NBC 10 I-Team: Taxed beyond the grave
You’ve probably heard the saying, “nothing in life is certain except death and taxes.”
That’s especially true lately for Rhode Island funeral homes, who’ve found themselves the target of recent audits by the state’s Division of Taxation.
Funeral Director Craig Carpenter of the Carpenter Jenks Funeral Home and Crematorium in West Warwick told the NBC 10 I-Team his family business was one of several selected for the first round of audits, looking back through at least five years of funeral services.
"That first audit for us was just over $25,000,” Carpenter said. "I just feel it's unjust to have penalized us backwards. That's a big fine for a small business."
Carpenter said the business chose to pay the bill in one lump sum, to stop interest from accruing. But he noted that other funeral homes may be able to pay up all at once.
The I-Team learned it all comes down to a technicality over what’s taxable in Rhode Island -- and what’s not.
A big part of that tax bill was cremation urns, something more than half of all families now choose for deceased loved ones.
Rhode Island state law exempts “coffins, caskets and burial garments” from sales tax. Urns, which weren’t commonly used until more recently, aren’t specifically named in the law. But Carpenter said they were never subject to sales tax until recently.
"Shame on the state,” he said. “Do it and go forward, but don't penalize me for something that you ignored."
Rep. Bob Lancia of Cranston helped craft legislation that would add urns and prayer cards to the list of items exempt from sales tax. It passed in the state Senate, but died in the House, Lancia said.
"The speaker [Rep. Nick Mattiello] wouldn't bring the bill to the floor for a vote,” Lancia told NBC 10.
Then, on Tuesday, Lancia lost his bid for reelection, leaving the future of sales tax on urns and prayer cards up in the air.
“It is very frustrating, because ultimately it effects families,” Lancia said. “So, it becomes every nickel and dime you can possibly get. It’s so sad.”
The I-Team reached out to the Division of Taxation beginning Monday to find out how many funeral homes have been audited so far and how much money in back taxes, penalties and interest has been collected.
Chief Revenue Agent Neil Downing told NBC 10 the information wasn’t readily available. He said the Division of Taxation routinely does audits on all kinds of businesses, as well as individuals.
“The Division each year performs desk audits and correspondence audits involving thousands of businesses and individual taxpayers, resident and nonresident,” Downing said in an email to NBC 10. “Those who are subject to audit have the right to appeal.”
Downing also said officials from the Division of Taxation will meet with funeral directors in the next few weeks to explain the audits and answer questions.
Carpenter said he was able to get penalties for the back taxes waived, although he still had to pay interest. But the bigger problem, he believes, is how Rhode Island treats businesses.
“You can’t die without paying taxes,” he said.
NBC 10 will check in next year to see if the new General Assembly session is taking any action on the issue.