Why Paying With Pennies Isn't Always Legal

Unless pennies are counterfeit or not legal tender, the legality of paying using only pennies is clear. Pennies are a legal form of currency according to the Coinage Act of 1965 and as expressed in Title 31 of the U.S. Code. However, the U.S. Department of the Treasury states there is no statutory mandate requiring private businesses, persons or organizations to accept pennies as payment. Thus, the legality of refusing payment in only pennies is also in question.

Image source: 'Rustedstrings'; GFDL, CC BY-SA 3.0

This clears up some of the question, but what are organizations, and do they include government entities? Also, just because there is no statutory mandate, does that mean common law has no bearing on the matter? County Courts such as the Fairfax County Court in Virginia openly state they do not accept non-rolled pennies as payment, but does that mean rolled pennies are ok? Some individuals have gotten away with paying pennies such as an individual who engineered a successful penny payment to the Fulton County Tax Office that made it difficult to refuse payment.

The lack of statutory language opens the door for interpretation, and consequently municipal ordinances can be created prohibiting the use of large amount of pennies as payment. This is further reinforced by judicial rulings in favor of those policies, or decision whether they were originally in writing or not.

The issue with pennies is they can become awkward and bulky, and may be used as payment with spite. There are several documented instances of people trying to pay their bills or taxes with pennies, and in these cases, individuals' payment have been denied. One such instance was when a resident of Canada tried to pay his taxes in pennies and was refused according to Paul L. Caron, a law professor at the University of Cincinnati . In a separate event, a U.S. Businessman wanted to pay his property tax; both were denied by local government authorities.

Paul Caron also refers to the Currency Act in reference to the denied penny payment in the Province of Quebec. That law allows refusal payment of more than 25 pennies; but that is a Canadian law. Is there any U.S. Law specifically pointing toward the capacity of county courts to deny acceptance of pennies as payment? Sidney D. Helmsley, a Senior Law Consultant, say there is. Specifically, Helmsley refers to a case called State vs Carroll, 1997. In this case the court ruled in favor of a municipal court that denied payment in pennies.

Even though pennies are legal tender, the appeal to a basic  common sense and practicality seems to override any other argument stating payment in a large amount of unrolled pennies is justified. Moreover, the need to carry out normal business, or operational functions is cited by Helmsley as part of the reasoning in the State vs Carroll case.

Is there any legal basis in which the refusal of pennies is not acceptable? A commenter at Bargaineering seems to think so. Specifically, a commenter called, Kosmo@thecasualobserver states the Uniform Commercial Code (UCC) requires “tender of payment” on negotiable instruments at risk of forfeit. In other words, refusal of payment leads to discharge of debt obligation according to the Uniform Commercial Code. However, according to Split Cents in the same discussion, the UCC in question is not discussing pennies but rather 'negotiable instruments' that are promissory notes per US Legal.

In light of the above, there are more reasons to deny payment of pennies than accept them. Little or no statutory law requires pennies must be used for payment, a court ruling and municipal rules reinforce the impracticality of pennies of payment. Even though pennies are legal tender, the effect of refusal is not so much a denial of legal tender as much as it is an appeal to common sense and a denial of impracticality in operational process.