Can You Take That To The Bank?

Dear Ann Landers: Your recent column concerning a sales clerk who refused a roll of pennies in payment for a bottle of soda caught my attention. You said that even though pennies are a nuisance, they are considered legal tender.

I had read an article in the Massachusetts Collectors and Treasurers Association newsletter concerning a problem faced by tax collectors and others: irate customers paying with small coins.

The article cites Title 31 of the U.S. Code, which states that minor coins (pennies and nickels) are legal tender at their nominal value for any amount not to exceed 25 cents in any one payment.

The article also mentioned a 1990 incident in which a restaurant owner in Portsmouth, N.H., brought 382,648 pennies to the tax collector’s office in a van. The taxpayer was miffed over what he described as a rude letter demanding payment of delinquent taxes. Most of the pennies were in $50 bags direct from the U.S. Mint. The rest were in boxes and a pillow case. Loose were 12,648 pennies.

The taxpayer ignored a request by the city attorney not to bring in the pennies and unloaded them anyway. City employees had to reload the pennies and take them by truck to the bank to be counted. The tax collector issued a receipt but said she didn’t think it was very funny. The taxpayer said he didn’t want to look at a penny ever again.

The editor of the newsletter suggested checking with your city or state Department of Revenue before invoking the provisions of Title 31.

Small coins aren’t the only problem. What about those businesses that say, “We will not accept bills over $20”? I understand they don’t want to create a security risk, but isn’t this against the law? If they refuse payment because you only have a $50 bill, does that mean the service is free?

Please, Ann, ask one of your attorney friends what’s legal and what isn’t. - A Reader in Randolph, Mass.

Dear Randolph: My staff contacted Donald R. Nichols, director of public affairs at the U.S. Mint. Here are the facts:

In the late 1700s and early 1800s, pennies were not considered legal tender, and merchants had the right to refuse them. The Coinage Acts of 1873 and 1879 made pennies and nickels legal tender for debts up to 25 cents. Dimes, quarters and half-dollars were legal tender up to $10.

However, in the early 1980s, these laws were combined into one provision that says U.S. coins and currency are legal tender for ALL debts, regardless of the amount. This means the Federal Reserve System must honor them. It does not, however, mean anyone else has to.

Individual vendors have the right to specify terms of payment. This means the Internal Revenue Service doesn’t have to accept payment in pennies and your local gas station attendant doesn’t have to accept bills over $20.

I would hope, however, that local businesses would keep their customers in mind when they determine what type of payment they will accept. Allowing a customer to pay for a soda in pennies is certainly worth the goodwill it will generate.

xxxx