Cal. Code Regs. Tit. 18, § 1505 - Funeral Directors

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(a) Definitions.

(1) Funeral Director. "Funeral director" means any person or entity that is engaged in providing a burial service or services and may include, but is not limited to, funeral directors, undertakers, morticians, embalmers, or cemetery brokers.

(2) Burial. "Burial" means all 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.

(3) Cash Advances. "Cash advances" means funds paid out to third parties as a courtesy to the client for items that are part of the funeral service but not generally sold by the funeral director.

(b) In General.

(1) Funeral Directors as Retailers. Funeral directors are retailers of caskets, boxes, vaults, and clothing. They are also retailers of any other tangible personal property such as memorial books and digital video discs (DVDs) furnished in connection with rendering their services if a separate charge is made for such property. Tax applies to the sales price of all tangible personal property sold by funeral directors, unless otherwise exempt.

(2) Funeral Directors as Consumers. Funeral directors are consumers of acknowledgment cards, memorial folders, registration books, embalming fluid, cosmetics, eye caps, morgue supplies, car stickers, prayer books, memorial books, and DVDs which are furnished by them in connection with services they render unless a separate charge is made for such property. Tax applies to the sales price of all tangible personal property sold to and consumed by the funeral director.

(3) Example of Application of Tax. In the example below, the burial package includes the basic services of the funeral director and staff, transfer of the decedent to the funeral home, embalming, dressing, cosmetology and placement of the decedent in a casket, facility and staff for ceremony, equipment and staff for committal service, on-line funeral notice, one visitation period, use of hearse, one "life-tribute" DVD, and a premium memorial box set. The client chose to purchase a maple casket and 10 additional DVDs for their family.

Funeral director's invoice to client:

Maple Casket (t..............................................................		..........................$2,895.00
Additional Copies of Life Tribute DVD (t) ($25/ea. x 10)......		..........................$250.00
	Total of Items Subject to Tax................................................	..........................$3,145.00

Traditional Chapel Burial Package..........................................		..........................$4,945.00.

Fees for Cash Advance items:

County filing fee........................................................	..........................12.00
Certified copy of Death Certificate..........................	..........................21.00
Organist.....................................................................	..........................225.00
Total Fees.................................................................	..........................$258.00
Total Nontaxable.......................................................	..........................$5,203.00
Total Taxable............................................................	..........................$3,145.00
Sales Tax ($3,145.00) x 8.25%..............................	..........................259.46
Grand Total...............................................................	..........................$8,607.46

(t) = Tangible personal property

(1) Sales in Interstate or Foreign Commerce. The sale of a casket and other tangible personal property by a funeral director, which is delivered or shipped to an out-of-state point pursuant to the agreement of sale is regarded as a sale in interstate or foreign commerce and is exempt from the tax. The facts that the death of the deceased occurred in this state, that the contracting parties are residents of this state, and that services are held in this state prior to the shipment, are immaterial.

(2) Cash Advances. Tax does not apply to cash advances for such items as cemetery charges, newspaper notices, airplane tickets, ministerial fees, and flowers.

(3) Sales to the United States (U.S.) Government. All or a portion of charges for funerals of veterans and other persons may be paid by the U.S. Department of Veterans Affairs or by the Social Security Administration. Funeral directors may take a deduction for sales to the U.S. Government when claims filed by them with federal agencies are paid directly to the funeral directors regardless of method of billing. If funeral charges are paid by another person, there is no tax exemption even though such person may receive reimbursement from a federal agency and even though the amount received as reimbursement is assigned or endorsed over to the funeral director as a credit against those charges.

In computing the allowable exemption, the funeral allowance and the interment allowance must be treated separately.

(A) Funeral allowance payments received directly from a federal agency are to be prorated between funeral charges for sales of tangible personal property and charges for exempt services. None are to be allocated to cash advances. The only exception will be when a portion of a payment is clearly identified as applying to something for which a funeral director has made a specific charge.

(B) Payments received directly from the U.S. Department of Veterans Affairs which are identified as interment allowances are to be prorated between sales of tangible personal property used in actual interment and charges or advances for services in connection with the interment. The only exception will be when a portion of the payment is clearly identified as applying to something pertaining to interment for which the funeral director has made a specific charge.

(4) Tax-paid Purchases Resold. A funeral director may claim a "tax-paid purchases resold" deduction if the funeral director reimbursed the vendor for tax which the vendor is required to pay to the state or has paid use tax with respect to the property and has resold the property prior to making any use of it.

(d) "Pre-Need" Agreements. Where a funeral director, cemetery association or other person enters into an agreement with a customer to provide services upon the death of the customer, no sale occurs for sales and use tax purposes until the services are rendered.

An amount designated as "sales tax" in the agreement will be considered an estimate of tax which may become due when the services are rendered. No sales tax should be paid to the board in connection with "pre-need" agreements until the services are rendered.

Notes

Cal. Code Regs. Tit. 18, § 1505

1. Amendment and renumbering of former Section 1908 filed 9-18-70; effective thirtieth day thereafter (Register 70, No. 38).
2. Amendment filed 10-31-72; effective thirtieth day thereafter (Register 72, No. 45).
3. Amendment of subsection (b) filed 5-6-74; effective thirtieth day thereafter (Register 74, No. 18).
4. Amendment of subsection (b) filed 6-21-74; effective thirtieth day thereafter (Register 74, No. 25).
5. Amendment of subsections (b)(3), (b)(5), and (c) filed 1-19-79; effective thirtieth day thereafter (Register 79, No. 3).
6. Amendment of subsection (b)(3) filed 5-20-80; effective thirtieth day thereafter (Register 80, No. 21). For technical reasons, printed in Register 80, No. 23.
7. Amendment of section heading and section filed 11-3-2015; operative 1-1-2016 (Register 2015, No. 45).

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6015 and 681, Revenue and Taxation Code.

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