Texas Sales Tax Audit for Funeral Cemetery
Sales Tax on Funeral Services
Sales tax is deemed payable when the funeral service company makes their initial purchase of a tangible item in relation to the funeral service.
Thus, morticians are required to pay sales tax at the time of purchase of all tangible personal property used, consumed, or furnished in the rendering of funeral services, regardless of whether the mortician states a separate charge for the item.
The mortician is the consumer of all tangible personal property used, consumed, or furnished to the customer in rendering funeral services, regardless of whether or not a separate charge is stated for any such item.
As the consumer, the mortician is required to pay the appropriate amount of tax at the time of purchase of all such tangible personal property used, consumed, or furnished in the performance of services.
Sales of Tangible Items by Morticians
If a mortician sells caskets, boxes, vaults, or other individual items of tangible personal property separately from an agreement to render funeral services, the mortician becomes a retailer and is required to have a limited sales tax permit. The mortician must collect and report the tax on the agreed price of all such tangible personal property sold.
Resale certificates may be given in lieu of the tax at the time of purchase only on those individual items purchased for resale.
Monument Builder’s Provisions
Contractor Status
Monument builders are contractors when they install memorials such as tombstones, vaults, and similar items. The provisions of §3.291 of this title (relating to Contractors) apply to their operations.
Retail Sales of Manufactured Products
When a monument builder sells a product and no installation is provided, the total charge for the product is taxable. In this instance, the monument builder is a manufacturer making a retail sale of the manufactured product.
Need Help with a Sales Tax Audit?
Facing a sales tax audit in Texas? Contact our attorney for a consultation.
Frequently Asked Questions
Do morticians have to pay sales tax on funeral items they provide, even if they charge separately?
Yes. Morticians are considered the end consumers of all tangible personal property used or furnished in the course of funeral services. Even if a separate charge is made to the client, the mortician must pay sales tax at the time of purchase.
Can morticians resell items like caskets without paying sales tax on them?
Yes, but only if the items are sold separately from the funeral services agreement. In such cases, morticians become retailers, must hold a sales tax permit, and are allowed to issue resale certificates at the time of purchase.
Are monument builders treated the same as morticians for sales tax purposes?
Not exactly. Monument builders are treated as contractors when they install items such as tombstones or vaults. Their operations fall under different state rules applicable to contractors, specifically Texas Rule §3.291.
When is sales tax charged on products sold by monument builders?
If a monument builder sells a product like a headstone without providing installation, the entire charge is taxable. This is considered a retail sale of a manufactured product.
What should I do if I’m facing a sales tax audit in Texas?
If you’re undergoing a Texas sales tax audit related to funeral or cemetery services, it’s advisable to contact an experienced attorney who can guide you through compliance and defense strategies.