Section 5103 of Title 31 of the U.S. Code, commonly cited as 31 U.S.C. § 5103, is the federal legal tender statute. It says that U.S. coins and currency, including Federal Reserve notes, are legal tender for all debts, public charges, taxes, and dues.1Office of the Law Revision Counsel. 31 USC 5103 – Legal Tender That is the whole rule. It does not require every business to take your cash, and it does not mention checks, cards, or cryptocurrency. What it guarantees is that U.S. currency is a valid way to settle a debt that already exists.
The Full Text of the Statute
The operative sentence reads: “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.” A second sentence adds that foreign gold or silver coins are not legal tender for debts.2Office of the Law Revision Counsel. 31 U.S. Code 5103 – Legal Tender There is no penalty clause, no enforcement mechanism, and no instruction for what happens when a bill is refused. The statute simply declares what counts.
Congress phrased the list carefully. “Public charges, taxes, and dues” appears alongside “debts” because those government obligations are not technically debts in the private-law sense. They are charges imposed by the state. Grouping them together means the statute reaches both private obligations you owe another person and public obligations you owe the government.
Why the Word “Debts” Does Most of the Work
Legal tender status attaches when a debt already exists. A debt is a sum someone owes someone else, whether from a loan, an unpaid bill, a court judgment, or a contract that has come due. If you owe a creditor $500, that creditor cannot refuse U.S. currency and then turn around and claim you failed to pay.
This is where nearly every misunderstanding of § 5103 starts. Walking up to a counter to buy a coffee is not settling a debt. No obligation exists yet, so the statute has nothing to say about it. The shop can require a card, refuse large bills, or set any payment terms it likes. But if you sit down at a restaurant and receive the bill after the meal, a debt has been created, and at that point U.S. currency is a legally valid way to pay it.3The Fed. Is It Legal for a Business in the United States to Refuse Cash as a Form of Payment?
For government obligations the analysis is simpler. Income taxes, licensing fees, court fines, and tolls fall directly within “public charges, taxes, and dues,” so U.S. currency is a valid tender for those regardless of whether they qualify as debts in the private sense.
When a Creditor Refuses Your Cash
Because § 5103 contains no penalty, it does not directly punish refusal. The consequences come from other law. Under the Uniform Commercial Code, adopted in nearly every state, if you tender payment on an obligation and the creditor refuses, interest on the tendered amount stops accruing from that point forward, and any third parties with recourse rights (co-signers, guarantors) can be discharged to the extent of the tender.4Cornell Law School. U.C.C. 3-603 – Tender of Payment In plain terms: if you try to pay and the creditor says no, the creditor cannot keep piling on interest and late fees for the period after your offer.
A documented tender of U.S. currency can also serve as a defense in a debt collection lawsuit. The debt itself does not vanish. You still owe the money. But the creditor’s ability to collect penalties, fees, and post-tender interest takes a serious hit, and courts view unfavorably a claim of nonpayment when the record shows valid currency was offered and refused.
Why Businesses Can Still Refuse Cash
The Federal Reserve has addressed this question directly: “There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.”3The Fed. Is It Legal for a Business in the United States to Refuse Cash as a Form of Payment? The phrase “legal tender” printed on every bill is what trips people up. It does not mean universal acceptance.
A store can go cashless. A parking garage can require cards. An airline can refuse coins. A gas station can refuse $100 bills. A vending machine operator has no federal obligation to accept dollar coins. None of these scenarios involve a pre-existing debt, so § 5103 does not touch them. Setting payment terms up front is a basic feature of contract law.
State and local law can change that answer. Several jurisdictions now require retail establishments to accept cash, driven by concern for the roughly 6 million U.S. households with no bank account. New Jersey and Massachusetts have statewide cash-acceptance laws, as do a number of major cities. New York’s statewide mandate took effect March 21, 2026, and prohibits most food stores and retail establishments from refusing cash. Exemptions vary by jurisdiction, sometimes covering online-only businesses, membership clubs, or transactions above certain dollar thresholds. Whether a business near you must take cash depends on where you are, not on federal law.
Paying the Government in Cash
Government agencies sit squarely inside the statute’s coverage of “public charges, taxes, and dues,” so they must recognize U.S. currency as valid payment.1Office of the Law Revision Counsel. 31 USC 5103 – Legal Tender The practical mechanics, though, come with restrictions.
The IRS accepts cash tax payments through a network of retail partners, including Walmart, CVS, Walgreens, and 7-Eleven. Each cash payment is capped at $500, with a $1.50 processing fee per transaction. There is no daily limit on the number of payments, but monthly and annual caps apply.5Internal Revenue Service. Pay With Cash at a Retail Partner Paying a large tax bill in cash is possible but slow and fee-laden by design.
Large cash transactions trigger separate reporting. Any business that receives more than $10,000 in cash in a single transaction (or related transactions) must file Form 8300 with the Financial Crimes Enforcement Network within 15 days, send a written notice to the payer by January 31 of the following year, and retain a copy for five years.6Internal Revenue Service. Form 8300 and Reporting Cash Payments of Over $10,000 The rule does not limit your right to pay in cash. It just means the transaction will not be anonymous.
What Is Not Legal Tender
Bitcoin, stablecoins, NFTs, and other digital assets are not legal tender under U.S. law. Section 5103 has never been amended to include them, and no separate statute grants them that status. For tax purposes, the IRS classifies digital assets as property, not currency.7Internal Revenue Service. Digital Assets Spending cryptocurrency triggers capital gains calculations in a way spending dollars does not. No creditor is required to accept crypto for a debt any more than they would be required to accept a used car.
Foreign currency is also excluded. The statute explicitly says foreign gold and silver coins are not legal tender for debts, and no other provision extends legal tender status to euros, pesos, or other foreign currency on U.S. soil.2Office of the Law Revision Counsel. 31 U.S. Code 5103 – Legal Tender Checks, wire transfers, and card payments are not covered either. Their validity depends on agreement between the parties and on banking regulations, not on this statute.
Old and Damaged Bills
All U.S. currency remains legal tender regardless of when it was issued.8The Fed. Do I Have to Trade in My Old-Design Notes When a New One Begins Circulating? A $20 bill from 1963 is just as valid as one printed last month. Old-design notes do not expire, and no one can refuse them for looking outdated.
Damaged currency is different. Mutilated paper currency can be redeemed at face value through the Bureau of Engraving and Printing if clearly more than half of the original note remains along with sufficient remnants of at least one security feature.9eCFR. 31 CFR 100.5 – Mutilated Paper Currency If half or less remains, you can still submit a claim, but you have to show the missing portion was totally destroyed, not just lost. The BEP accepts submissions by mail or in person, and the BEP Director has final authority over redemption.10Bureau of Engraving and Printing. Mutilated Currency Redemption Redemption is denied if the damage appears intentional or connected to fraud.
Common Misreadings of Section 5103
Understanding what the statute does not do prevents most of the frustration around it:
- It does not require anyone to accept cash for a purchase. Only pre-existing debts and government obligations are covered.3The Fed. Is It Legal for a Business in the United States to Refuse Cash as a Form of Payment?
- It does not cap coin denominations. Federal law does not limit how many pennies or nickels can be used to pay a debt, though a creditor’s practical reception may differ.
- It does not give foreign currency any status here. The statute explicitly excludes foreign gold and silver coins from legal tender for debts.2Office of the Law Revision Counsel. 31 U.S. Code 5103 – Legal Tender
- It does not address checks, wires, or digital payments. Those operate entirely under contract law and banking regulation.
The cleanest way to hold § 5103 in your head: it protects your right to pay what you owe in U.S. dollars. It does not give you the right to force anyone into a transaction they never agreed to.