Treasury issues guidance on end of penny production

The Treasury issued guidance Tuesday afternoon addressing frequently asked questions for businesses and consumers about the end of penny production. America’s Credit Unions, the American Association of Credit Union Leagues, and all leagues wrote to the Federal Reserve Dec. 11 sharing credit union concerns, including the need for specific guidance, and followed that with a letter to the House Financial Services Committee.  

The guidance notes that, as pennies fall out of circulation, “merchants will need to round transactions either up or down to the nearest five cents. However, most states require sales tax to be calculated on the final sale price, rounded to the nearest penny. How states and localities will ultimately amend their sales tax laws is the right and responsibility of those jurisdictions.” 

Treasury notes recent guidance from the National Council of State Legislators “gives some indication how states may adapt,” but it still remains up to individual states. Credit unions should note that this recommendation was made to state legislators and is not a recommendation as to how credit unions should round transactions. Any rounding of transactions should be done pursuant to current state law. 

America’s Credit Unions continues to support the bipartisan Common Cents Act, which provides a clear, uniform national rounding standard, and continues to request: 

• The Federal Reserve maintain access to coin depots, provide inventory updates, and prevent regional disparities as supplies shrink;
• Clear, coordinated guidance on acceptable rounding approaches and what to do when exact change is not available; and
• Regulators provide timely interim guidance that promotes consistent implementation and reduces compliance uncertainty.