A monument company designs, letters, and installs headstones and vaults; inscribes dates of death on existing stones; and does jobs like moving/leveling headstones or adding curbing and marble to cemetery lots. Which of these are taxable, and how does the tax apply?

Plain-English summary

A monument company asked the Comptroller how sales tax applies to several different jobs it performs in cemeteries: designing, lettering, and installing headstones and vaults; inscribing a date of death on an existing stone; moving or leveling an existing stone; and adding curbing and marble to a cemetery lot.

Designing, lettering, and installing a headstone or vault: The company is acting as a contractor performing an improvement to real property. Under a lump-sum contract, the company pays tax to its own supplier on its cost for the taxable items incorporated into the realty, and it may not separately pass that tax on to the customer as tax. Under a separated contract (materials and labor billed separately to the customer), the company instead collects sales tax from the customer on the amount it charges for materials. If the company only sells the inscribed stone or vault, with no installation, the entire amount charged to the customer is taxable. The letter references Rule 3.334, Monument Builders, on this point.

Inscribing a date of death on an existing stone: This is treated as an initial finish out of the stone — new construction under Rule 3.357(a)(4) — so tax is not due on the labor to perform this service.

Moving, leveling, or adding curbing/marble to a lot: Leveling an existing headstone is taxable as repair or remodeling of nonresidential real property. Moving a headstone is not a taxable service. Adding or installing curbing and marble to a cemetery lot again makes the company a contractor improving realty, so the same lump-sum/separated contract rules described above apply — pay tax on cost under a lump-sum contract, or collect tax on the materials charge under a separated contract.

What this means for you

Monument builders and cemetery service companies

How you structure your contract matters. A lump-sum contract (one all-in price) means you owe tax on your own cost of materials and cannot bill your customer separately for "tax." A separated contract (materials and labor itemized) means you collect tax from the customer, but only on the materials portion.

Selling stones/vaults without installation

If you just sell an inscribed headstone or vault and someone else installs it (or the customer installs it), the full sales price to the customer is taxable — there's no contractor-improvement treatment to fall back on.

Distinguishing labor types on existing monuments

Not all cemetery labor is taxed the same way. Inscribing a date on an already-installed stone is treated as new construction labor (not taxable). Leveling an existing stone is treated as repair/remodeling (taxable). Simply moving a stone is not taxable at all. Track which category each job falls into.

Accountants and tax professionals

This letter is a useful map of contractor-vs-retailer treatment for the monument industry: lump-sum vs. separated contracts for new installations and curbing/marble work, versus the labor-only distinctions (new construction vs. repair vs. non-taxable moving) for work on stones already in place.

Common questions

Q: Do we pay sales tax on the entire job when we design, letter, and install a monument?
A: It depends on the contract type. Under a lump-sum contract, you (the contractor) pay tax to your supplier on your cost of materials — you don't charge the customer "tax" on the job. Under a separated contract, you collect sales tax from the customer on the materials charge only.

Q: If only materials are taxable, do we pay tax on what we charge the customer or what we paid for the materials?
A: Under a lump-sum contract, tax is based on what you paid your supplier (your cost). Under a separated contract, you collect tax from the customer based on what you charge the customer for materials.

Q: Is sales tax due when we inscribe a date of death on an existing headstone in the cemetery?
A: No. This is treated as an initial finish-out (new construction) under Rule 3.357(a)(4), and tax is not due on the labor.

Q: Is moving a headstone to a different location taxable?
A: No, moving a headstone is not a taxable service.

Q: Is leveling an existing headstone taxable?
A: Yes, the total charge to level an existing headstone is taxable as repair or remodeling of nonresidential real property.

Q: Can another monument company rely on this letter for its own contracts?
A: No. This opinion is based on the specific facts presented, and other facts, even if similar, may produce a different result. It can be relied on only by the taxpayer to whom it was issued.

Citations and references

• 34 Tex. Admin. Code Rule 3.334, Monument Builders
• 34 Tex. Admin. Code Rule 3.357(a)(4)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9207263L

Original ruling text

July 14, 1992

Dear **:

Thank your for your letter concerning the taxability of the various sales and
services that your company provides. I appreciate your patience and apologize
for the delay in responding.

I have restated your different situations and questions below followed by my
response:

1) We order in the granite and materials needed. We design, letter, and install
the monument in the cemetery.

a) Do we pay sales tax on the entire job?

b) If only the materials are taxable, do we pay tax on what we charge the
customer or what we buy it for?

RESPONSE: ** (COMPANY A) is acting as a contractor when it designs,
letters, and installs head stones, vaults, and similar items. A lump-sum
contractor who performs an improvement to realty must pay tax to its supplier
on the contractor's cost for the taxable items being incorporated into the
realty. Tax may not be passed, as tax, to the customer. Under a separated
contract (where materials and labor are separately stated to the customer)
COMPANY A would collect sales tax on its charge to the customer for materials.

If COMPANY A only sells the inscribed stone or vault without installation, the
total amount charged to the customer would be taxable. I have enclosed a copy
of Rule 3.334, Monument Builders, for your information.

2) We take our equipment into a cemetery and inscribe a date of death on an
existing stone. Is sales tax due on this?

RESPONSE: This would be considered an initial finish out of the stone (new
construction) in accordance Rule 3.357(a)(4) and tax would not be due on the
labor to perform this service.

3) We contract a job to: move a stone to a different location, level an
existing stone, or add curbing and marble to a cemetery lot. Is sales tax due
on all or part of the above?

RESPONSE: The total charge to level an existing headstone is taxable as the
repair or remodeling of nonresidential real property. Moving a headstone is not
a taxable service.

COMPANY A will be acting as a contractor improving realty when it adds or
installs curbing and marble to a cemetery lot. Under a lump-sum contract,
COMPANY A is considered to be the consumer of all materials incorporated into
the realty and must pay tax to its suppliers on these costs. Under a separated
contract, COMPANY A would collect tax from its customer on the total amount
charged for materials.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

If you have other questions or need more information, you may call
512/463-4600, or 1-800-252-5555 from outside Austin. You may write to Tax
Administration Division.

Sincerely,

Gilbert Zamora
Tax Administration Division