State's funeral directors claiming sales tax refunds

JEFFERSON CITY, Mo. -- A recent ruling by an administrative judge could allow funeral directors to claim millions of dollars for sales taxes paid on caskets, burial vaults and concrete grave liners.

Karen Winn, a member of the state Administrative Hearing Commission, ruled that the items are not tangible personal property because they are sold after they are buried in the ground. Fixtures that are part of the land are not subject to sales tax.

While the case is being appealed to the Missouri Supreme Court by Missouri Attorney General Jay Nixon, funeral homes are continuing to charge taxes on caskets and burial containers because the businesses are liable for the taxes if they lose the case.

Consumers, meanwhile, aren't benefiting from the ruling because funeral homes are not required by state law to return the sales taxes to the families who paid them.

Since the August ruling, about 20 funeral homes have applied for refunds totaling $685,000, said Stan Farmer, director of the Missouri Division of Taxation and Collection. Businesses can apply for refunds of taxes going back three years.

Farmer said 335 funeral homes are registered to pay sales tax in the state, so "clearly we'll be in the millions" of dollars if most seek refunds.

For families, the sales tax can add perhaps $225 to the funeral bill, assuming a 7 percent tax on a $2,400 casket and $800 burial container. The state tax rate is 4.225 percent; local taxes are applied on top of the state rate and vary by municipality.

'A mess for us'

"It's actually kind of a mess for us," said Jeffrey Stygar, president of the Missouri Funeral Directors Association and secretary-treasurer of Stygar Family of Funeral Service in St. Charles County. He said funeral directors are considering different options for the money. "Some may give it back, some may decide to keep it, some may give it to charity," he said.

Buchholz Mortuaries Inc. of St. Louis filed the lawsuit that resulted in the tax being thrown out. The company sought refunds totaling $101,819 for Dec. 1, 1997, through Nov. 30, 2000.

Buchholz said its services were not complete until interment was complete. The customer pays for the item interred in the earth, the company argued.