|
Newark Archdiocese fails to pay state taxes in for-profit headstone, mausoleum business
By Mark Mueller
Looking to wring more revenue out of its Catholic cemeteries, the Archdiocese of Newark in recent years quietly entered the headstone and mausoleum business, a lucrative venture for which the archdiocese acknowledges it must pay a particular state tax. Yet over the past eight years, it hasn’t paid a penny, The Star-Ledger found. According to court records and the plaintiffs in a legal fight that could reshape New Jersey’s funeral industry, the archdiocese owes the state tens of thousands of dollars — if not more than $100,000 — in so-called use taxes, which are based on the wholesale prices of monuments and private mausoleums. The disclosure could create new public relations difficulties for Archbishop John J. Myers, who has faced a torrent of criticism from inside and outside the archdiocese since The Star-Ledger revealed last month he is building a lavish extension on his future retirement home in Hunterdon County. Legal papers connected to the case also show how the archdiocese has transformed its burial grounds into a source of enormous income, with millions of dollars flowing into the Newark chancery each year, possibly in violation of a state law that restricts the use of cemetery revenue. In a December 2012 email exchange between Andrew Schafer, the cemeteries’ executive director, and Msgr. Michael Andreano, the chancellor, Schafer says the new headstone business should bring in $500,000 a year, allowing him to increase the cemeteries’ annual assessment — or tribute to the archdiocese — to $3 million from $2.8 million. "Full speed ahead on this Andy!" Andreano responds. "Great news and potential. Do let me know if you sense the beginnings of any ‘negative p.r.’ However, no need to let it change your plan and approach." The failure to pay the tax and the existence of the annual assessment emerged during the discovery phase of a lawsuit brought against the archdiocese by two headstone dealers and their trade association, the Monument Builders of New Jersey. On April 1, the plaintiffs will ask a Superior Court judge in New Brunswick for an injunction barring the archdiocese from continuing its headstone and private mausoleum business. They contend the cemeteries are using sleight of hand to sidestep a state law prohibiting cemeteries from selling the objects. New Jersey is one of only a handful of states with such a ban. The dispute does not involve large communal mausoleums, which sometimes hold thousands of bodies in individual crypts. The archdiocese is the first New Jersey cemetery operator — religious or non-sectarian — to profit from monuments and private mausoleums beyond installing foundations, according to interviews with cemetery executives, headstone dealers, funeral directors and representatives of the other dioceses. Though religious organizations are largely tax-exempt, the archdiocese is subject to the use tax because it is purchasing monuments and private mausoleums to turn a profit in direct competition with private companies, the plaintiffs contend. Lawyers for the archdiocese, without citing a reason, agreed in legal papers the tax applied. "The archdiocese is subject to the New Jersey use tax on its purchase of a monument or private mausoleum," attorney Donald F. Miceli wrote in his response to the Monument Builders’ motion for an injunction. 'We Will Cease To Exist' The monument vendors say the archdiocese has an unfair competitive advantage because its cemeteries are often the first and last point of contact for families and because the majority of funerals are now pre-planned, allowing for one-stop shopping. If the monument business is allowed to continue, they argue, it will bankrupt them. "Here’s what’s going to happen," said John Burns Jr., president of the Monument Builders. "As time goes on, they’re going to perfect this. Their sales force is going to be better educated. They will monopolize the industry. And we will cease to exist." Ralph Rullis, a third-generation monument dealer, said that if the archdiocese continues to market monuments, he expects to lose 75 to 80 percent of his sales at McHugh-Tully Memorials, across the street from Gate of Heaven Cemetery in East Hanover. "After doing this for 40 years, I would say it’s a certainty we would go out of business," said Rullis, 65, of Parsippany. Others in the funeral industry say that if the archdiocese prevails in court, it could open the door for all of New Jersey’s cemeteries, religious or not, to market monuments and mausoleums. "If this opens up for religious cemeteries, the independent cemeteries will most likely follow suit, which will not be good for the monument dealers," said George Kelder, assistant executive director of the New Jersey State Funeral Directors Association. One question is whether the expansion would stop at monuments and private mausoleums. Bernard Stoecklein, a New Jersey cemetery consultant and manager, said Catholic cemeteries across the nation have stocked their staffs with business-minded professionals over the past two decades. In that time, Stoecklein said, the cemeteries have become "cash cows" with expanding interests, including cremation. "One of the big fears of the funeral directors is that at some point, the Catholic church is going to want to get into the funeral business," he said. Eternal Lease Cemetery executives in Newark have taken a novel approach to monuments and mausoleums. The executives, along with lawyers for the archdiocese, say in court papers they aren’t, in fact, selling any physical objects. When the archdiocese buys a private family mausoleum — typically large enough for two to eight people — it owns the structure in perpetuity. What’s sold is the right to use the space, akin to an eternal lease. Similarly, the archdiocese owns the headstones it buys. Instead of reselling those monuments to the public, it sells "inscription rights" on them, allowing buyers to personalize them with words and symbols. The prices for inscription and entombment rights are about the same as what one would pay to buy a headstone or mausoleum outright, the monument dealers say. Charles Carella, a lawyer for the archdiocese, declined to comment on the case, citing the ongoing litigation. The archdiocese's spokesman, Jim Goodness, likewise declined to comment on the suit or on the failure to pay the state tax. In court papers, the archdiocese argues its programs are a boon for consumers, who will no longer have to worry about repair costs if a monument or mausoleum is damaged. That responsibility now falls on the cemeteries, the attorneys said. They add that by bringing more competition to the marketplace, prices will remain in check. And while the archdiocese acknowledges that non-sectarian cemeteries are barred from selling monuments and mausoleums, it says the Cemetery Act of 1971 exempts religious cemeteries from the law. Religious cemeteries, free of oversight by the New Jersey Cemetery Board, are governed by Title 16, the statute regulating religious corporations. That law, the archdiocese argues, allows cemeteries to purchase land, buildings and other items in keeping with a cemetery’s purpose. That same law, however, requires that profits from sales of burial plots "shall be devoted to the care and maintenance" of cemeteries and may be used "for no other purpose." The statute’s language suggests the archdiocese could be in violation of the law by collecting millions of dollars from its cemeteries through the annual assessment. Goodness, the archdiocese’s spokesman, would not address the issue. He did confirm the assessment is used as the archdiocese sees fit, whether in support of parishes, schools or other endeavors. The legal briefs filed by the archdiocese make no mention of the tax liability on headstones and mausoleums. A spokesman for the state Treasury Department said he was barred from discussing individual taxpayers. 'We Have Not Paid the Tax' Since 2006, the archdiocese has sold entombment rights in dozens of private mausoleums priced as high as $329,000, according to records turned over to the plaintiffs. The headstone program began last June, with inscription rights selling for as little as $900 and as much as $4,288, the records show. The documents don’t reflect a full picture of sales. Monument records show only the first five months of sales, from June to October of 2013. Mausoleum sales are listed at only three cemeteries: Gate of Heaven Cemetery in East Hanover, Holy Cross Cemetery in North Arlington and Saint Gertrude Cemetery in the Colonia section of Woodbridge. Burns, the Monument Builders president, said the archdiocese also offers private mausoleums at Holy Name Cemetery in Jersey City and Maryrest Cemetery in Mahwah. After driving from cemetery to cemetery, Burns said he counted at least 55 private mausoleums installed by the archdiocese. The use tax requires that 7 percent of the wholesale price of a monument or mausoleum be paid to the state. Returns are typically filed quarterly. The incomplete records provided to Burns’ attorney show the archdiocese has spent just over $1 million to buy private mausoleums, meaning the state is owed at least $70,000. That figure is certain to increase as mausoleums at other cemeteries are factored in. It’s not clear how many inscription rights the archdiocese has sold for headstones. The records reflect 61 sales between June and October of last year, but the documents don’t include wholesale prices. Because the program continues, it’s likely the archdiocese will owe tens of thousands of dollars more. Asked in a deposition if the archdiocese paid the tax on monuments, Andrew Schafer, the executive director of Catholic cemeteries, said it had not. "I would say at this point in time, we have not paid the tax, but we are subject to paying the tax," Schafer said during the November deposition. Burns said that after the newspaper’s inquiries, the archdiocese informed his lawyer it was preparing to pay the use tax on monuments and would soon file returns with the state. The archdiocese, he added, will ask for an opinion from the state about whether it also owes the use tax on private mausoleums, as it insisted it did in legal papers. He said the archdiocese lawyer confirmed to his attorney the tax on mausoleums had not been paid. "I think it’s atrocious that they cheat the government out of money," Burns said. "If we didn’t pay our taxes, they would have come in and padlocked our doors by now. But the people at the archdiocese think they can get away with anything."
|
.
Any original material on these pages is copyright © BishopAccountability.org 2004. Reproduce freely with attribution.