In a post-Wayfair world, with evolving economic nexus thresholds and a squishier ‘undue burden’ replacing the bright-line “physical presence” rule as the standard for nexus, it’s no surprise that the upward trend in tax calculation volume for ecommerce from Black Friday through Cyber Monday has continued.
As evident by the total number of tax calculation requests Sovos received on Black Friday and Cyber Monday in 2017, 2018 and 2019, Wayfair has significantly impacted ecommerce and traditional retailers’ tax processes. For example, we saw one client’s total tax calculation requests at approximately 14 million in 2017. After the Supreme Court’s Wayfair decisions, as states started to enforce economic nexus standards, requests from that one retailer spiked to 43 million in 2018, a 207 percent increase. With more states coming onboard in 2019, the retailer’s transaction requests went up again, from 43 million to 49 million or about 14 percent.
In 2019, our retail customers continued to see an increased number of sales demanding a tax calculation due to expanded nexus over the peak four-day holiday shopping period. During this year’s Cyber Monday and Black Friday, Sovos’ sales tax engine had six times more traffic than the average day. In fact, Sovos’ data processing for tax transactions increased 80 percent on Cyber Monday between 2018 and 2019.
Sales and use tax continues to get more complex and burdensome with the evolving regulatory environment, and the need for comprehensive and scalable sales tax compliance solutions will continue to increase. It’s important to have a robust and trusted sales and use tax solution to help you stay compliant.
Learn more in Preparing for the Second Wave of Wayfair.