The IOUs can be redeemed at face value, plus 3.75% interest, by Oct. 2 or earlier if a budget deal is signed and the state has enough cash to cover them. Some banks and at least 25 credit unions have agreed to accept the IOUs. Bank of America, Chase, Citi and Wells Fargo have said they would accept the paper through July 10.

In other words, you can treat the IOUs more or less like an actual dollar payment — the banks will accept them, and California will eventually pay them back (or default on the rest of its debt).

This is expensive and inconvenient to the average taxpayer. Instead of borrowing a few billion dollars at a time from people who want to lend money, the state is borrowing a few hundred dollars at a time from people who want cash. The IOU trick gives them some breathing room, though, and presents the possibility that California can coast into an economic recovery without gong bankrupt first.

California Warrants Blog Post Roundup

• Joe Weisenthal at Clusterstock agrees that California has invented its own currency.

• Kay Bell of Don’t Mess With Taxes tells taxpayers what to do, with specific advice on everything from how to deposit them to what to do if you can’t.

• BuyMyIOU.com is exactly what it sounds like. (But caveat emptor — the site doesn’t exactly look professional.)

• Months ago, Taxrascal suggested that state IOUs aren’t so bad. Perhaps California’s treasurer read it!

North Carolina is structuring the bill so that any retailer physically present in a state owes sales taxes on online purchases. And for the purposes of the bill, that physical presence rule covers the affiliates. Amazon weighed one the value of the affiliates against the cost of the taxes, and made the call.

Ironically, this tax increase might end up costing North Carolina tax money, overall. Amazon’s affiliates pay income taxes, including state income taxes, so by forcing them to stop getting checks from Amazon, the state is taking away its own revenue, too. Since an affiliate program can be run from anywhere, it’s likely that the revenue will just go to other states instead.

So what happens next? There are a few possibilities? North Carolina might back down on their tax plan — a victory for Amazon, since other states would then prefer not to raise their taxes. Amazon might change its mind and let North Carolina residents run affiliate programs, possibly with a lower payout — but only at the cost of losing face and seeing their taxes raised almost everywhere else. Or the status quo might be maintained: Amazon affiliates might be a program available in every state but one.

• One online commenter complained of a 12-week wait for the check, which hadn’t arrived yet.

• Other commenters are asking when the check will arrive — the answers indicate that it takes ten to twelve weeks, but there’s lots of confusion nonetheless.

• Other estimates for how long the credit takes imply a wait of 12-16 weeks.

• Some people are even less lucky. One of them had to wait fourteen weeks — to find out that he needed to send the IRS more information.

Some people are in no mood to wait for the check. Several states have found a way around this: HUD is starting to lend people money backed by the tax credits, for certain mortgages. And several states have taken matters into their own hands: here is a list of states that lend new homeowners money to tide them over until the tax credit arrives. For many new home buyers, this can be a good way to stay afloat, but in most cases, it’s best not to rely on that tax credit as the only way to close a new home purchase.

The problem is the behavior this engenders. A quick look at their previous tax amnesties reveals the effect this kind of program has on New Jersey taxpayers:

• During the first amnesty, in 1987, the state expected $50 million in back taxes. These taxes covered taxes for all prior years.

• In 1996, another amnesty planned on collecting $80 million in back taxes for the previous nine years, and got $90 million instead.

• In 2002, a tax amnesty plan raised far less than the $150 million expected for the previous eight years.

• And now, the plan is collecting about $600 million, possibly more, from the previous seven years.

In short: every tax amnesty covers less time and expects more back taxes. Why? Because every time New Jersey does a tax amnesty, every taxpayer factors that into their decision to pay taxes. We’ve gone from expecting $9 million a year in accumulated back taxes (the $80 million projected haul from the 1996 amnesty) to expecting almost $30 million a year in back taxes ($200 million divided by the seven years since the 2002 amnesty) — and it looks like we’re actually seeing about $90 million per year in repaid taxes.

In theory, a tax amnesty is a fine idea. And it certainly does bring in the revenue. But every amnesty plan trains taxpayers to take fines and interest less seriously. Over time, it leads to exactly what is happening in New Jersey: newer, bigger amnesties, at a faster and faster pace.

As CNN reports on tax hikes:

Already, 16 states have taken this unpopular step this fiscal year, and another 17 have proposed tax hikes for the coming year, according to the Center on Budget and Policy Priorities, a policy group. In many cases, they are making small increases in specific taxes, rather than imposing a broad rate hike.

At a time when jobs are scarce, retirement funds are decimated, and the economy is on the edge, high taxes may have many state residents worried. Here’s what you should keep in mind:

• They aren’t here to stay: In most cases, these temporary tax hikes really are temporary. States are making up their current revenue shortfal, but few of them intend to permanently raise income taxes or state taxes. More specific measures, like higher alcohol and cigarette taxes, are more likely to stick around, though.

• Not every state is in trouble: Although many states are in the headlines, there are only a few real danger spots: California, Arizona, Florida, and Nevada are in trouble because of the real estate crash (the vast majority of foreclosures are happening in these states). New York, New Jersey, Illinois, and Massachussets are suffering because of high spending on social services, combined with reduced income from the financial industry. Meanwhile, states like North Dakota and Alaska have seen fewer defaults and less economic trouble (so far, at least).

• They’re designed to keep you afloat, not sink you: States are raising taxes so they can keep spending money on services people need most in a tough economy. So they’ve tried to design current taxes to minimize job loss and keep people from leaving the state altogether. So if you find your new taxes overwhelming, you’re probably going to get a sympathetic hearing. State tax authorities are often able to help you extend your payment, negotiate for more time, or even help reduce the amount you owe.

The current state tax situation is certainly worrisome, but it’s not as bad as it looks. With the economy likely to recover, and state spending set to drop, the current shortfalls are not likely to last. And if the situation deteriorates, the Federal government may step in with a bailout rather than force states to raise taxes and cut services even more.