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ST 2006-01- Sales and Use Tax: Funeral Transactions - Issued October 2006

The Sales and Use Tax Division of the Ohio Department of Taxation is proposing to adopt an amendment to rule 5703-9-32 of the Ohio Administrative Code dealing with the application of the Ohio sales and use tax to funeral transactions. Prior to adopting it, the Ohio Department of Taxation (ODT) is seeking public comment on the draft of that rule. Public comment on this rule should be addressed to:

William Riesenberger

Counsel, Sales and Use Tax Division

Phone: 614-466-4810

FAX:   614-995-5797

E-mail: william_riesenberger@tax.state.oh.us

Please make any comments directly related to this proposed rule by the end of the business day on October 27, 2006.

Reason for rule. The Tax Commissioner is taking this action to modernize the existing rule to more accurately reflect current funeral practices and to revise the treatment of limousine service provided as part of a funeral transaction to more accurately reflect the fact that tax is imposed on the intrastate transportation of persons.

Draft of Rule 5703-9-32 Sales and Use tax: Funeral Transactions Morticians.

(A)  Morticians and funeral directors are the retailers of the following all items of tangible personal property and taxable services which must be separately stated in the billing and tax collected on the full selling price:. Examples of such tangible personal property and services include, but are not limited to:

(1) Clothing

(2) Vaults – all kinds

(3) Outside containers (except pine box furnished with casket)

(4) Flowers (Not including the Door Piece or Badge)

(5) Caskets

(6) Urns or other containers for ashes from cremation

(7) Limousine service if entirely within Ohio

(8) Guest books and prayer cards

(B) Morticians render the following Personal and professional services which may be that are not subject to tax should be stated separately itemized and on which no tax shall be collected: from the taxable tangible personal property and services in the billing.  Examples of nontaxable personal or professional services include, but are not limited to:

(1) Funeral notices

(2) Gratuities to clergyman and pallbearers, churches, etc.

(3) Cash advances

(4) Charges for all limousines exceeding two in number (charges for the first two limousines shall be included in the complete funeral charge) Embalming and care of the remains

(5) Transportation of the remains

 

(6) Cremation

 

(7) Use of the funeral home or chapel for showing or services

(8) Counseling or other professional services

(C) All other charges, such as the charge for a complete funeral service including casket complete, door pieces or badges, embalming and care of the remains, hearse, two limousines or less, use of funeral chapel and establishment and professional service, shall be totaled in determining the complete funeral charge and the tax computed on fifty percent of the balance.

Morticians and funeral directors are the consumers of such articles as embalming fluids, cosmetics, various items or instruments used in embalming all items of tangible personal property or any taxable services used in performing their personal or professional services and shall pay the tax on the purchase of such articles.  Examples of such items include, but are not limited to:

(1) Embalming fluids, cosmetics, and instruments used in preparation of the remains

(2) Crematory equipment and supplies

(3) Funeral home or chapel furnishings

(4) Motor vehicles used for transporting the remains

In those cases where cremation is to be substituted for burial, the same rules apply as to taxability, except where no casket or articles of tangible personal property are furnished, in which case service only is supplied and no tax shall be collected.

(D) Cemetery associations are vendors of all items of tangible personal property sold such as vaults, and markers, including grave and lot markers, and are responsible for the collection of the tax on taxable transactions.

(E) If the casket and remains are to be shipped to a point outside the State, no Ohio tax shall be collected by the Ohio mortician or funeral director for the tangible personal property shipped.