Copyright Salt Lake City Deseret News
President Donald Trump’s decision in February to cease production of the penny seems to make pretty good sense from a bare-bones fiscal breakdown. The cost of production for the copper-plated zinc coin at about 3.9 cents far exceeds its face value. But while the penny cancellation effort is well under way — the U.S. Mint placed its final order for penny blanks in May and the Federal Reserve began suspending coin distribution terminals for penny services in August — retailers, banks and other businesses say the change did not come with an implementation plan and penny shortages are showing up in markets across the country. “The current penny shortage and lack of guidance from the federal government have left retailers and other cash-accepting businesses uncertain on how to handle cash transactions where pennies are unavailable,” Dylan Jeon, the National Retail Federation’s senior director for government relations, wrote in a recent report. The organization’s survey findings reveal that U.S. retailers are taking a variety of actions to mitigate the current penny shortage. Businesses are tweaking coin management strategies as it becomes more difficult to obtain pennies from banks and armored carrier services. Strategies include point-of-sale signage and entreaties to pay with exact change and, in some cases, rounding cash transactions in the customer’s favor for the time being to avoid customer friction and potential litigation risks. The retail federation notes that while rounding to the nearest nickel is widely understood to be the simplest, most practical solution, various state and local laws and federal program requirements effectively prohibit rounding practices. Retailers seek help from the Feds The organization has been lobbying the Trump administration and Congress to provide consistent guidance, per a report from Reuters. Canada executed a plan to eliminate its one-cent coin over a decade ago but, unlike the current U.S. effort, the Canadian government provided businesses and consumers with consistent guidance as part of its phase-out process, according to the retail federation. A group of trade organizations that include gas stations, convenience stores, travel centers and grocery stores warned in a Sept. 30 letter to congressional leaders that if remedies to address the penny shortages are not addressed in short order, “it will be challenging to legally engage in cash transactions with customers in growing swaths of the country,” per Reuters. Love’s Travel Stops, which operates more than 640 locations in 42 states, said the phaseout of penny production is affecting its retail operations. “If one of our stores runs out of pennies, all change on cash transactions will be adjusted in the favor of the customer and Love’s will cover the difference,” a company spokesperson told Reuters. “This is a temporary measure while we work toward a long-term solution.” Rounding up and down On Monday, the Utah Department of Commerce published a business advisory, created in partnership with the Utah State Tax Commission and Department of Government Operations, to help businesses navigate the penny shortage issue. The agency notes price rounding is applicable to cash purchases only where, after the total amount due is calculated (price + tax), change to the consumer is required. If a purchase requires change to a consumer, a business may choose how to round, so long as notice is provided. The Utah Department of Commerce’s recommended price rounding method is as follows:
