NC Department of Revenue Issues Guidance on Cash Rounding Amid Penny Shortage
The North Carolina Department of Revenue (NCDOR) has issued new guidance addressing how retailers should handle cash transaction rounding following the U.S. Mint’s decision to halt production of the one-cent coin.
On November 12, 2025, the U.S. Mint announced it had produced its final penny for circulation, leading to a growing nationwide shortage. In response, many North Carolina retailers have begun rounding cash transactions to the nearest five-cent increment. The NCDOR’s directive clarifies how this practice affects—and does not affect—sales and use tax obligations.
Sales Tax Calculations Remain Unchanged
According to the NCDOR, after-tax rounding of cash transactions does not change the amount of sales and use tax due. Retailers must continue to calculate sales tax based on the full, unrounded sales price or gross receipts.
The Department observed two rounding approaches currently in use:
Symmetrical rounding, where totals are rounded up or down to the nearest $0.05, and
Rounding down only to the nearest $0.05.
In both cases, rounding occurs after sales tax is calculated, and the rounding adjustment does not increase or decrease the tax owed to the state.
Cash-Only Guidance
The directive applies exclusively to cash transactions. Non-cash payments—including credit cards, debit cards, electronic payments, checks, gift cards, and transactions involving exact change—are unaffected.
North Carolina’s existing tax calculation rules also remain in place. Sales and use tax must still be computed to the third decimal place and rounded to the nearest cent. Retailers may calculate tax on an item or invoice basis, with rounding applied to the aggregate tax due. All collected taxes must be reported and remitted in full.
Recordkeeping Still Required
The Department emphasized that standard recordkeeping requirements continue to apply. Retailers that round cash transactions must maintain records documenting those adjustments. This may include updating point-of-sale systems to reflect rounding on customer receipts and within internal accounting records.
What This Means for Accountants
For North Carolina accountants and CPAs, the guidance confirms that the penny shortage introduces no substantive change to sales tax reporting or compliance. Rounding is treated solely as a payment adjustment, not a modification of taxable sales or tax liability.
Practitioners should ensure that clients:
Apply rounding only after tax is calculated,
Do not adjust taxable sales or tax due to account for rounding, and
Maintain clear documentation to support their reporting positions in the event of an audit.
You can access The NCDOR’s full directive here.If you have questions about this issue or other policy matters, please contact NCACPA Coordinator of Advocacy & Outreach Will Edmondson.