Killing the Penny Sounds Easy. The Compliance Mess Behind It Isn’t.

What’s Happening

New York’s Common Cents Act gives us a preview of the post-penny world. The bill forces merchants to round the final total of any cash purchase to the nearest nickel. One or two cents round down. Three through nine cents round up. Card payments stay the same.

Sounds simple. It’s not.

Why It Matters

Sales tax is still calculated before rounding. That means a customer paying cash might see a different final total than someone paying by card. Multiply that across thousands of daily transactions and you get mismatched records, confused customers and reconciliation headaches for finance teams.

This already happened in Canada when they killed the penny in 2013. Their solution was simple. Tax first. Round after. The U.S. has not clearly adopted the same rule yet, and early proposals leave lots of questions unanswered.

Where Compliance Gets Messy

Two totals for the same purchase is a problem. One for cash. One for digital. It sounds small, but it creates questions around consumer protection, customer service, audit trails and how to report these differences.

Retailers need rounding rules that are consistent with tax law, friendly for customers and easy for accounting teams to reconcile. That’s harder than it looks.

The Bigger Risk: Fifty Different Rounding Systems

The U.S. already has more than thirteen thousand sales and use tax jurisdictions. If every state creates its own rounding rule, multistate retailers will be buried in complexity. It adds another layer of risk on top of economic nexus, tax holidays, local surtaxes and already complicated reporting.

A national standard would help. Getting states, cities and Congress to agree on one is a different story.

Why Accountants Should Care

For accountants, this isn’t about pennies. It’s about process. Removing a coin means
• new rounding logic
• new audit trails
• updated POS and ERP systems
• new reconciliation steps
• new reporting formats

Everything has to show the pre rounding total, the post rounding total and clean documentation for auditors. Even tiny inconsistencies between systems can break tax filings.

And cash still matters. The Federal Reserve says 83 percent of Americans used cash at least once last month, and 18 percent of in person transactions are still cash based. That’s millions of daily transactions affected.

A Call for Coordination

Killing the penny could save money, but if states rush into this without a plan, it will create far more waste somewhere else. Revenue agencies, retailers and tech vendors need to align on clear rounding rules before anything becomes law.

Handled right, this could modernize compliance. Handled wrong, it becomes another layer of chaos in an already chaotic sales tax world.

FAQ

Why does rounding matter for sales tax
Because sales tax must be calculated before rounding, so cash and card totals can differ.

Will card payments change
No. Only cash totals get rounded.

What did Canada do when it removed the penny
Canada kept tax math the same and rounded only the final cash total, which reduced disputes.

How would this affect accounting systems
POS, ERP and tax engines must all use identical rounding rules to avoid mismatched records.

Is a national rule likely
Possible, but difficult. States already disagree on almost everything related to sales tax.

Summary

The penny costs too much to make, so retiring it makes financial sense. But the ripple effect across sales tax, accounting and compliance is huge. If states don’t align on a single rounding rule, businesses will face new confusion, new audits and new operational headaches.