their operating expenses, right? Shouldn’t be a problem with the booming economy.
Has this been confirmed? This article appears to be from an obscure website, and I haven’t seen any other articles asserting this.
California contractor paid with IOU sues the state
Wed Jul 29, 8:28 pm ET
SACRAMENTO, Calif. A vendor who provided 1,200 embroidered polo shirts and uniforms to a state-run youth camp and got paid with an IOU filed a lawsuit Wednesday against the state of California.
Nancy Baird, the owner of an EmbroidMe franchise in Paso Robles, sued state Controller John Chiang and state Treasurer Bill Lockyer in U.S. District Court in San Francisco.
That is wrong on so many levels.
In the end, the people are responsible. They elected the fools that are running the asylum. Maybe next year, they can rectify some of the problem.
California won’t accept the worthless crap IOUs it foists on vendors and taxpayers. I hope and prey they lose in court
I have to ask: Doesn’t $27,000 buy a whole trainload of polo shirts?
Has this been confirmed? This article appears to be from an obscure website, and I havent seen any other articles asserting this......
Go to google news and you will find many articles for “Nancy Baird” who is suing
“Uh Duh!! Like they are like worthless dude!”
I’ll buy all you have for 50 cents on the dollar!!!
For dishonesty, California is insisting the vendors take something for payment that the state won't take for payment. You know California is paying some of it's bills, so how much you want to bet that the people getting paid are politically connected?
Remember when Hillary found all the "abnormalities" in the WH travel office? This would be an easy ploy for California to run vendors out of business, and advance businesses that will contribute politically to the "right" causes.
You know they're picking out which vendors they pay, and you know they're doing it because of political affiliation.
I think the most vulnerable businesses (those who would go out of business without government customers, and who don't have "connections") were told "accept IOUs, or be blacklisted from doing business with California agencies"
She took the IOU to the bank only to find that they refused to honor it.
"I'm like, 'Why not?' 'Well, there's a stipulation you have to be a customer for a year and you've only been here nine months,' and I'm like, 'Are you kidding me?'" Baird recalled. "I was under so much stress because all of this stuff that I just sat in my car and cried."
I wonder just whose stipulation that might be; I have read the guidance from the Fed and from the California authorities, and I don't believe there was anything like a suggested requirement that someone be a customer for a year before honoring these instruments is mentioned.
Good thought, didn’t the federal government just do almost that very thing to car dealership owners?
Various counties and municipalities issued scrip during the Depression. I did a quick look and the scrip I saw was also good for paying debts and taxes to the entity that issued it. So California is operating a shameful rip-off compared to what impoverished governments did during the 1930’s
Wow...even the New York times is covering Nancy Baird and her mini tax and IOU revolt
We don’t really have competitors as it’s a very specialized niche and also we’re not talking a lot of money, or else what you wrote would definitely require thought.
“I have to ask: Doesnt $27,000 buy a whole trainload of polo shirts?”
Of course not, you could probably haul that many in a pickup truck if they are good quality. Even the very cheapest wouldn’t nearly load an eighteen wheel truck. If they are the very finest you might come close to loading them into a large car trunk.
Depends on which shirt and how many stitches are in the design, and the number of locations emb. But a unit cost of 24.00 should have been a nice profit.