08/03/2012

OFDA Legal Report

By T. Scott Gilligan, OFDA General Counsel

OFDA Legal Report

As reported to the Board on June 22nd, 2012

1.  Credit Card Processing Fees.   Currently, merchants who accept payments by credit cards are prohibited by their agreements with VISA and MasterCard from imposing any type of surcharge on consumers who elect to pay with a credit card.  This means the merchant must end up footing the processing fee of 1.5% to 2.5% and cannot pass that on to the consumer.  With funeral bills often running up to $10,000 and more, the processing fee that the funeral home must assumed when a consumer pays with a credit card can be significant.

The recent settlement that VISA and MasterCard agreed to in a class action antitrust suit will end the prohibition against credit card surcharges.  Once the judge approves the settlement, merchants, like funeral homes, may impose surcharges against consumers who pay by credit card in order to recoup the credit card processing fees.  It should be noted that there are 10 states that do prohibit a merchant from passing these fees on to consumers, but Ohio is not one of them.

 

2.  Federal Estate Taxes.  NFDA continues to work with several small business coalitions to make permanent the federal estate tax exclusions and rates that were adopted two years ago, but which are set to expire at the end of 2012.  Currently, there is a $5 million exclusion for an individual and a $10 million exclusion for a married couple.  If an estate exceeds those exclusions, it is taxed at 35%.  If the current estate tax provisions are not made permanent, then the exclusion level will revert back to $1 million and the tax rate will jump up to 55% for anyone who dies after December 31, 2012.  While NFDA would prefer to have the estate tax repealed, that is unlikely to happen given the ballooning deficit.  Therefore, we are attempting to lock in the current exclusions and rates to avoid the return of the 55% tax on estates that exceed $1 million. 

 

3.  Pennsylvania Lawsuit.   As previously reported, a number of funeral homes and cemeteries in Pennsylvania sued that state’s funeral board claiming that many provisions of that state’s licensing law were unconstitutional.  A federal judge issued an opinion last month which agreed for the most part with the plaintiffs and struck down 11 key provisions of Pennsylvania’s funeral licensing law.  Three of the provisions that were held unconstitutional are also found in Ohio’s licensing law.  They include the requirement that each funeral home have a manager (who can only managed one funeral home), that the name of the funeral home must include the name of the funeral director in charge of the funeral home, and that funeral homes must allow the state board to inspect a funeral home without first obtaining a search warrant.  The court did uphold Pennsylvania’s requirement (which is also found in Ohio) which mandates that only licensed funeral homes may sell direct cremations to the public.  The Pennsylvania’s attorney general appears ready to appeal the judge’s decision to the Third Circuit Court of Appeals.  If that happens, we will probably not have an outcome to the case until the latter part of 2013.