You don't need a body to have a funeral, and you also don't have to have a grave side service. His friends may not have even known the grave existed. Yes, Michael and Thomas were both there when Bianca gave Harry the grave stone, but neither may have known that there was actually a dug grave to go with it. People buy plots all of the time to be buried in in the future, but no actual hole is dug until it is needed. Also Butters may have used funeral interchangeably with memorial, especially if it is a few friends getting together to remember and there is no actual body.The White Council, that's the wizard's government, which has nothing to do with the city or the state which is vanilla humans.. As far as the vanilla human government goes, Harry would be considered missing and presumed dead, but not officially dead until he had been missing for seven years.
As for the funeral
[quote“Over here,” said a familiar voice. It was later, but not much later. Sometime after noon, maybe? It was hard to tell from the grave. “You’ve never even been here before,” answered another.
“I was at the funeral. How the hell would you know where his grave was?” I heard Fitz let out a sigh front-loaded with so much drama that only a teenager could have managed it without hurting himself. “Is it the gaping hole in the ground over there, with the big pentacle on the headstone?” There was a brief, miffed pause, and Butters answered, “Okay. Maybe it is.” [/quote]
When Butters visited Harry's graveside in GS, he mentions that the funeral had been held there.
As for the government, the WC is the WC, not a government. I think the quote from Rashid above clearly states that the WC's office would send the forms to the government.
But I understand that a missing person isn't usually declared dead for 7 years. But I think the bullet hole and blood splatter is different from a simple missing persons report.