After 232 years, the U.S. Mint ended the production of pennies last week. What does it mean for your business?
For now, not much. Federal and state legislators and regulators are still working on what a post-penny economy will look like for businesses that transact in cash. In the meantime, pennies continue to circulate in the economy, allowing businesses to carry on as if the copper and zinc disks were still being minted.
Utah released guidance on the matter this week. It suggested that when providing change in cash transactions, businesses should round to the nearest nickel (for example, 1 or 2 cents are rounded down to 0 cents, and 3 or 4 cents are rounded up to 5 cents). Federal legislation introduced in the U.S. House of Representatives earlier this year, called the Common Cents Act, adopted a similar approach. Digital transactions are unaffected.
As we await final guidance from the government, businesses should continue to use pennies as they have always done. Point-of-sale system producers will provide updates to make adoption easy once concrete federal and state directives are issued.
There remain 300 billion pennies in circulation, significantly more than are needed for commerce, according to the U.S. Mint. Still, retailers in some areas of the country have experienced transitory penny shortages due to slowed circulation.
In a financial world dominated by digital transactions, pennies have waned in popularity at the same time as their production costs have risen. During its last production, one penny cost nearly four times its value to produce.
Synexus Tax Solutions advisors are monitoring developments and stand ready to guide clients in navigating the penny’s final act.
