Apparently, there is some history and legality for not accepting small coins and bills. The federal limit was removed in 1965, however, and businesses must post their legal-tender-exceptions prominently.
That would not, I believe, apply to a governmental entity.
Up until the late 19th century, pennies and nickels weren’t legal tender at all. The Coinage Acts of 1873 and 1879 made them legal tender for debts up to 25 cents only, while the other fractional coins (dimes, quarters, and half dollars) were legal tender for amounts up to $10. This remained the law until the Coinage Act of 1965 specified that all U.S. coins are legal tender in any amount. However, even in cases where legal tender has been agreed to as a form of payment, private businesses are still free to specify which forms of legal tender they will accept. If a shop doesn’t want to take any currency larger than $20 bills, or they don’t want to take pennies at all, or they want to be paid in nothing but dimes, they’re entitled to do so (but, as mentioned earlier, they should specify their payment policies before entering into transactions with buyers). Businesses are free to accept or reject pennies as they see fit; no law specifies that pennies cease to be considered legal tender when proffered in quantities over a particular amount. (Snopes)
I’ve never heard of the penny-and-nickel exception; which is not surprising, since it expired 5 years before I was born.
I mean, at least 5 years before I was born. WHO KNOWS.
