The Machinery Act requires taxpayers to pay their bills in our “national currency,” meaning in money. This provision allows tax offices to reject creative non-monetary payments offered by disgruntled taxpayers such the bushels of wheat sent via overnight mail to Yadkin County a few years back.
But what about pennies? Thousands and thousands of pennies?
In 2012, a Winston-Salem resident, sporting a t-shirt that read “taxation is theft,” hauled a box containing 11,722 pennies into the Forsyth County tax office to pay his vehicle tax bill. In 2015, a UNC-Charlotte student paid his parking ticket fines with over 10,000 pennies to protest the fact that most of the revenue generated by university parking citations goes to public school districts. The town of Columbia, N.C. reports that one taxpayer who owns a coin-operated laundromat routinely drags in huge laundry bags full of quarters to pay his taxes and water bills.
Google “paying with pennies” and you’ll discover that paying fines, taxes, and other government bills with thousands of coins as a protest is very common. Do local governments have to accept these protest payments?
The answer is almost certainly yes. But that doesn’t mean your office needs to deal with a wheelbarrow full of loose pennies. Local governments may place reasonable restrictions on how and when coins will be accepted.
The federal “legal tender” statute, § 31 U.S.C. 5103, states that “United States coins and currency . . . are legal tender for all debts, public charges, taxes, and dues.” The purpose of the statute is to ensure that U.S. currency is accepted nationwide as a form of legal tender to satisfy the payment of debts. Combine that federal law with the requirement in NCGS 105-357(a) that taxes be paid in national currency and I think it’s clear that local governments are required to accept any form of money as legitimate payment for taxes or other debts.
That said, courts routinely approve limitations on payment by coin and cash. For example, an Ohio court held that it was reasonable for the clerk of court to refuse to accept unrolled pennies as payment of court costs. (State v. Carroll, Ohio App. 4th Dist. Mar. 13, 1997) In New York, a state court held that its state’s legal tender statute did not require the New York City subway system to accept dollar bills at every station. (Nemser v. New York City Transit Auth., 530 N.Y.S.2d 493 (1988))
The only North Carolina case I could find involving an attempt to pay a local government in pennies is a 1921 case in which a Durham water and sewer employee beat up customer who attempted to pay fifty cents of a $4.50 bill in pennies. (Munick v. City of Durham, 181 N.C. 188 (1921))
Happily North Carolina counties and towns offer much friendlier customer service today. I have not heard of a single local government that completely refuses to accept coins. A few accept only rolled coins. Many others will accept unrolled coins, but require that the payor remain present in the office while the staff counts the coins.
Accepting and counting the coins in a cheerful and diligent manner eliminates the primary goal of many protest payments, which is annoying the government bill collector. Because the counting might take a couple of hours, it also serves as a deterrent to future protesters who won’t want to spend their entire day in the tax office. (Thanks to the many tax officials who shared their entertaining penny protest stories with me via email; if you have one to add, please post it in the comment section below.)
Whatever policy your office decides to adopt concerning coin payments, it’s best to put that policy in writing and display it clearly at your cashier stations. That helps ensure that all customers are treated similarly and demonstrates that your office is not arbitrarily changing the rules when somebody tries to pay in coins. Above all, train your employees not to get frustrated with customers who offer coins as payment. An emotional or abusive reaction by a local government employee is certain to show up on YouTube or Facebook later that day.
The bottom line: if a grumpy taxpayer hauls a wheelbarrow full of pennies into your tax office, smile and offer him a seat. He might be there a while.
[Many thanks to my SOG colleague Rebecca Badgett for help researching and writing this post.]