How Black Friday and Cyber Monday Sales Can Trigger Unexpected Sales Tax Nexus

A sudden sales surge during Black Friday and Cyber Monday can instantly push your business past state nexus thresholds without you realizing it. So, prepare for the high-volume orders by automating your sales tax compliance.

Black Friday and Cyber Monday (BFCM) are great for your revenue, but they could also be quietly triggering a tax time bomb. Those record-breaking sales, new customers, and multi-state orders might be pushing you past economic nexus thresholds without you even realizing it.

Before you start celebrating your best quarter yet, it’s worth asking -- did your sales success create new tax obligations? Let’s break down how seasonal surges can trigger unexpected sales tax nexus and how automation can keep your compliance from collapsing under the holiday rush.

The BFCM Sales Surge and Its Hidden Tax Risks

Black Friday and Cyber Monday are the peak shopping periods of the year, thanks to the major discounts and strategic marketing designed to attract consumers. So, ecommerce brands must prepare because the short-term surge in sales usually creates new or lasting tax obligations.

The extended sale period, which typically lasts for four days, may feel seasonal, making it easy for you to miss a compliance gap. However, that can quickly turn into a year-round trouble with lasting implications once you unknowingly create new tax obligations in one or multiple states.

Here’s what the BFCM boom could mean for your business. Expect the following implications when your sales are high enough to trigger nexus.

New state registrations – Crossing sales or transaction thresholds in states where you weren’t previously registered can require immediate sales tax registration and collection obligations.

Back taxes and penalties – If you miss your new nexus trigger, you could owe back taxes plus penalties and interest for uncollected amounts.

Complex filing requirements – Once nexus is established, you’re obligated to file periodic returns—even if your sales drop after the holidays.

Audit exposure – States track transaction data closely; sudden spikes can attract audit attention, especially if you fail to register promptly.

Ongoing Compliance Burden – Nexus doesn’t reset when sales slow down—once triggered, you’re in for continuing compliance, filings, and monitoring long after BFCM ends.

Low Threshold States: When Small Gains Create Big Tax Liabilities

Economic nexus determines when a business should register, collect, and remit sales tax even without a physical presence. The economic nexus threshold varies per state, with most states limiting it at $100,000 in total sales and/or at least 200 transactions.

California and Texas’s economic nexus threshold is $500,000. However, some states have a lower threshold, so you can easily trigger nexus. For instance, in Utah and Washington, you have to register your business and collect sales taxes when you make $100,000 in sales.

Additionally, you can trigger nexus even if you are living in a state without sales tax. For instance, you live in Oregon and offer free shipping and bundle discounts to South Dakota and Kansas as part of your BFCM promotion. If you generate $110,000 in sales in South Dakota, then you have to register in that state.

Overlooking your new tax obligation could mean penalties and back taxes. Do not wait for tax authorities to notify you of your unregistered activities and be scrutinized in a costly and time-consuming audit.

Be proactive and do not let your sales turn into a liability. So, you should monitor your exposure all the time.

The Cost of Waiting: Why Delaying Registration Is Risky

Many businesses are so focused on increasing their sales during BFCM, but are not as driven when it comes to their new tax obligations. They delay registration because they find the process inconvenient, and some just underestimate how Black Friday and Cyber Monday can push them past nexus thresholds.

Unfortunately, waiting can lead you to paying back taxes, penalties, and interest. The longer you wait, the higher your risk of being audited, and that’s the last thing you would want for your business.

Noncompliance can affect your brand’s reputation, customer relationships, cash flow, and operations. Here’s why you should end the wait and be on top of your sales tax obligations.

Penalties for noncompliance

When you register late, states often impose steep penalties for failing to collect and remit sales tax on time. The penalties can range from flat fines to a percentage of the tax amount you owed. Compounded penalties can significantly affect your profits.

Back taxes and interest

There is no way you can escape the sales tax you owe to the government. If you triggered nexus earlier than you registered, you’re responsible for paying sales tax retroactively. This means you still have to pay the taxes you owed, plus the compounded interest. In short, you will end up paying more than you initially owed. This can get worse if you owe taxes in multiple states.

Increased audit risk

When you wait too long before you register your business after triggering an economic nexus, you significantly increase your audit risk. Tax authorities deem late registration as a red flag. And if they subject you to an audit, the process can be protracted and expensive. It will affect your business operations and consume your resources. It might also uncover inconsistencies in the report and filing.

Damage to business reputation

It is your responsibility as a business owner to comply with your tax obligations. Noncompliance can be a major turn-off for your partners and customers who expect you to be professional. This can cast doubt on your reputation and affect the value of your business in the case of acquisition or partnerships.

Ongoing compliance burden

Once registered, you’re obligated to file returns regularly, even during periods of low or no sales. Failing to register early can complicate your future compliance setup, as states may require you to reconcile historical data. This increases the time and cost of getting fully compliant later on.

Automating Nexus Tracking During the Holiday Rush

Black Friday and Cyber Monday are goldmines, but they can also be a minefield depending on how you manage your sales tax compliance. If you still track your nexus manually, you are likely treading on a minefield.

Ditch the spreadsheets and use sales tax automation tools like Kintsugi, which tracks your nexus in real time. The tool will alert you when you are close to or have crossed a nexus threshold, reminding you to register.

Automating nexus tracking eliminates the guesswork and manual monitoring that leads to missed or late registration, penalties, and interest.

Do not divide your energy and attention during the holiday rush by keeping tabs on your nexus manually. Automation tools make compliance easy from registration, calculation, and remittance, so you can stay ahead of your tax obligations with confidence.

Exceeding Thresholds: What to Do Next

Without sales tax automation, you have to go through the following processes.

1. Register promptly in affected states

As soon as you confirm you’ve crossed a nexus threshold, begin the registration process with the state’s tax authority to minimize penalties and show good-faith compliance.

2. Calculate and address back taxes

Review the date you triggered nexus and calculate any sales tax owed from that point forward. You may need to remit unpaid taxes out-of-pocket if they weren’t collected at checkout.

3. Work with a tax professional if necessary

If you’re unsure how to handle your obligations, a tax professional can guide you through the process. The process can be confusing, especially if you are new to navigating tax rules. A tax professional can help you with the process to avoid mistakes and mitigate exposure. However, they may charge you for an hourly rate, and their service can be expensive.

4. File and remit taxes

After collecting taxes, file your returns and remit sales tax to the appropriate state. Make sure to file on time to avoid penalties and interest.

5. Keep detailed documents of all transactions

Keep detailed records of all sales transactions, including invoices, your registrations, tax returns, and exemption certificates. These documents are necessary in case of audits.

If you want an easier experience, pivot to automation.

Automate nexus tracking

You can skip the steps above by simply automating sales tax compliance. A sales tax automation solution like Kintsugi monitors real-time sales by jurisdiction and will alert you when you trigger nexus to prevent compliance surprises in future peak seasons. 

Kintsugi also calculates taxes accurately, helps you manage exemptions, and keeps all documents in a centralized storage. With Kintsugi, you are always audit-ready and tax compliant.

Stay ahead of tax trouble this holiday season, try Kintsugi’s free tax exposure assessment to simplify sales tax management before your next BFCM rush.