Sales Tax Concerns of Coming Holiday Season

The High-Stakes Holiday Shopping Environment

Holiday shopping season is the playoffs for retailers; Everything must work perfectly, from the warehouse to the order-taking taking to the shipping and everything between.

This is especially so for ecommerce retailers, who tend to deal with shoppers with short fuses who can simply click away from the site and who will show long memories when next shopping season rolls around.

2025 Holiday Retail Landscape: What to Expect

The National Retailers’ Federation predicts this will be $1 trillion holiday shopping season, with American shoppers expected to spend more during this season than last year despite economic uncertainty and rising prices.

The 2025 NRF estimates that shoppers will spend $1.01 trillion to $1.02 trillion in November and December, an increase of 3.7% to 4.2% over last year. Retailers rung up $976 billion in holiday sales last year, a 4.3% increase from the prior year, NRF said (adding that the 2025 the figures were a surprise).

Yet more Americans are growing selective and focusing on discounts. And while spending is expected to be up again, the growth of that spending may be in decline. The forecast this year arrives during the longest government shutdown in U.S. history. There has been no government data released on the jobs market or retail sales since the shutdown began in early October.

“People are going to keep shopping, but with continuing concerns about tariffs and elevated prices especially on electronics, apparel, toys, food and household staples,” added the 2025 Holiday Outlook from consultancy PwC.

How Retailers Can Prepare for Holiday Shopping Demand

Holiday shoppers are eager to spend yet quick to shift loyalties if the shopping offers any glitches. Consider how quick would-be buyers are to click away from a site during normal shopping times; add the time crunch of the holidays and you can easily imagine the increased potential to lose shoppers.

Holiday shoppers are also early shoppers: The NFR has reported that up to 40% of shoppers shop for holiday gifts before Halloween. Even that traditional linchpin of that shopping period between Thanksgiving and Cyber Monday may be starting, even slightly, to erode.

This is, you may have discovered and even implemented some of experts’ recommendations:

• Hire extra help. Even at this late date, try to leave time to ensure that they fit your operation.
  
  
• Provide equal training. Seasonal help often gets less attention. Find a way to give them extra attention – after all, they will be helping you in your toughest time of year, and pressure can be the best way to find a diamond.
  
  
• Set staff schedule around busiest times. Study peak sales hours, busiest hours of website. marketplace facilitators’ visits and other activity pegs to see you know fulfillment staff has to be at its highest. Whether it’s matter of minutes or hours to get the package out, time has never been as important to customer satisfaction.
  
  
• Doublecheck your site’s (and any brick-and-mortar locations’) décor. A site still decked out for summer or fall is just a turn-off when snow starts to fall and there are presents to start wrapping.
  
  
• Make tax clear. According to the Baymard Institute, 39% of shoppers abandon their online shopping cart because of sticker shock with taxes (including sales taxes), shipping and fees to be too high. There are few ways commerce retailers can affect this statistic directly, but they can chip away at cart abandonment with quick, accurate and consistent sales tax calculations across all channels.

Supply Chain Pressure & Nexus Considerations for Ecommerce

As an ecommerce retailer, supply chain will likely be your biggest challenge. Shoppers’ early activity does seem to make fulfillment easier, but preordering what early indications show will be your top products this year may be a worthy risk.

Increased sales activity almost always leads to the need for more scrutiny on sales tax complexities. If you store inventory in a warehouse or use a fulfillment center to process orders, you may have physical nexus (though lately this has been debated in court). The increasingly popular delivery system of dropped shipment increase need to investigate nexus obligations of three parties rather than just two. The risk of nexus also increases if you sell more via social media and through marketplace facilitators.

Your first priority should be figuring out where you have nexus if you’re unsure. You also need an effective way to track new nexus. Ensure you have an efficient way to apply the correct rates to all items for each jurisdiction where you sell.

Feeling Unprepared? Get Help Before the Holiday Rush

If you think your business may be unprepared for this year’s holiday buyer rush, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.