5 Sales Tax Ecommerce Mistakes To Avoid During Black Friday & Cyber Monday Sales

Black Friday and Cyber Monday can turn your sales dashboard into fireworks and your tax compliance into a dumpster fire. Between flash deals, new customers, and sales flying across state lines, even the savviest ecommerce or SaaS brand can trip over tax rules.

So, before the chaos begins, make sure these five common sales tax mistakes aren’t lurking in your checkout cart.

1. Misclassifying promotions or bundled products

This happens when ecommerce businesses apply incorrect tax treatment to items sold together during complex BFCM deals. Different states have different rules on how discounts, bundles, and “free” items are taxed, and one misstep can throw your compliance off.

For example, if you offer a bundle that includes a taxable item (like software) and a non-taxable item (like a consultation), some states require you to allocate tax proportionally, while others tax the entire bundle if it’s sold for a single price.  “Buy One Get One” (BOGO) deals can also be misclassified if the state considers the “free” item still taxable.

Misapplying discounts can result in over- or undercharging taxes. This happens when you tax the pre-discount price, even though the state requires you to tax the final amount.

So, it’s important to set up your tax engine to cater to the right promotional rules in the state where you sell or ship your products. An incorrect setup risks you from collecting the wrong amount of sales tax.

Unfortunately, this mistake can quickly compound during BFCM, when businesses experience high sales volume. So, it’s nearly impossible to catch and correct errors.

How to avoid this mistake:

• Choose a smart sales tax automation tool that applies tax rules based on the exact structure of your discounts and bundles, ensuring state-specific compliance in real time. An automation tool like Kintsugi can help you with this.

• Run test transactions for your BFCM deals in advance to confirm your tax engine calculates correctly for each state and bundle scenario.

2. Not collecting in newly triggered states

Failing to collect in states where you just triggered nexus is another common mistake during Black Friday and Cyber Monday. Many businesses underestimate their sales during the holiday rush and assume that there’s no significant increase in their usual sales volume. However, a spike in multi-state orders can easily lead to new tax obligations without warning.

For instance, if you make $100,000 in sales in Florida due to a spike during BFCM, you are legally required to register your business and collect and remit taxes. If your ecommerce or SaaS company is based in one state but you ship to other states and trigger nexus there, you must register, collect, and remit taxes in those states.

Failing to do your tax obligations after hitting the threshold incurs back taxes and penalties. It also increases your audit risk.

Unfortunately, many businesses struggle to track their state-by-state sales in real time. They mistake BFCM for another promotional weekend, and this oversight can snowball into a significant compliance gap when sales volume is high across multiple states.

How to avoid this mistake:

• Implement real‑time sales‑by‑state monitoring so you can flag when you approach or surpass each state’s economic nexus threshold, and begin registration and collection as soon as triggered.

• Engage an automated tax‑compliance tool or professional to handle jurisdiction‑level tracking, so you don’t rely on manual spreadsheets that can’t scale across states or high volumes.

• After BFCM, audit your order data by state to identify any states where you crossed the threshold but didn’t collect tax, correct the shortfall, register if needed, and remit back taxes before penalties grow.

3. Forgetting tax on shipping

Another common mistake many businesses make is the assumption that “free shipping” or flat-rate delivery means no tax is involved. Shipping rules vary widely by state. For instance, some states tax shipping when the item is taxable, while others exempt it when the item is non-taxable or the shipping charge is listed separately.

For instance, in New York, “free shipping” can still be taxable when bundled into the price of a taxable item. However, many merchants, especially those using manual checkout systems, often forget to apply sales tax on shipping. Or they probably didn't add shipping because they assumed it was tax-exempt.

During the holiday rush, when there’s a spike in order volume and shipping promotions, it’s easy to overlook taxes on shipping. Unfortunately, this mistake can lead to under-collection and back-tax liabilities. It also increases your risk of an audit — a process that can be costly and time-consuming.

So, make sure to factor in the shipping tax for the upcoming BFCM. Remember that forgetting tax shipping during BFCM can be a costly mistake wrapped in a seemingly harmless delivery.

How to avoid this mistake:

• Go through your top‑shipping states and check whether shipping charges are taxable when the item is taxable, whether shipping must be separately stated, and whether mixed shipments affect the taxability.

• Ensure your checkout and tax engine treat shipping as a taxable line item where required. Make sure your cart logic or tax automation flags shipping (and handling) as taxable when the product is taxable and the shipping address meets the state's conditions.

• Before peak rush, simulate orders with shipping to risk states (and mixed taxable/non‑taxable items) to catch mis‑configurations; after BFCM, review order data to verify shipping was taxed correctly in each jurisdiction and make corrections early if needed.

4. Overlooking SaaS or digital product taxability

Many ecommerce and SaaS businesses assume that digital products are always non-taxable during Black Friday and Cyber Monday. However, the rules regarding SaaS or digital goods vary widely by state.

Some treat digital downloads, streaming services, and software as taxable tangible property, while others exempt them entirely or apply tax only under specific conditions.  There are dozens of US states that tax digital goods, and each has its own definition of what constitutes a taxable digital good. Some include downloaded content such as music, video, ebooks, and software, as well as streaming services. However, others only tax a digital product when it’s delivered on a tangible medium, such as a disk or a USB drive.

During the BFCM rush, when launching new digital bundles, subscription deals, or global access offers, misclassifying the product and ignoring destination-based rules are common. However, sellers must remain vigilant, as they will be liable for any uncollected taxes.

With some states still unclear about their digital tax rules, managing compliance manually is tricky. Automation makes this simple by using regularly updated product tax databases and intelligent mapping to assign each product to the correct tax category. It also removes human error from manual classification.

How to avoid this mistake:

• Map out the taxability of your digital product by state before BFCM, including definitions for your specific offerings (software, SaaS, downloadable content, subscriptions).

• Use automation or tax‑compliance tools that assign correct tax codes for digital goods and automatically apply destination‑based rules to each transaction.

• After BFCM, conduct a quick audit of digital‑product sales to identify any states where tax should have been collected but wasn’t, and address registrations or remittances promptly.

5. Failure to securely store and manage exemption certificates

Failing to keep exemption certificates is a common mistake during the BFCM rush. Since businesses are more focused on volume and speed, they often give little attention to properly documenting each transaction.

For instance, they accept exemption certificates but fail to properly store them, verify their validity, or track their expiration. This leaves compliance gaps and puts you at risk when authorities conduct an audit of your business.

Most companies still manage exemption certificates manually. However, this approach doesn’t hold up during the demanding holiday rush.

In a high‑traffic BFCM period, missing certificates can mean reporting exempt sales without documentation, triggering auditor extrapolation that increases your tax liability. Without valid certificates on file, you could face back taxes, penalties, and interest, even if your sale was legitimately exempt.

Essentially, failing to archive and manage exemption certificates correctly during peak sales not only overlooks a single transaction error but also exposes you to systemic compliance risk.

How to avoid this mistake:

• Use tools that capture and verify certificates at checkout, so you’re never chasing paperwork after the sale.

• Set up automated alerts for expiring or missing certificates to stay ahead of compliance gaps.

• Store all certificates in a cloud-based system with easy access and audit-ready organization—ditch the spreadsheets.

How Kintsugi Helps You Avoid These 5 Mistakes Automatically

Kintsugi addresses each tax mistake above with its powerful features designed to streamline sales tax compliance. Whether it’s nexus tracking, shipping rules, or digital taxability, Kintsugi keeps you audi-ready so you can enjoy your BFCM sales without scrambling to fix the mistakes most encounter during this season.

Here’s how Kintsugi solves each issue:

Ecommerce and SaaS businesses often face compliance challenges during BFCM due to massive sales spikes, complex discounts, and multi-state tax rules. However, partnering with the right sales tax automation tool, like Kintsugi, not only reduces the risk of audit but keeps you confidently compliant, so you scale without worries.

So, stay compliant this BFCM by automating sales tax with Kintsugi to catch errors before they cost you. Start by getting a free tax exposure (nexus) assessment.