In recent times, funeral homes are experiencing increased pressure from different angles. One of these is an increase in cremation rates, which drives down revenue. Another is an increase in e-commerce shopping, which also reduces profits. Lastly, funeral homes must comply with all government mandates and regulations, like the Truth-in-Lending Act and Regulation Z.
This article will discuss the Truth-in-Lending Act and Regulation Z and how they apply to your funeral home.
What is The Truth-in-Lending Act and Regulation Z?
The Truth-in-Lending Act (TILA) is a mandate by the Federal Trade Commission (FTC). It requires that all financial charges and total amounts financed be shared when offering credit to a consumer.
The TILA states that all customers who get credit by banks and businesses must be fully informed of all aspects of the credit arrangements. Unfortunately, funeral homes are no exception to the TILA.
Like any other lender, a funeral home offering credit must be truly transparent. They must not steer the customers into a loan with more compensation for the lender.
Right of Recession
Funeral homes should also be aware of the consumer’s right of recession. This act essentially gives borrowers the ability to back out of certain types of loans within three days. The borrower might think over the loan and decide it’s not right for them.
Funeral homes might not be aware of the parking tax even though they’re in the death care industry. This tax is an easy-to-miss provision of the Tax Cuts and Jobs Act (TCJA) that applies to funeral homes. It states that the employer must provide a parking space for any employee who drives to work.
According to the TCJA, parking expenses actually might qualify as taxable “income” and may lead to tax liability.
The death care industry is becoming more highly regulated in recent years. It takes additional time and energy to make sure your business is compliant with FTC regulations. If your funeral home offers credit, be sure you’re sharing the total amount financed to be compliant with the TILA Act and Regulation Z.
Also, be sure you’re taking proactive tax and financial decisions to compensate for things like the parking tax.
We understand that it may be challenging to find time to organize taxes and stay compliant with updated rules and regulations. MKS&H can help your funeral home make the best financial and tax-related decisions. Contact us today to speak with a CPA or business consultant.