5 eCommerce & Sales Tax Trends You Should Watch out for in 2021

The United State and the rest of the world is yet to be fully recovered from the tide of Covid-19. The pandemic has brought about the new normal, which has altered the way people live, work and interact with each other, and also with brands.

This change also affect tax policies across boards.

A study shows that one-fifth of the sales made by retailers across the US in Q3 of 2020 came from online sales. This is one of the trends that the new normal brought.

In this blog post, we would be providing retailers with key sales tax trends to watch out for, so as to effectively plan ahead.

Let’s get started: 

1. Omni-Channel Retailers transformation to take more dominance:

The pandemic affected shopping pattern, and since ‘brick n mortar’ stores are amongst the worse hits, there has been a significant growth in Buy Online, Pickup in Store (BOPIS). However, this has some complications. Amongst them are inventory tracking and compliance to sales tax. To tackle this, an effective point-of-sale (POS) system that can handle that complexity must be considered. S-a-a-S would help take such burdens off.

2. Tax Reforms for Remote Services would increase:

In the second quarter of 2020, the U.S. Census Bureau found that consumers spent over $200 billion in online purchases alone (with consistent increase observed quarter by quarter). Following the landmark decision in South Dakota v. Wayfair (2018), which permitted states to tax out-of-state internet retailers and remote service providers, the increase likelihood of state looking deeper into digital services is high for 2021 for taxation in order to increase their Internally Generated Revenues (IGR). With growing trends in virtual meetings, the likelihood of states to begin to tax remote services and businesses hosting online events are higher in 2021. 

3. Marketplace facilitators are expected to grow in 2021:

In most states, Marketplace facilitator laws are already in effect. With surge in the increase of online shoppers and Marketplace sellers the likelihood of marketplace facilitators are also expected to grow geometrically. With this, it is expected that States could begin to crack down on unregistered sellers in 2021 even as the number of Marketplace facilitators are expected to surge. 

4. Overwhelming tax complexities anticipated ahead of growing Ecommerce Sellers:

With the anticipated growth of marketplace facilitators especially Ecommerce companies, complying with taxes would pose a challenge for those selling across state lines, as they might be paying higher.

5. Mobile wallets users to increase sporadically:

Though credit cards are most popular for online purchases, but mobile wallets are becoming increasingly popular, especially amongst the Gen Z, who are the highest online shoppers. So, it is imperative sellers put these into consideration in their purchasing protocols.

This post is just a highlight, and not exhaustive explanation of upcoming sales tax trends.

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