The U.S. Mint has stopped producing the penny for circulation. Pennies remain legal tender, but the supply is shrinking, and there is no federal standard for how retailers should handle cash transactions without one-cent coins. For most retailers, this is a minor inconvenience. This change may seem trivial, and indeed, it may have limited effects on dealers because of the relatively limited acceptance of cash at the dealership. However, as the penny stockpile decreases, there can be real compliance issues that affect advertising, sales tax, TILA, cash acceptance laws, and DMS configuration.
What Changed and What Did Not
The U.S. Mint stopped producing pennies because each one costs more than a cent to manufacture. Existing coins remain valid, but no new supply is entering circulation. There is also no federal guidance on how to round cash transactions and no federal requirement that private businesses accept cash. State laws continue to control these issues, and none of the underlying pricing and disclosure rules have changed.
Why Rounding Matters for Dealers
Dealership sale and lease transactions rely on precise cent-level calculations. Advertised prices must match the amounts charged. Fees must match what appears on the buyer’s order and contract. Taxes must be calculated exactly under state rules. Cash and non cash buyers must be treated generally equally, and regulators often consider even small inconsistencies that favor the dealer to be deceptive.
How to Round in a Compliant Way
So what should a dealer do when a charge for a dealership product or service results in an amount “down to the penny” but pennies are no longer available? Bottom line – if its a cash transaction and pennies aren’t available, you need to round DOWN to the nearest nickel, not up.
In the sale or lease context, a dealer’s rounding method cannot increase the amount the customer owes under the contract. TILA requires that the amounts printed on the contract match the customer’s actual legal obligation, which means a dealer cannot ever round up a cash total beyond the cent-level amount disclosed. Doing so would create a TILA disclosure error.
A compliant approach should follow these principles:
- Do not round individual line items. All advertised prices, doc fees, government fees, add ons, taxes, and discounts must remain listed to the cent.
- If you need to round – you should round to the lower multiple of 5 – or nickel. And you should round only the final cash total after all fees and taxes have been calculated.
- Do not round up. The only legally safe direction is rounding down, since the dealer may accept slightly less than the disclosed amount but cannot collect more than what appears on the contract.
- Apply rounding only to cash payments. Electronic and card payments, along with all non-cash lease and finance transactions continue to settle to the exact cent.
- Disclose the policy in writing so customers understand that any rounding will only reduce their cash amount owed and will not increase it.
This approach prevents TILA violations, avoids UDAP exposure, and keeps the transaction aligned with the customer’s exact legal obligation.
UDAP and Cash Acceptance Risk
If a dealer’s rounding method causes cash buyers to pay more than card buyers, that can be treated as discriminatory or deceptive under state UDAP or consumer protection laws.
In addition, some states require acceptance of cash for in-person transactions, and others require equal treatment of cash and non-cash customers. A rounding method that increases what cash customers pay can be viewed as a hidden fee. A written policy (that you follow) to “round down” avoids these issues and ensures consistent treatment of all customers.
Sales Tax and Government Fees
State revenue agencies still require tax to be calculated to the cent and remitted exactly under existing rules. The discontinuation of the penny does not change any state’s tax calculation method. Rounding should only occur after tax has been calculated and only on the final cash amount collected.
TILA Compliance
The elimination of the penny does not change the Truth in Lending Act. All credit disclosures, including finance charges, APR, itemization of the amount financed, down payments, and fees, must still be exact to the cent. A TILA issue arises if the amount the customer actually pays in cash no longer matches the amount printed on the contract. If the contract lists a down payment of $4,000.02 but the dealer collects $4,000.00 after rounding, this is permitted because the dealer is accepting less than the disclosed amount. If the dealer collects $4,000.05 instead, this is not permitted because it exceeds the customer’s legal obligation. Rounding must never result in collecting more than the disclosed total.1
Systems, Training, and OEM Considerations
A rounding policy affects every part of the dealership’s workflow. DMS and menu systems must preserve cent-level accuracy and apply rounding only to cash receipts. Online checkout tools should explain that rounding may occur at delivery. OEM programs that require adherence to advertised prices must still be followed, and rounding cannot change the effective price. Staff must know how to explain the policy clearly and must apply it consistently. Accounting must appropriately record the “rounding” transactions to ensure accurate books. Regular audits should confirm the process is working correctly.
- Note on Regulation Z Tolerances: While TILA (12 CFR § 1026.22) allows a tolerance of 1/8 of 1 percentage point (0.125%) for the Annual Percentage Rate (APR) disclosure, this tolerance does not explicitly apply to the Down Payment or Amount Financed figures themselves. An error in the down payment amount changes the Amount Financed, which effectively changes the APR. Although a $0.02 variance is mathematically unlikely to push the APR outside the 1/8% tolerance, relying on this margin is not a compliant strategy for cash handling. Disclosures should always reflect the exact legal obligation. ↩︎