Thanksgiving is a day of food, fun and family across the United States. But the holiday has become overshadowed to an extent by the commercial extravaganzas looming just beyond it on the calendar: Black Friday and Cyber Monday.
Cyber Monday 2016 was the biggest online sales day ever, with sales increasing 12.1% year-over-year to a sum of $3.45 billion. That’s great news for Amazon sellers — the eCommerce giant reported its Marketplace sold 23 million items in 2015 — but it also means they need to be mindful of the potential sales tax ramifications.
Here are some things to keep in mind after the Cyber Monday fracas has died down:
Every state has different rules and rates for shipping taxes.
Some states consider shipping to be taxable, while others don’t. And then there are the wild card states, like Colorado, which considers shipping taxable under most circumstances, but does not if the shipping charges are invoiced separately and the buyer determines a separate way to receive the products sold — setting up their own shipping, picking up the products in person, etc.
Colorado isn’t alone in its complexity. Some states consider shipping to be taxable only when the seller makes a profit off of the shipping; on the flip side, if the seller only charges the consumer the exact cost of shipping on a sale, it may not be considered taxable.
Check out our sales tax by state map to stay on top of each state’s rules and regulations on shipping.
Nexus is being redefined.
This past spring, Massachusetts attempted to pass a directive that would establish nexus for any seller with more than $500,000 in sales — or over 100 total sales — into the state would be required to register, collect and remit sales tax to the state. However, the Massachusetts Department of Revenue revoked the directive after Amazon refused to comply, prompting a state judge to rule in favor of the DOR in September. After Amazon was ordered to turn over its vendor data, it introduced an amnesty program for its Marketplace sellers who had not been collecting and remitting sales tax.
This was the first instance of a state cracking down on remote sellers and imposing new nexus requirements, but more are sure to follow Massachusetts’ lead. Just as they should stay up-to-date with the latest state-by-state shipping rates, eCommerce sellers should keep track of the states participating in the Amazon Amnesty program, and also keep tabs on any new nexus regulations that may emerge in the coming years.
The Taxify team will work to keep you updated on any developments in the regulatory world. Consider signing up for a free trial to see if we can help with your sales tax reporting process. In the meantime, we wish you the best of luck with Cyber Monday sales and the forthcoming holiday season!