Lobby now for changes in streamlined sales tax Cemeteries and funeral homes will have to track point of ‘final delivery’
by guest columnist Robert Topp
This month’s column provides an important update on the status of the Streamlined Sales Tax Act, discusses the potentially adverse impact it may have on the business operations of ICFA members and recommends that members contact their respective state associations and state legislators to express their concerns.
In an earlier column (January 2004) I discussed the status of the Streamlined Sales Tax Project, which currently involves 42 states and the District of Columbia. As of April 2004, 20 states have enacted all or parts of the act. The project is now completing a review process to verify compliance, with the expectation that the act will become effective as of October 1.
The most egregious provision impacting funeral homes and cemeteries is the manner in which transactions are to be sourced. Under the act, sourcing occurs at the point of final delivery. Final delivery will determine the taxability of sales as well as the proper sales tax rate to charge.
Historically, most funeral and cemetery transactions have viewed the location of the funeral home or cemetery making the sale as the point of final delivery. This has provided consistent reporting that is simple to compute, explain to customers and report to the taxing jurisdiction(s).
That simple, easy life is about to change—and change for the worse. As currently interpreted, future transactions will consider the point of final delivery to be:
• Morgue, hospital, nursing home or residence for pick-up of deceased.
• Cemetery for sales of vaults, markers, monuments, etc.
• Crematory for crematory services occurring at a crematory remote from your funeral home or cemetery.
• Mailing address for any miscellaneous items delivered via shipment.
• Remote funeral home for ship-outs.
• Remote funeral home for caskets sold without services.
This means that for the above transactions, businesses will be required to track the zip+4 associated with the point of final delivery, which will be used to determine taxability and sales tax rates for future transactions. If the point of final delivery occurs in another state, county or city, the seller will be required to know and understand how those rules apply to the transactions.
Because the act is still being interpreted, our members have a significant opportunity to influence its application to cemeteries and funeral homes. I implore you to take a moment and become an advocate for your profession. Contact your state association and/or your state legislators and:
1. complain about the fact that The Streamlined Sales Tax Act is going to adversely effect your business;
2. explain that current interpretations of the Streamlined Sales Tax Act unnecessarily complicate your business and will confuse your customers;
3. say that a special rule should be enacted that recognizes that funeral and cemetery sales are delivered at the funeral home or cemetery location; and
4. ask that they contact their delegate(s) to the Streamlined Sales Tax Implementing States to request that cemeteries and funeral homes be given a special rule that more reasonably interprets the act.
Robert Topp is the ICFA representative to the Streamlined Sales Tax Project. He is available to answer questions or to discuss these issues with you, your state associations or your advisors. Topp’s previous column on this topic is available by clicking here. Topp can be reached at 713.525.5571.