Wisconsin Funeral Directors Association (WFDA) Sales and Use Taxes New Publication 246 June 14, 2016 Dave Steines and Janet Abrams Wisconsin Department of Revenue

Publication 246, Funeral Homes How Do Wisconsin Sales and Use Taxes Affect Your Operations? New publication published in March 2016!

Publication 246 Introduction Nature of Sales and Use Tax Sales by Funeral Homes Occasional Sales Purchases by Funeral Homes Keeping Aware of New Sales and Use Tax Developments Do You Have Questions or Need Assistance

Introduction This publication explains how Wisconsin sales and use taxes affect funeral homes. It includes examples of taxable and nontaxable sales and purchases. The information relates to the state’s 5% sales and use tax. The following may also apply: 0.5% county tax 0.1% baseball stadium tax Note: Prior to October 1, 2015, certain sales and purchases were subject to the 0.5% football stadium tax

II. Nature of Sales and Use Tax The Wisconsin sales tax is a 5% tax imposed on the sales price of retailers making taxable retail sales in Wisconsin. Sales tax does not apply to sales for resale

II. Nature of Sales and Use Tax, cont. Sales tax is imposed on the retailer Retailer is liable to the State for sales tax Retailer may pass the tax along to the consumer or user (customer) Retailer holds tax that it collected in trust for the State Retailer is responsible for reporting and remitting the tax

II. Nature of Sales and Use Tax What sales are subject to sales tax? Tangible personal property Certain coins or stamps Certain leased tangible personal property affixed to real property Certain digital goods These are referred to collectively as taxable products. Specified services (e.g., photographic services)

II. Nature of Sales and Use Tax, cont. What is use tax? Counterpart of sales tax Wisconsin use tax is a tax imposed on the purchase price of taxable products or taxable services that are stored, used, or consumed within Wisconsin, and upon which a Wisconsin sales or use tax has not previously been paid

II. Nature of Sales and Use Tax, cont. If Wisconsin did not have a use tax, persons could buy items in another state to avoid paying Wisconsin sales tax on such purchases Every other state with a sales tax has as use tax

II. Nature of Sales and Use Tax, cont. Examples of when use tax is due: Mail order or Internet purchases Property purchased outside of Wisconsin to be used in Wisconsin Purchases for resale that were used in business

III. Sales by Funeral Homes Charges for funeral services are not taxable Sales of caskets and burial vaults are exempt, including: Caskets and casket rental, even if not used for burial Burial vaults Cremation caskets Cremation boxes and containers used for burial Cremation urns Appliques or medallions sold as part of cremation urn (e.g., permanently glued or screwed to the urn) Cremation urn vaults Outdoor memorials (e.g., sundials, wind chimes, bird baths) used to hold cremated remains Memento chests used to hold cremated remains Casket corner pieces that are as part of the casket (i.e. permanently screwed into the casket)

III. Sales by Funeral Homes Sales of containers that are not caskets or burial vaults are taxable and include: Cremation containers and boxes that are not caskets, unless used for burial Casket inserts used with casket rental and later cremated with the body Scattering memorials used for transportation and scattering remains (i.e., not buried in ground or in water) Miniature urns, jewelry, or other keepsake pieces that hold a small amount of cremated remains Urn bases that hold a small portion of the cremated remains

III. Sales by Funeral Homes Charges for property and services used by the funeral home in providing funeral services are not taxable Items are not transferred to purchaser but used by funeral home Property and services are listed separately on the invoice or statement of funeral services Funeral home is liable for sales or use tax on its purchases of property and services Examples Include: Biers Chemicals for embalming Church trucks Folding chairs Lowering machinery Surgical instruments Exception – Charges for items that are separate and optional from the sale of funeral services are taxable

III. Sales by Funeral Homes Charges for property transferred incidentally with funeral services are not taxable Even if charge for property is listed separately on the invoice or statement of funeral services Property is transferred incidentally if the customer does not have the option to: Receive property for a separate and optional fee, or Obtain the property from another party (or not receive the property) and pay the funeral home a lesser amount Funeral home is liable for sales or use tax on its purchase of property transferred incidentally with funeral services

III. Sales by Funeral Homes Charges for property NOT transferred incidentally with funeral services are taxable Funeral home allows purchaser to choose property for an additional charge Purchaser has the option to purchase the property from the funeral home or someone else (or to not purchase the property at all) and not be charged Funeral home may purchase the optional property without tax by providing its vendor a fully completed exemption certificate, claiming resale

Important Note Sales and purchases by funeral homes of caskets and burial vaults are exempt This is the case regardless of whether the charge by the funeral home for the casket or burial vault is optional to the customer

III. Sales by Funeral Homes Sales of property without funeral services are taxable, unless an exemption applies (e.g., casket for human remains) Sales of cremation diamonds from human remains are taxable Sales of videos and photographs are taxable Exception: Charges for diamonds made from human remains and videos and photographs transferred incidentally with funeral services are not taxable

IV. Occasional Sales A funeral home's sales are exempt occasional sales if certain conditions are met Funeral home does not hold and is not required to hold a Wisconsin seller's permit Either of the following: Taxable sales are less than $1,000 during the calendar year, or Taxable sales are $1,000 or more during the calendar year, but sales are isolated and sporadic and the funeral home is not pursuing a business as a vendor of taxable products and services Different standards apply if the funeral home is a nonprofit organization (Publication 206)

V. Purchases By Funeral Homes Taxable purchases: Property used or transferred incidentally with funeral services Office equipment and supplies Services Internet access services Landscaping services Telephone services

V. Purchases By Funeral Homes Nontaxable purchases: Caskets, cremation urns, and burial vaults Livery Services, unless funeral home is renting or leasing a hearse or coach without a driver Property that is resold to customers

V. Purchases By Funeral Homes Nontaxable purchases: Property that is not transferred incidentally with funeral services (i.e., resold to customers) Nonprofit funeral home holding a Certificate of Exempt Status (CES) number Real property improvements

Part VI. Keeping Aware of New Sales and Use Tax Developments The Department of Revenue's website at www.revenue.wi.gov Subscribe to one or more electronic mailing lists at https://www.revenue.wi.gov/html/lists.html

Part VII. Do You Have Questions or Need Assistance? If you are unable to find an answer to your question about sales and use taxes, email, write, or call the department. Visit our website at www.revenue.wi.gov Email DORSalesandUse@revenue.wi.gov Write Wisconsin Department of Revenue P.O. Box 8949, Mail Stop 5-77 Madison, WI 53708-8949 Telephone (608) 266-2776

Questions?