Funeral taxes: California takes its cut from the dead
By Steve Rubenstein
Updated 1:37 pm, Wednesday, April 29, 2015
The state of California is updating its tax code for funeral-related goods.
Death and taxes are just as certain as ever, except that now even more of death could be taxable.
Specifically, a death or “memory” DVD. It’s big business these days in the funeral business. So the state Board of Equalization, which interprets tax law, wants to make sure California is getting its 8.25 percent cut.
The board gave preliminary approval this week to new tax rules about products and services such as memory DVDs and memory books that are increasingly part of modern funerals.
A death video, like death, is complicated. The first copy of the death video — generally a collection of photos, music and recorded tributes that is screened at the funeral — is tax-free and would remain so. Its preparation is considered part of a funeral service and, under state law, funeral services aren’t taxable.
But extra copies of the death DVD that are given to mourners — those are different. Those may not be considered part of the funeral, but would be regarded as “tangible personal property.”
The state gets to collect sales tax on such personal property. So a $25 souvenir death DVD would no longer cost $25 but $27.06.
Clarifying the rules
“We’re trying to consider things about a funeral that were not widely available before,” said board spokeswoman Venus Stromberg. “We’re trying to clarify the rules.”
The same personal property distinction goes for memorial books, another relative newcomer to funerals. The first one would be tax-free, but extras would not.
Sarah Adams, a tax expert for Service Corporation International, a funeral directors group that represents 171 California funeral homes, said specifying that the second death DVD is not the same as the first death DVD makes sense, tax-wise.
“With the acceptance of this, our company can continue to ensure (customers) will not incur any unintentional costs in connection with their funeral service,” she said.
The new rules — an attempt to update the 82-year-old tax code covering the funeral business — specify other taxable elements of death. But some things wouldn’t change.
For example, a coffin that a body goes inside would continue to be taxable. But the embalming fluid that goes inside the body that goes inside the coffin — that would remain tax-free.
That’s because the “consumer” of the embalming fluid is the embalmer, not the dead person, the tax board said.
“This is a grave matter,” board member Diane Harkey told her fellow members, getting into the spirit of the thing.
The board also decided that those little signs that say “funeral” that mourners stick on their dashboards when driving to the cemetery should not be taxable. The “consumer” of those is the funeral director, even if the mourners are the ones doing the driving.
The organist who plays “Amazing Grace” will continue to be tax-free. And the first copy of the death certificate that proves the decedent is not merely dead but really most sincerely dead — that’s tax-free, too. But any extra copies would be taxed.
Thank-you cards provided by the funeral home that the family mails to mourners would be tax-free. The comfy pillow that the corpse rests its head on would be taxable.
Under other changes approved this week, a “burial” will no longer refer only to a burial. It will also include any “legal methods of disposing of the remains of a deceased person including, but not limited to, interment, cremation, burial at sea and medical school donation.”
That means, according to Sacramento, that a dead person could be buried while simultaneously being dissected, incinerated or submerged.
“The term 'burial’ is used for simplicity and easy of reading,” explained Stromberg.
Bob Achermann, executive director of the California Funeral Directors Association, which represents 600 funeral homes, said his members know the difference between a cremation and a burial even if the state of California isn’t sure. If a customer pays to have a loved one cremated, he said, that’s what’s going to happen, no matter how much simplifying the board does.
http://www.sfgate.com/news/article/Funeral-taxes-California-takes-its-cut-from-the-6231681.php“There’s a clear distinction on our part,” he said. “We’re not confused.”
