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BTLG Table of Contents > Sales and Use Tax Regulations > Article 1 > Regulation 1505

Sales And Use Tax Regulations

Title 18. Public Revenues
Division 2. California Department of Tax and Fee Administration — Business Taxes (State Board of Equalization — Business Taxes — See Chapters 6 and 9.9)
Chapter 4. Sales and Use Tax

Article 1. Service Enterprises

Regulation 1505

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Regulation 1505. Funeral Directors.

Reference: Sections 6015 and 6381, Revenue and Taxation Code.

(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.

(t) = Tangible personal property

(c) Application of Tax to Specific Types of Transactions.

(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.

History—Effective August 1, 1933.

Adopted as of January 1, 1945, as a restatement of previous rulings.

Amended and renumbered September 16, 1970, effective October 18, 1970.

Amended October 25, 1972, effective November 30, 1972.

Amended May 1, 1974, effective June 5, 1974.

Amended May 1, 1974, effective July 21, 1974. Noted additional interment allowance from U.S. Veterans Administration and illustrated effect on computation of tax exempt sales to federal government.

Amended December 7, 1978, effective February 18, 1979. Subsection (b)(3) and (c) amended to delete language on excess tax reimbursement and subsection (b)(5) with regard to "tax-paid purchase resold" was reworded.

Amended April 9, 1980, effective June 19, 1980. In (b)(3), Examples 1 and 2, substituted "$300" for "$250," "$180" for "$150," for "$125" and revised the computations accordingly.

Amended September 16, 2015, effective January 1, 2016. Renamed the regulation from "Morticians" to "Funeral Directors" and updated throughout all the references to "mortician" and "morticians" to refer to "funeral director" and "funeral directors," respectively; added a new subdivision (a) to include definitions for the terms "funeral director," "burial," and "cash advances," and renumbered the current subdivisions. In renumbered subdivision (b)(1) added the phrase "such as memorial books and digital video discs (DVDs)" in the first sentence; deleted the phrase "Unless otherwise exempt" from before "tax," and moved it to the end of the last sentence. In renumbered subdivision (b)(2), added "memorial books, and DVDs" in the first sentence; deleted the phrase "to the mortician" and added "sold to and" in the last sentence. Added new subdivision (b)(3). Added new subdivision (c)(2), renumbered current subdivision (b)(2) as subdivision (c)(3), and added "(U.S.) Government" to the title of renumbered subdivision (c)(3). In the first paragraphs of subdivisions (c)(3) and (c)(3)(B) replaced "United States Veterans Administration" with "U.S. Department of Veterans Affairs"; deleted former subdivisions (b)(3) and (4) and renumbered current subdivision (b)(5) as subdivision (c)(4).