How can preneed tax be handled at the time of purchase?

When a preneed contract is purchased, the total amount for the services being prearranged often includes applicable taxes. Paying the tax in full at the time of the purchase is not only straightforward but also locks in the tax rate for the service being purchased, even if the service is rendered at a later date. This is important because tax rates and regulations can change over time. By paying the tax upfront, the consumer avoids any future tax increases that may apply when the service is eventually utilized.

This option reflects standard practices in many jurisdictions, where the tax is calculated based on the total cost at the time of the contract's execution, ensuring clarity and financial stability for both the funeral service provider and the consumer. In addition, paying the tax outright as part of the total purchase solidifies the financial commitment of the consumer and can potentially simplify record-keeping for both parties involved when the time comes to fulfill the contract.