Informal Opinion No 84-7

US CONST, Art I, § 10, C1 1; 31 U.S.C. § 5103.

A county may accept Federal reserve notes in payment of county taxes.

Dennis V. Tobolski, Esq. County Attorney, Cattaraugus County

You informed us that a taxpayer has taken the position that payment of taxes in any form other than gold and silver coin violates Article I, § 10, cl 1 of the United States Constitution. You ask whether a county may accept Federal reserve notes in payment of county taxes.

Article I, § 10, cl 1 provides: "No State shall * * * make any Thing but gold and silver Coin a Tender in Payment of Debts * * *." This provision prohibits states from declaring legal tender anything other than gold and silver but does not limit Congress' power to declare what shall be legal tender for all debts ( Juilliard v Greenman, 110 U.S. 421, 446; United States v Rifen, 577 F.2d 1111 [8th Cir, 1978]; Chermack v Bjornson, 223 N.W.2d 659 [S Ct, Minn, 1974] cert den 421 U.S. 915). Nor does it preclude a state from requiring that payment of a debt be made in any form of tender authorized by the Federal government ( Chermack, supra; Richardson v Richardson, 332 N.W.2d 524 [Mich App, 1983]; City of Colton v Corbly, 323 N.W.2d 138 [S Ct, SD 1982]; Leitch v State Department of Revenue, 519 P.2d 1045 [Or App, 1974]).

Under its power to borrow money on the credit of the United States, and to issue circulating notes for the money borrowed, Congress is authorized to establish a national currency, either in coin or in paper, and to make that currency lawful money for all purposes, as regards the government or private individuals ( Juilliard v Greenman, supra, at 448). Congress has, in fact, declared what constitutes legal tender in addition to gold and silver coin. 31 U.S.C. § 5103, entitled "Legal tender", provides:

"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 * * *." (Emphasis supplied.)

Federal reserve notes are on an equal basis with other currency, including coins, and constitute legal tender for payment of taxes and debts ( 31 U.S.C. § 5103; United States v Schmitz, 542 F.2d 782 [9th Cir, 1976], cert den 429 U.S. 1105; United States v Benson, 592 F.2d 257 [5th Cir, 1979]; State v Gasser, 306 N.W.2d 205 [S Ct, ND, 1981]). Thus, a requirement by a state that taxes and debts be paid with Federal reserve notes does not violate the prohibition of Article I, § 10, cl 1 of the United States Constitution.

We conclude that a county may accept Federal reserve notes in payment of county taxes.