The COVID-19 pandemic caused an immediate and massive uptick in e-commerce and online sales as people around the globe shop from the safety of their homes. This created opportunities for online retailers, as well as a slew of new tax challenges expected to surmount in the coming year.
The U.S. Census Bureau found that consumers spent $211.5 billion in online purchases during the second quarter of 2020 alone, with a steady increase quarter over quarter. Additionally, Deloitte projects that nearly 65% of shoppers will opt for online purchases this holiday season as a result of the pandemic.
Our world is increasingly digital, but technology serves to connect buyers and sellers in ways that were previously not possible. However, with opportunities come challenges. Retailers are selling in more places, to more customers across state and country lines. Subsequently, they’re subject to an increasing number of tax regulations – more than 11,000 different jurisdictions in the U.S. alone, constituting nearly 700,000 unique taxability rules. Just when sellers feel like they have a handle on all of the requirements and regulations, they change.
Today’s tax regulations can be influenced by contributing factors, including environmental impacts, business changes that require merchants to pivot, the continuously evolving pandemic and, of course, technology advancements. We’re seeing a massive shift to the cloud, mobile commerce and handheld devices, not only in customers’ hands, but also in stores.