BIR Form 2307 for Funeral Homes and Memorial Service Providers

A pre-need memorial plan company, HMO, or employer that pays an accredited funeral home for interment and memorial services generally withholds 2% expanded withholding tax (EWT) under RR No. 2-98, Section 2.57.2(E), and issues BIR Form 2307 — but a grieving family that pays the same funeral home directly out of personal funds generally doesn’t withhold at all. The distinction matters most to pre-need plan companies, which remit funeral home service fees on a recurring basis every time a planholder passes away.

This guide is part of the BIR Form 2307 series. It covers who withholds on a funeral home payment, the applicable EWT rate and ATC codes, why an interment package is treated as one bundled service rather than split into goods and labor, and a worked pre-need plan example.

Who withholds on a funeral home payment? #

The same payor-status test that applies across this series applies here: a corporation or business-connected payor withholds, a private individual paying out of pocket generally does not. RR No. 2-98 sets the test this way:

“(A) In general, any juridical person, whether or not engaged in trade or business; (B) An individual, with respect to payments made in connection with his trade or business…”

— RR No. 2-98, Section 2.57.3(A)–(B)

• A pre-need memorial plan company (a corporation selling memorial plans and remitting service fees to its network of accredited funeral homes when a planholder dies) is a withholding agent under clause (A) on every such payment.
• An HMO paying a funeral home directly under a burial-assistance or death benefit is likewise a withholding agent under clause (A).
• An employer paying a funeral home directly as part of a death benefit for a deceased employee’s family withholds under the same clause.
• A family paying the funeral home directly out of its own funds, with no business or plan company standing between the family and the funeral home, falls outside clause (B) — no trade or business connection, no withholding, no BIR Form 2307.

What EWT rate applies to a funeral home’s service fee? #

A funeral home’s interment and memorial service fee is not named as its own separate line item in RR No. 2-98 — it falls under the same flat 2% general contractor/business-services catch-all covered in BIR Form 2307 for Contractors and Subcontractors, the bracket this series applies to event planners, caterers, and similar service-supplying businesses not given a more specific rate elsewhere.

A funeral package is generally treated as one bundled service, not split between a goods sale (the casket) and a labor fee (embalming, viewing, and burial coordination). Most funeral homes invoice interment as a single all-inclusive package, and that package is withheld as a service payment in full — the same approach this series takes toward a full-service caterer’s package in BIR Form 2307 for Event Planners, Caterers, and Wedding Suppliers, where food, labor, and venue coordination aren’t unbundled into separate withholding categories either.

There is a second, independent route to the same 2% figure: if the paying pre-need company or employer is a classified Top Withholding Agent (TWA) — reached once gross sales/receipts, gross purchases, or claimed deductible expenses hit ₱12,000,000 in the preceding year under RR No. 7-2019, RR No. 11-2018, and RR No. 24-2025 — its local service purchases not otherwise assigned a more specific rate are withheld at 2% under the TWA services rule in BIR Form 2307 for Purchases of Services: Top Withholding Agent 2% Rate Explained. Either route lands on 2%.

Worked example: a pre-need plan company’s service remittance #

Everlasting Memorial Plans Corp., a pre-need company, remits a ₱150,000 all-inclusive interment package fee to Golden Rest Funeral Homes, Inc., an accredited corporate funeral home, when a planholder passes away and the family calls in their plan.

Everlasting Memorial Plans withholds ₱3,000 and remits it through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, lists Golden Rest Funeral Homes on its Quarterly Alphalist of Payees, and issues a BIR Form 2307 showing ₱150,000 as the income payment, ATC WC120, and ₱3,000 tax withheld. Golden Rest credits the ₱3,000 against its own income tax due. Because a pre-need company processes claims like this continually across its planholder base, the funeral home ends up accumulating a large number of BIR Form 2307 certificates from the same payor over the course of a year — all reportable, cumulatively, on the pre-need company’s Quarterly Alphalist of Payees.

When a funeral home payment isn’t withheld at all #

A family that pays a funeral home directly out of personal savings, with no pre-need plan, HMO, or employer involved, is not a withholding agent — the funeral home does not receive a BIR Form 2307 for that payment. The moment a plan company, insurer, or employer steps in as the actual payor of record — even if the underlying reason is still a family’s loss — that entity becomes the withholding agent on its own payment to the funeral home, exactly as it would for any other business service it purchases.

Frequently asked questions #

Does a pre-need memorial plan company have to withhold tax when paying a funeral home? #

Yes. A pre-need plan company is a corporation paying an accredited funeral home for interment, embalming, and memorial services on behalf of a planholder, which makes it a withholding agent under RR No. 2-98, Section 2.57.3(A). It withholds expanded withholding tax and issues BIR Form 2307 to the funeral home.

What withholding tax rate applies to a funeral home’s service fee? #

A funeral home’s interment and memorial service package generally falls under the 2% general contractor/business-services bracket under RR No. 2-98, Section 2.57.2(E), as amended by RR No. 11-2018 — ATC WI120 for an individually owned funeral parlor or WC120 for one organized as a corporation.

Does a family paying a funeral home directly for a loved one’s funeral need to withhold tax? #

Generally no. Under RR No. 2-98, Section 2.57.3(B), an individual is a withholding agent only for payments connected to a trade or business. A grieving family paying a funeral home out of personal funds, with no business involved, is not withholding tax and the funeral home does not receive a BIR Form 2307 for that payment.

Does casket and merchandise sold by a funeral home get treated differently from its service fee? #

In practice, most funeral homes bill interment as a single all-in package covering the casket, embalming, viewing, and burial or cremation services, and the whole package is treated as a service payment subject to the 2% rate rather than being split between a goods purchase and a service fee — the same way a full-service caterer’s package isn’t unbundled into food cost versus labor.

Does an HMO or employer paying for a deceased employee’s funeral benefit withhold tax the same way? #

Yes. An HMO paying a funeral home directly under a burial-assistance benefit, or an employer paying a funeral home directly as a death benefit for an employee, is a corporate payor under RR No. 2-98, Section 2.57.3(A) and withholds the same 2% rate as any other business paying for funeral services.

Summary #

A funeral home’s interment and memorial service package sits in the flat 2% general business-services bracket (ATC WI120/WC120) under RR No. 2-98, Section 2.57.2(E), billed and withheld as one bundled service rather than split between goods and labor. Only a corporate or business-connected payor — a pre-need plan company, an HMO, or an employer — triggers withholding; a family’s own out-of-pocket funeral payment generally does not. See BIR Form 2307 for Event Planners, Caterers, and Wedding Suppliers for the closely parallel bundled-package treatment, and BIR Form 2307 for Contractors and Subcontractors for the general 2% bracket this rate draws from.