Must U.S. Merchants Accept All U.S. Currency?

Is it legal for stores to say things like "We don't accept bills over $20"?

I was actually inspired to look this up because in an episode of "30 Rock", Liz Lemon tried to pay for a bottle of water with a $100 bill, and it sparked the following dialog:

Cashier:	No $100s, Small bills.
Liz:	Oh, I knew this was gonna happen.
Cashier:	Store policy.
Liz:	Yeah, Well, That's an illegal policy. You have to take this.
Cashier:	No, I don't
Gray:	Yeah sir you do, it says "legal tender for all debts, public and private."
Cashier:	Does it say anything about $100 for a bottle of water?
Gray:	You can't decide what money you'll accept. That's illegal.
Liz:	It's an illegal policy.
Cashier:	You're holding up the line!
Liz + Gray:	No, You're holding up the line!

Here's what the Federal Reserve says about it:

Is U.S. currency legal tender for all debts?

According to the "Legal Tender Statute" (section 5103 of title 31 of the U.S. Code), "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." This means that all U.S. money, as identified above, when tendered to a creditor legally satisfies a debt to the extent of the amount (face value) tendered.

However, no federal law mandates that a person or an organization must accept currency or coins as payment for goods or services not yet provided. For example, a bus line may prohibit payment of fares in pennies or dollar bills.

Some movie theaters, convenience stores and gas stations as a matter of policy may refuse to accept currency of a large denomination, such as notes above $20, and as long as notice is posted and a transaction giving rise to a debt has not already been completed, these organizations have not violated the legal tender law.

Isn't that interesting? They only have to accept all bills if the goods or services have already been provided! So Liz Lemon was wrong (sorry, Tina!) in the water bottle case, but if she tried to pay for a haircut she just got or for a meal she just ate, she could have paid in $100s or pennies and they'd have to take it. Good to know!