According to the 2023 online shopping forecast released by Adobe Analytics, Cyber Monday is the year’s largest single shopping day and is expected to yield $12B in spending. Additionally, Adobe reported that online shopping will account for over half of all online spending during the holiday season of November 1 through December 31. As an online seller, here are some things you should consider during this highly profitable season.
“... [W]e expect strong e-commerce growth this season on account of record discounts and flexible payment methods.”
economic nexus
Since the 2018 Supreme Court ruling in South Dakota v. Wayfair, Inc., states require out-of-state sellers to comply with economic nexus laws even if the seller does not have physical presence nexus in the state. As such, the majority of states have established thresholds for the amount of online sales and/or transactions that can be made into the state before an out-of-state seller has a sales tax obligation.
The most common economic nexus threshold is $100,000 in gross sales and/or 200 transactions. Some states, such as California, have a higher threshold of $500,000. Other states, however, will impose a sales tax filing obligation when as little as 200 transactions have been made into the state in a calendar year. Due to the various thresholds and the potential tax liability and noncompliance penalties and interest, it is important for sellers to conduct a detailed economic nexus analysis of their sales and transactions each month.
holiday season sales
Although Cyber Monday is the biggest single day of sales in the year, Adobe anticipates that online holiday sales will exceed $220B throughout the remainder of the holiday season. As an online seller, you must be prepared for the sales tax implications of a busy year, including registering for sales tax, filing returns and maintaining compliance with each taxing jurisdiction.
No need to let sales tax compliance interrupt your successful quarter of increased sales. Libertas can seamlessly streamline your sales tax process from start to finish, so you can focus on finishing the year strong.