How To Redeem California IOUs (Registered Warrants)

Back in July, the state of California started issuing what they called Registered Warrants, aka IOUs, to taxpayers, vendors, and local governments to whom they owed money. Due to a “cash-flow infusion” from JP Morgan Chase, the redemption date was moved up a month to as early as last Friday, September 4th. Through August 31st, the state had issued 457,238 IOUs totaling $2.37 billion. Here’s mine :)


(click for larger version)

Since I had to figure this out myself, I’ve tried to collect all the disparate information about how to redeem these IOUs below. The interest rate for these IOUs was set at 3.75% per year. You can estimate the interest accumulated on your IOU using this Excel calculator. Each $1,000 of IOU issued on July 2nd would have only accumulated about $6.70 of interest by now.

In Person

If you live near Sacramento, you can redeem your IOU with all accumulated interest in person for a check (not cash) at the State Treasurer’s Office located at 915 Capitol Mall, 1st floor.

Walk in hours are Monday through Friday from 8:00 a.m. to 4:00 p.m. Third parties redeeming IOUs by mail must include a notarized bill of sale signed by the person to whom the IOU was issued.

Via Snail Mail

You can also mail your IOU to the State Treasurer’s Office. According the state, IOU holders should receive their checks in a week to 10 days including mail time. Mail to:

Attention: Registered Warrant Desk
State Treasurer’s Office
915 Capitol Mall
Sacramento, CA 95814

It seems like you just mail the IOU by itself, although one press release said to be sure to include a return address. This makes sense especially if your address is different than the one printed on the IOU.

Pay Your Other Tax Bills

You can also use it as direct payment towards current and past due personal and corporate tax obligations. It is not clear if they will account for interest earned, but I can only guess that they won’t.

To pay a tax liability with an IOU, endorse the IOU on the reverse side with the phrase “Pay to the order of Franchise Tax Board” and your signature then mail it with the tax bill or estimated tax voucher. By law, FTB cannot deposit the IOU until it is payable, but FTB will credit the taxpayer’s account on the date the IOU is received to stop the accrual of interest. If the IOU is not sufficient to pay the outstanding balance, taxpayers should send an additional payment for the difference. Otherwise, the taxpayer will receive a bill reflecting the new balance due.

Deposit Directly At Bank

Some major banks with a presence in California, as well as many local community banks and credit unions are accepting these IOUs from their customers. Whether they will cash IOUs from non-customers, or if they will credit interest earned, is something to verify directly with them. If they do credit interest and you have an account with them, this would be the easiest and fastest method.

The following major banks will accept IOUs from their customers:
Bank of America (starting Sept. 9th)
Bank of the West
Citibank
Union Bank
US Bank (starting Sept. 8th)
Wells Fargo

The following major banks will NOT accept IOUs from their customers:
Chase

Wells Fargo and Bank of America have publicly stated that they will credit interest paid by the state to their customers’ accounts. BofA will accept the IOUs on September 9th, and then will credit the interest owed by the state on these items to customers’ accounts within approximately 30 days (I suppose when they redeem it themselves). WF will only credit if the interest amount exceeds $5. Wells will stop crediting customers for interest due after September 30th, but will continue to cash them for face value after that date. BofA will accept the IOUs through October 9th.

Sources: State Comptroller’s Office, CA Treasurer’s Office, Franchise Tax Board, FTB release, BofA press release, Bizjournals

Comments

  1. Successful budget management begins with knowing what’s left to spend.
    So many people say, ‘I don’t know where my Cash goes…

  2. FYI… Wells Fargo will NOT give you the interest. They just keep it. Looks like me and my $500k are going to change banks again.

  3. For everyones info; most banks including the majors above have now decided to stop accepting all IOU’s. Most did accept them if you were current customers at their bank, but they have now stopped this as well. Hope this helps some out. For all this hassle, I wish I could charge the state late payments & credit card lending rates…

  4. Evan Bartlett says:

    Thanks for the most useful information I’ve found on this anywhere on the web! Any new information on this?

    I’ve got this silly IOU/Warrant/Check and I don’t know what to do with it!?

    Chase definitely won’t take it…

  5. BOA returned my IOU deposited last week.

  6. Evan Bartlett says:

    Does that mean I have to go to get a bank account just to deposit this thing?

  7. Many banks are no longer accepting these IOUs as it’s been a while. Just mail it in and get a real check, that’s what I ended up doing.

  8. Evan Bartlett says:

    Oh, so you mail it to:

    915 Capitol Mall, Attention Registered Warrant Desk, Sacramento, Ca 95814.

    And then they’ll mail you a real check, with the interest, that can be deposited at any bank?

  9. @Evan – Yes.

Trackbacks

  1. [...] My Money Blog explains how to redeem California IOUs (registered warrants). [...]

  2. Personal Finance Links (Just Links Edition) | thesweetmagnolia.com says:

    [...] My Money Blog explains how to redeem California IOUs (registered warrants). [...]

  3. [...] another “creative” way to get some money from its residents. First, I had to figure out how to redeem my California IOU. Now starting back on November 1st, the state increased the income tax withholding on regular wages [...]

Speak Your Mind

*