Sales Tax & Black Friday: What Retailers Need to Know Before the Rush

Black Friday is one of the most significant sales opportunities of the year. From doorbusters to online flash deals, businesses of all sizes prepare for a surge in traffic and revenue. But with higher sales volume comes a critical responsibility many businesses overlook: properly charging, collecting, and remitting sales tax.

Whether you operate a brick-and-mortar store, an online business, or a hybrid model, understanding your sales tax obligations during the Black Friday shopping season is essential to staying compliant and protecting your bottom line.

Black Friday dramatically increases sales volumes, which means:

• More transactions to track
• Greater potential for errors
• Higher visibility by tax authorities
• Increased chances of triggering audits

Mistakes that might go unnoticed during slower months can become significant liabilities when multiplied by hundreds or thousands of holiday transactions.

Key Sales Tax Considerations for Black Friday:

1. Know Your Nexus

A “nexus” is the connection your business has with a state that requires you to collect sales tax there.

You may have nexus through:

• A physical presence (store, warehouse, staff)
• Economic activity (passing a state’s sales or transaction threshold)
• Marketplace facilitator rules

2. Verify Taxability of Your Products

Not everything sold on Black Friday is taxable. Depending on the state, items like:

• Clothing
• Food
• Digital goods
• Children’s products

May be taxed differently. If you’re running discounts or bundles, you must ensure you’re applying tax correctly to each component.

3. Don’t Forget About Discount Rules

Sales tax is usually calculated on the discounted price, not the original price, but it depends on the type of discount:

• Manufacturer coupons → often taxable on the full price
• Store discounts → usually taxable on the discounted price
• Buy-one-get-one promotions → tax treatment varies by state

Incorrectly applying tax on heavily discounted items is one of the most common Black Friday errors businesses make.

4. Keep Marketplace Rules in Mind

If you sell on platforms like Amazon, Etsy, or Walmart Marketplace, the marketplace may collect and remit sales tax on your behalf.

However, you still must:

• Track which transactions are marketplace-facilitated
• Know your responsibilities in non-marketplace sales
• Maintain accurate records for audits

5. Prepare for Increased Online Sales

Black Friday has shifted heavily toward e-commerce. With this shift comes additional tax considerations:

• Out-of-state sales
• Shipping and delivery charges (taxable in some states)
• Digital product taxability
• Cross-border sales within the U.S.

If your website integrates with tax calculation software, double-check that the settings and product categories are correct before the holiday rush.

Black Friday is a significant revenue booster, but it also brings added sales tax complexity. Businesses that prepare early by understanding tax rules, reviewing systems, and keeping accurate records can enjoy the benefits of the season without the compliance headaches.

If you need help reviewing your sales tax obligations before Black Friday, working with a DDH can ensure you’re set up for a smooth and compliant holiday sales season.

 About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC, we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.