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I was of the understanding that all governmental bodies inside the US were required to accept all forms of legal tender. In other words, if you owed a $1,000 fine to the federal, state, or local government, you could pay in 100,000 pennies and that governmental body or agency has to accept the payment.

On this page of US Treasury's website, it states only private entities do not have to accept US currency. This would not include any federal, state, or local governmental bodies or agencies.

If this is the case, how can Michigan law 21.153 exist?

Here is an example of a local government not accepting coins as payment in Michigan.

  • I'm not sure what you are asking? Just because they have to accept cash, doesn't mean they can't accept checks or other legal forms of tender. – Ron Beyer Jul 5 at 15:33
  • @RonBeyer The law allows Michigan to exclude coins. This would be a violation of federal law, as I understand it. – Keltari Jul 5 at 16:23
  • Depending on jurasdiction, the use of coins as Legel tender is often limited to a reasonable amount. The Eurozone: 50 coins. In Australia: a maximal amount based on the type of coin. – Mark Johnson Jul 5 at 19:47
  • Your willingness to pay and their willingness to accept payment are two different things, as well. No one can argue in court that you didnt try to render payment. – CogitoErgoCogitoSum 23 hours ago
  • I dont read the michigan law as prohibiting a cash payment, only a coin payment. You could pay in $1 bills if you so chose. Debts to gov. are rarely (if ever) in fractions of a dollar anyway, so it begs the question why anyone would pay in coinage. – CogitoErgoCogitoSum 23 hours ago
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Your understanding of “legal tender” is flawed

There is plenty of case law to show that governments can place reasonable restrictions on payment by legal tender up to and including excluding it entirely. Picano v Borough of Emerson explains this very succinctly:

Finally, there is no basis for concluding that defendants violated 31 U.S.C. § 5103. Section 5103 provides that "United States coins and currency . . . are legal tender for all debts, public charges, taxes, and dues." None of the cases cited by plaintiff stands for the proposition that § 5103 requires a local government (or any other entity) to accept payment in cash, and no court has so held.

The refusal by governments to accept pennies (or any other small denomination) has withstood challenge multiple times. 31 U.S.C. § 5103 does not create a requirement to accept cash.

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  • Im marking this is as correct, but I am curious. If the state can say it is unreasonable to accept lots of pennies, why are there so many instances of government agencies allowing it. Take the article I cited above as an example. That would be the perfect time to say no. – Keltari Jul 7 at 0:32
  • Another bad ruling not based on law but based on what is most convenient for the state. – CogitoErgoCogitoSum 23 hours ago
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As is so often the case with law, it's all about interpretation.

American courts take a variety of approaches to reading statutes. Sometimes, courts look only at the text of the statute. And sometimes, they go beyond the text, and consult such sources as the intentions of the legislature, the purpose of the law, or decisions in earlier cases.

Here are some of the ways these approaches have been used to interpret §5103:

1) Text: The justification to sticking to the words of the text is simple: The text is the law. It is what legislators voted on, and what citizens can read.

Focusing on text does not mean reading the text literally. As the architect of the new textualism, Justice Scalia, said: “A text should not be construed strictly, and it should not be construed leniently; it should be construed reasonably, to contain all that it fairly means.”

Here are some examples of how the words of §5103 have been read to limit the scope of the statute:

a) When the text says “all debts, public charges, taxes, and dues,” it means exactly that: debts, not rents, not purchases, and so on. Thus, both the Treasury and Federal Reserve claim "debts" do not mean ”payment for goods or services.”

b) Since §5103 does not provide any punishment for not accepting legal tender, it is merely defining legal tender.

c) The statute says nothing about the form of payment. A check is not a substitute for cash. It is, as one court put it, “a promise of payment in legal tender, upon presentation of the check to a bank.”

B) Intention of Congress: When Congress passes a statute, it intends the words to mean something. Statutes should be read in light of those intentions, real or imagined. For example, one court said:

"First of all, it strains logic that Congress would have intended the statute to preclude a payee from limiting the locations where certain types of cash payment may be made."

C) Purpose of the statute: In the United States, law must serve the public good, it must solve some public problem. When interpreting statutes, judges should further the public good by asking what problem the law is trying to solve. Any interpretation that does not help solve the problem, or creates more harm than good, does not serve the public good, and should be rejected.

Thus, one court said, “the absolute language of the legal tender statute is clearly modifiable by the necessary consideration of what is reasonable under the circumstances.”

Similarly, the IRS interprets §5103 as allowing it to accept cash only at some locations, so as to reduce embezzlement and other frauds.

D) Precedent & Practice: If the law can be interpreted in different ways, the courts should follow earlier interpretations so the law is stable. If the courts choose the wrong interpretation, legislatures can always pass a statute correcting the courts.

Many of the decisions in this area rely on precedent.

ADDED: Theories of statutory interpretation

As George points out in the comments, many would say that judges should not look beyond the words of the text when reading a statute. However, as a matter of fact, they do.

For more details about the approaches I discuss, see Sec II here for a short, relatively non-lawyer friendly discussion, and Sec I here for a longer, more academic lawyerly discussion.

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    "When interpreting statutes, judges should further the public good by asking what problem the law is trying to solve." That seems like a good idea to me but I do not think it is the law. Judges may primarily look at the text of the law and not the intended purpose/legislative history which may be hard to ascertain and contradictory. For a textualist, congressional intent is almost irrelevant. – George White Jul 6 at 20:49
  • George, thanks! People have been arguing about hermeneutics, the science of interpreting texts, for a long time. In 1584, Edward Coke invoked the Mischief Rule (what I call purpose) in his decision in Heydon's Case. In 1621, the poet John Donne argued for textualism in reading scripture. Donne, a good Protestant, sounded like Scalia: "It is the Text that saves us; the interlineary glosses, and the marginal notes... controversies and perplexities, undo us.” – Just a guy Jul 6 at 22:12

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