BORIS and NOMAD Complications: How Returns are Taxing Retailers

Merchants confront a growing number of complexities as they strive to deliver a singular customer experience across all of their sales and services channels. The magnitude of this challenge is evident in some arresting statistics and a couple of important acronyms.

Vertex Inc.

In 2017, 40 percent of online shoppers purchased multiple variations of similar items so they could determine which they liked best before returning their other purchases. In 2018, 38 percent of retailers reported a year-over-year increase in “buy online, return in store” (BORIS) transactions. For customers, this convenience represents a crucial component of the seamless, omnichannel experience they now expect retailers to deliver. For merchants, BORIS activity and similarly complicated returns (e.g., those that involve purchases in one state and a return to a store in a neighboring state) represent significant challenges, especially from a tax management perspective.

Consider the issues that arise when a return transaction involves one of the NOMAD states and a non-NOMAD state. A store based in Delaware, one of those states without sales tax, that accepts a return from a sister store in New Jersey, with a state sales tax of 6.625 percent, needs immediate, accurate access to complete taxability information (including local sales tax rates, tax categories, rules related to the crediting of tax on returns, and more) concerning the specific items being returned.

All of these factors figure into a single return. Now multiply those complications by the increasing number of returns that shoppers are making.

The dizzying number of tax variables involved in recalculating sales tax accurately in real-time can be difficult. Happily, tax automation can help merchants mitigate this complexity, streamline operations and ensure accuracy, as I discuss in this E-Commerce Times article.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.


About this Contributor

Pete Olanday Headshot
Pete Olanday
Vertex Consulting Retail Practice Leader

Pete Olanday is Vertex Consulting Retail Practice Leader, responsible for the integration of Vertex's Indirect Tax solutions in the retail space, specifically with Point-of-Sale systems and e-commerce platforms. Prior to joining Vertex, Pete worked for IKEA and EY. Pete has a B.S. in information and decision sciences from Carnegie Mellon University.

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