Does a standalone casket retailer that sells directly to consumers (not through a funeral home) have to charge New York sales tax, even though funeral homes don't charge tax on the caskets they sell?

Plain-English summary

Direct Casket sells burial caskets straight to consumers, positioning itself as a lower-cost alternative to buying through a funeral home. The company pointed out that caskets sold by funeral homes aren't subject to New York sales tax, and asked whether its own direct-to-consumer sales get the same treatment.

New York's exemption is written to cover a specific seller, not a specific product: tangible personal property sold by a mortician, undertaker, or funeral director is exempt from sales and use tax. But the exemption is tied to who is selling and in what capacity (in the performance of the funeral director's professional services), not to the fact that the item happens to be a casket. Direct Casket is a casket retailer -- it is not a mortician, undertaker, or funeral home. Because the exemption's language specifically names those licensed roles and doesn't extend to a general retail seller of the same merchandise, Direct Casket's sales to consumers don't qualify, and it must charge sales and compensating use tax on every casket it sells directly to the public.

There's a partial silver lining on Direct Casket's own cost side, though: when Direct Casket buys caskets from its own suppliers for resale to its customers, those purchases remain tax-exempt under the ordinary resale exemption (this has nothing to do with the funeral-director exemption) -- Direct Casket just needs to furnish its supplier with a properly completed Resale Certificate (Form ST-120) within 90 days of delivery. So the tax cost doesn't disappear; it simply shifts downstream, landing on Direct Casket's collection obligation to its retail customers rather than on Direct Casket's own wholesale purchases.

What this means for you

Casket retailers and funeral-alternative businesses

Being in the same product category as an exempt seller doesn't make your sales exempt -- the funeral-director exemption is role-based, tied to a specific licensed capacity (mortician, undertaker, funeral director), not to caskets as a category of merchandise. A standalone retailer must collect tax that a funeral home wouldn't on the identical item.

Consumers comparison-shopping for caskets

A price difference between a funeral home and an independent casket retailer isn't purely about markup -- sales tax genuinely applies to one and not the other under current law, which is worth factoring into any direct comparison.

Accountants and tax professionals

This is a clean example of an exemption defined by the seller's licensed role rather than the product itself -- useful whenever a client in a regulated industry (funeral goods, pharmacy, etc.) asks whether an exemption "follows the product" to a different type of seller. It generally doesn't unless the statute says so.

Common questions

Q: Why are caskets sold by funeral homes exempt but not caskets sold by Direct Casket?
A: The exemption specifically names morticians, undertakers, and funeral directors as the qualifying sellers -- it's a seller-based exemption, not a product-based one, so a non-funeral-home retailer selling the identical item doesn't qualify.

Q: Can Direct Casket buy its inventory tax-free from its own suppliers?
A: Yes -- that's a separate, ordinary resale exemption, available to any retailer buying inventory for resale, and requires a timely Resale Certificate (Form ST-120) to the supplier.

Q: Would Direct Casket qualify for the exemption if it hired a licensed funeral director?
A: This ruling doesn't address that scenario; the exemption is about who is doing the selling and in what capacity, so any change to Direct Casket's business structure would need its own separate analysis.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4)(i) (retail sale)
• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1110(a) (compensating use tax)
• Tax Law § 1115(a)(7) (exemption for property sold by a mortician, undertaker, or funeral director)
• Tax Law § 1132(c) (resale certificate timing)
• 20 NYCRR § 528.8(a) (funeral director exemption)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1999.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a99_36s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-99(36)S
Sales Tax
July 27, 1999

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S990629A

On June 29, 1999, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Direct Casket, 1215 2nd Ave., New Hyde Park, New York 11040.
The issue raised by Petitioner, Direct Casket, is whether its retail sales of caskets directly to
consumers are subject to sales tax.
Petitioner is a casket retailer which sells burial caskets directly to consumers. Petitioner
states that purchasing caskets from its business offers customers a lower priced alternative to
purchasing caskets from funeral homes. Petitioner points out that caskets sold by funeral homes are
not subject to sales tax.
Applicable Law and Regulations
Section 1101(b)(4)(i) of the Tax Law defines the term "Retail sale" in part, as:
A sale of tangible personal property to any person for any purpose, other than
(A) for resale as such...
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax.-On and after June first, nineteen hundred seventy­
one, there is hereby imposed and there shall be paid a tax of four percent upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
Section 1110 of the Tax Law provides, in part:
Imposition of compensating use tax.-(a) Except to the extent that property or
services have already been or will be subject to the sales tax under this article, there
is hereby imposed on every person a use tax for the use within this state on and after
June first, nineteen hundred seventy-one, except as otherwise exempted under this
article, (A) of any tangible personal property purchased at retail,...

-2­
TSB-A-99(36)S
Sales Tax
July 27, 1999

Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
*

*

*

(7) Tangible personal property sold by a mortician, undertaker or funeral
director. However, all tangible personal property sold to a mortician, undertaker or
funeral director for use in the conducting of funerals shall not be deemed a sale for
resale within the meaning of paragraph (4) of subdivision (b) of section eleven
hundred one of this chapter and shall not be exempt from the retail sales tax.
Section 528.8(a) of the Sales and Use Tax Regulations provides:
Exemption. Tangible personal property sold or rented by a mortician,
undertaker or funeral director (hereinafter referred to as funeral directors) in the
performance of his professional services is not subject to the sales or compensating
use tax.
Opinion
Section 1115(a)(7) of the Tax Law provides an exemption from sales and use tax for sales
of tangible personal property by a mortician, undertaker or funeral director. These businesses, on
the other hand, may not purchase tangible personal property exempt from sales tax as purchases for
resale. Petitioner is a retail seller of caskets; it is not a mortician, undertaker or funeral home.
Petitioner’s sales of caskets to consumers are therefore subject to sales and compensating use tax.
However, when Petitioner purchases caskets for sale to its customers such purchases are considered
for resale. Therefore, such purchases are not subject to sales and compensating use tax. Petitioner
should present a properly completed resale certificate (Form ST-120) to the seller of the caskets
within 90 days of the date of delivery. See Section 1132(c) of the Tax Law.

DATED: July 27, 1999

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.