Timmy ElsewhereMarch 6, 2008 Tim WorstallTimmy Elsewhere5 CommentsAt the Business. Raising the minimum wage and are coins legal tender? previousQuitenextThe Use of Foundations 5 thoughts on “Timmy Elsewhere” Matthew March 6, 2008 at 4:24 pm It’s a little bit more complicated than that. Doesnt legal tender in the UK mean private individuals have to accept it too? It doesn’t mean that in the US: The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled “Legal tender,” which states: “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Private businesses can decide their own form of payment requirement. See http://www.ustreas.gov/education/faq/currency/legal-tender.shtml Tim adds: Ta for the extra. So I did get the basic point, that you can pay your tax bill in pennies, right then? Matthew March 6, 2008 at 4:31 pm Yes, taxes. It does say ‘debts’ which you think would be private transactions as well. Wikipedia says UK legal tender only really applies in court in discharge of debts, so perhaps that is what it means in the US too? Wikipedia also says £1 and £2 coins are legal tender for anything. llamas March 6, 2008 at 5:57 pm It is, as said, more complicated than that. Yes, in the US, coins, including pennies, are legal tender in any amount. Yes, you could choose to pay your taxes in pennies. But the courts have recognized that, while this may be legal to do, that acts like this impose added and unjust costs upon the payee. If you go and pay your taxes in pennies, those taxes have to go somewhere, whether it be a bank, or to pay the liabilities of the taxing agency. In any event, those taxes will most-likely end up being paid to private entities – who, as observed above, are under no obligation to accept payment in pennies. As a practical matter, the reasonable person would expect them to be deposited in a bank – which may also refuse large deposits of pennies, or charge a fee for their deposit. In effect, payment in this manner, while legal, imposes an effective devaluation upon the payment, which may be measured in time or in money, or both. There is precedent for these costs to be charged back to the payor http://www.law.com/jsp/article.jsp?id=1120208723965 as being the direct and inescapable result of the mode of payment which he chose. In the case cited, the matter concerned payment of fees ordered by the court, so this is not a case of customer and merchant bargaining, but a payment that was required to be made with the force of law – like taxes. So you could well pay your taxes all in pennies, and the payee, being a government agency collecting taxes, may well be obliged to accept your payment as being legal tender – but the payee might well then assess upon you the costs of converting your payment into negotiable funds, citing the case above as precedent. After all, you could deliver your taxes to the county clerk in the form of a certified check (which they would certainly accept without question) – sealed in a slab of glass. The payment itself is good, and negotiable, and timely delivered to the correct place, but you have wrapped it around with an additional burden in order to render it available, and the costs of lifting that burden fall to you – the payee should not have to absorb them. In this case, the bill to have someone come with a diamond saw and cut the glass open to retrieve your check. llater, llamas llamas March 6, 2008 at 6:09 pm Matthew wrote: ‘It does say ‘debts’ which you think would be private transactions as well.’ Not so. Private transactions are matters of contract, for the most part, and the form of payment is a part of the contract, express or implied, and so cannot be unilaterally imposed by one party upon the other. So if I walk into a store and offer to purchase an item, no contract has been formed and therefore no debt incurred, until the storekeeper and I have agree all the terms – including the form of payment. This process (covered under the legal doctrine of ‘invitation to treat’) often takes place seamlessly and so it is generally not understood. So if, for example, we agree a price, and then I haul a sack of pennies onto the counter and start counting, the storekeeper is free to decline the transaction, and he cannot be forced to sell to me – my mode of payment forms a part of the contract, to which he must agree before the contract is formed. If a contractual debt has been incurred, and if the creditor has not specified or limited the mode of payment as part of the contract, I suppose that one could stand upon one’s rights to pay the debt in any legal tender form, including pennies – but the creditor might well (as described above) seek relief from the court for the added burdens imposed in order to render the payment available to him. llater, llamas OneHourAhead March 6, 2008 at 7:52 pm http://www.royalmint.com/Corporate/BritishCoinage/LegalTenderGuidelines.aspx Leave a Reply Cancel replyYour email address will not be published. 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