As pennies disappear, proposed rules could round sales to the nearest nickel in NYS

ALBANY — New Yorkers may soon be able to say goodbye to the penny.

State lawmakers are pushing to require businesses and municipalities to round cash transactions to the nearest nickel after the federal government stopped making pennies last year, citing the cost.

Bills being proposed in the Senate and Assembly aim to provide guidance to businesses and municipalities that, for example, need to collect taxes.

"There was no guidance provided by the federal government to, in particular, businesses, but also municipalities about what to do if there’s a transaction that ends in a one, two, three, four, six, seven, eight or nine," Sen. James Skoufis (D-Cornwall), the bills’ sponsor, told Newsday. "If enacted, these bills would effectively put an end to the usage of pennies in New York State by rounding all transactions."

The U.S. Department of the Treasury largely points to guidance from the National Conference of State Legislatures, which suggests a model similar to the one being proposed in New York.

There are two bills, one addressing municipal property tax collections and one for business sales, both of which would require transactions paid in cash or coins to be rounded to the nearest amount divisible by five.

If the total ends in 1 , 2, 6 or 7 cents, it would be rounded down. Transactions ending in 3, 4, 8 or 9 cents would be rounded up. Transaction totals would include sales or other taxes. The bills do not apply to transactions of 4 cents or less or those being paid electronically.

Clear standard

The bill related to businesses is based on a European model, said its sponsor, Assemb. John McDonald III (D-Cohoes). "We want a standard ... there really should be clarity, not confusion," he said.

The bills would not only save time for consumers and businesses, but also eliminate the hidden costs of handling pennies, Assemb. John Mikulin (R-Bethpage) said in an emailed statement. "Setting a clear rounding standard now gives businesses and consumers the certainty they need and keeps transactions simple, fair, and predictable," he said. 

The real cost impact of rounding transactions would be "nearly unnoticeable," he said.

But some business groups say the decision should be left up to business owners.

"While the state legislation is well-intentioned, businesses should have the flexibility to determine how to operate without the penny themselves in a way that works best for their company and customers," Stacey Sikes, acting president and CEO of the Long Island Association, told Newsday.

Penny scarcity

Other business leaders say the need for guidance will only grow with penny scarcity and as states take different actions to address the copper coin's retirement.

"The lack of guidance is making it really hard for us to advise our members on how best to do it," Alison Ritchie, president of the New York Association of Convenience Stores, told Newsday. "I think this is the best way to make sure that we can all be in compliance with what is right."

It’s important legally, said Ken Pokalsky, vice president of government affairs for the Business Council of New York State. "People need a legal standard that they can rely on to protect themselves from someone after the fact challenging them."

It’s an issue both Democrats and Republicans appear to agree on, particularly as the use of credit and debit cards and electronic transfer apps increases.

Pennies are "more of a nuisance than a useful form of currency," Mikulin said. "They pile up in jars, slow down checkout lines and cost businesses time and money to handle, count and deposit. In an ever-digitizing world, they represent an unnecessary burden."

Pennies, which were first issued in 1793, now cost 3.69 cents to make, according to the U.S. Mint.

Skoufis said he agrees with Republican President Donald Trump, who directed the Treasury to stop making pennies.

"I’ve long felt this, that the penny has been rendered basically useless and factually, basically worthless in the sense that it costs a lot more to actually mint these pennies," he said.