How is Kansas sales tax calculated on funeral charges, and is the state-paid portion of a burial taxable?

Plain-English summary

A funeral provider asked how Kansas sales tax applies to funeral charges, including a portion paid directly by the state. The Department explained the special funeral rule in K.A.R. 92-19-15: a state-paid burial portion is exempt, a lump-sum funeral is taxed on 50% of the charge, and an itemized funeral is taxed only on the tangible personal property sold. It noted the reply "is an informational letter only and not a private letter ruling pursuant to K.A.R. 92-19-59."

The Department walked through the regulation:

• State-paid burials are exempt. K.A.R. 92-19-15 provides that "Sales tax shall not be charged when the state of Kansas or another political subdivision pays for a burial." So the $550.00 portion paid directly by the state "would not be subject to sales tax."
• Lump-sum funerals — tax on 50%. A funeral director who "charges a lump sum for a funeral service that covers the total funeral charge, including services and tangible personal property, is required to collect, report, and remit sales tax on 50% of the entire amount charged for each funeral including embalming, casket, and usual services."
• Itemized funerals — tax on the property only. When a director "charges separately for the sale of tangible personal property and for required services, the sales tax shall be collected only on an amount equal to the retail sales price of the tangible personal property," provided the property charges are segregated from the service charges on the invoice.

The Department then applied the rule with numbers. For a $2,000 lump-sum funeral, subtract the $550 state-paid amount to get $1,450, then tax 50% of that — a taxable base of $725.00. If the director itemizes instead, tax applies only to the retail price of the tangible personal property, and "the $550.00, which is paid directly by the state should be applied pro-rata to the services and the tangible personal property."

What this means for you

Funeral directors

Your billing method drives the tax. A lump-sum funeral charge is taxed on 50% of the total; itemizing the casket and other tangible personal property separately from your services lets you charge tax only on the retail price of that property (if the invoice segregates the two).

State- or subdivision-paid burials

When the state of Kansas or another political subdivision pays for a burial, that portion is exempt from sales tax. Back it out before applying the 50% lump-sum calculation, or apply it pro-rata across services and property when you itemize.

Keep invoices clear

The itemized treatment depends on the invoice actually segregating charges for tangible personal property from charges for services. Without that separation, the 50% lump-sum rule applies.

Common questions

Q: Is the state-paid portion of a burial taxable in Kansas?
A: No. Under K.A.R. 92-19-15, no sales tax is charged on the portion the state of Kansas or another political subdivision pays.

Q: How is a lump-sum funeral charge taxed?
A: On 50% of the entire amount charged (including embalming, casket, and usual services), after removing any state-paid portion.

Q: What if the funeral director itemizes?
A: Then sales tax applies only to the retail price of the tangible personal property, provided the property and service charges are segregated on the invoice; any state payment is applied pro-rata.

Citations and references

• K.A.R. 92-19-15 — the funeral-services regulation: no sales tax on a burial paid by the state or a political subdivision; a 50% taxable base for lump-sum funeral charges (including embalming, casket, and usual services); and tax only on the retail price of tangible personal property when charges are itemized and segregated on the invoice.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-1998-19

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

October 28, 1998

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Dear Ms. TTTTT:

We wish to acknowledge receipts of your letter dated October 15, 1998, regarding the application of Kansas Retailers’ Sales tax.

This is an informational letter only and not a private letter ruling pursuant to K.A.R. 92-19-59.

K.A.R. 92-19-15 states in part: “. . .Sales tax shall not be charged when the state of Kansas or another political subdivision pays for a burial.”

It is a correct assumption on your part, in that the $550.00 portion of the burial service which is paid directly by the state of Kansas would not be subject to sales tax.

K.A.R. 92-19-15 further states that: “Each funeral director who charges a lump sum for a funeral service that covers the total funeral charge, including services and tangible personal property, is required to collect, report, and remit sales tax on 50% of the entire amount charged for each funeral including embalming, casket, and usual services. When a funeral director charges separately for the sale of tangible personal property and for required services, the sales tax shall be collected only on an amount equal to the retail sales price of the tangible personal property if charges for tangible personal property are segregated from those for services rendered on the invoice furnished to the purchaser. . .”

Therefore, funeral directors who charge a lump sum of $2000.00 for the total funeral, which includes services and tangible personal property, would be required to collect the appropriate Kansas sales tax(es) on 50% of the amount remaining after deducting $550.00 paid by the state of Kansas. In this case, the taxable amount would be $725.00.

However, a funeral director who charges separately for the sale of tangible personal property and for required services would be obligated to collect sales tax only on the retail sales price of the tangible personal property, so long as the charges for the tangible personal property are segregated from the services rendered on the invoice furnished to the purchaser. In this case, the $550.00, which is paid directly by the state should be applied pro-rata to the services and the tangible personal property.

If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 11/12/1998 Date Modified: 10/10/2001

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