If the preneed contract is trust-funded, the sales tax should be collected at the time the contract is signed and the funds are received by the funeral home. The funeral home should deduct the proper amount of sales tax and remit it to the Ohio Department of Taxation. The remainder of the preneed funds would then be placed in trust.
The collection and payment of the sales tax on a trust funded preneed contract is done at the time payment is received regardless of whether the preneed contract provides for a guaranteed price or a non-guaranteed price. The price guarantee does not impact in any regard the amount of the sales tax nor the timing for the payment of the sales tax.
No. The sales tax on the funeral merchandise has already been paid. It does not have to be paid again when the merchandise is delivered. Even though the funeral home is now receiving more money for the merchandise than was originally paid by the consumer, it does not owe any additional sales tax to the State of Ohio.
No. The sales tax has already been collected from the consumer and remitted to the State of Ohio when the preneed contract was entered into. The consumer is now using a different funeral home which will receive the trust funds when it performs the funeral. However, that funeral home will not be collecting any additional sales tax since the consumer has already paid the sales tax. Likewise, the original funeral home would not be entitled to any refund since it collected the sales tax from the consumer instead of paying it out of its own funds.
Unlike a trust-funded preneed contract, if insurance is used to fund a preneed contract, the sales tax is paid when the insurance proceeds are received by the funeral home and the contract is performed. Therefore, whether the preneed consumer is entering into a new insurance policy or assigning an existing insurance policy to the funeral home in payment of the preneed contract, sales tax will not be collected and remitted to Ohio until the proceeds of that policy are received by the funeral home in payment for the funeral merchandise that was sold.
The funeral home should use the current price of the casket for the purpose of calculating sales tax. According to the State of Ohio, the sale of the merchandise is taking place when the funeral home receives the insurance proceeds and provides the casket. Therefore, the sales price that applies to the transaction would be the at-need price of the casket, not the price that existed back in 2004.