Why Love is So Taxing

With apologies to Shakespeare, there’s nothing poetic about the tangle of sales tax rates and rules that apply to Valentine’s Day gifts. While the holiday is intended to celebrate devotion, human connection, and commerce, it also highlights the growing complexity of modern tax policy. That complexity is amplified by shifting consumer preferences and next‑generation commerce models that tax professionals and business leaders must navigate every day.

Across categories such as beauty and apparel, home décor, electronics, experiential gifts, curated bundles, and pet accessories, Valentine’s Day purchases can create significant tax compliance challenges for businesses and their indirect tax teams. This is especially true for purchases made on social media platforms, online marketplaces, AI platforms, and other digital channels, as more companies – including those outside of traditional retail – deploy omnichannel capabilities.

Here are three reasons why tax compliance on Valentine’s Day purchases requires more expertise, data, and precision than ever before:

• It’s not you—it’s the jurisdiction: U.S. sales and use tax rates broke records in 2025. More new state and local taxes were enacted last year (335) than in any other year over the past decade. Plus, there were 681 total combined sales tax rate changes and new rates in 2025 – the third-highest number of annual changes in the past decade, according to Vertex’s 2025 End-of-Year Rates and Rules Report. VAT rates and rules demonstrated similar volatility.
• The rules of engagement are ambiguous: Beyond their frequent fluctuations, tax rules can be imprecise, leaving determinations open to interpretation. Two years ago, the VAT treatment of Walkers’ Sensations Poppadoms generated international headlines based on a ruling that hinged on the volume of potato granules, potato starch, and modified potato starch used in their production. The verdict? Enough to classify them as taxable snacks rather than tax-exempt restaurant food requiring further preparation. Similarly, complex tax determinations play out across other food groups—bakery items, energy drinks, and frozen yogurt among dozens of others—and across other product categories. When these transactions cross multiple tax jurisdictions, the determinations become even hazier. Those chocolates you bought your sweetheart? They might be tax-exempt if they contain sufficient flour.
• Bundles are the love triangles of tax compliance: A growing number of retailers are embracing product-service bundles that combine physical, digital, and in-person offerings. (Manufacturers are following suit, by the way.) Consider a Valentine’s Day gift box containing fresh ingredients for a restaurant-quality meal at home, 15 minutes of video guidance from a professional chef, and a package of three cooking classes at a high-end grocery store. How that gift box is taxed will vary by state and local jurisdiction based on how each classifies the products and treats bundled transactions. Bundled digital transactions pose unique determination and compliance challenges.

Love may be complicated, but tax compliance doesn’t have to be – nor must it lead to heartbreaking visits from auditors. The good news is that a modern tax technology stack can handle these compliance challenges far better than manual processes – leaving indirect tax groups more time to focus on tax planning and delighting colleagues and customers (and maybe your sweetheart, too). Ready to simplify compliance and fall back in love with your tax process? Visit Vertex to see how modern tax technology can work for you.