While curbside pickup started as a way to continue serving customers during the early days of the pandemic, it has become a well-loved feature for consumers — and one that’s here to stay. The trend of shoppers buying online and then picking up their purchases in a store or curbside has broken down traditional boundaries in the retail industry. 

Curbside and in-store pickup have continued to flourish even in a post-pandemic retail world, and it has blurred the distinction between e-commerce and brick-and-mortar sales. There are clear benefits for both customers and retailers. Customers like it because when they pick up an online purchase in a brick-and-mortar store, they often get the item more quickly than if they had opted for delivery. Retailers like it because the model helps reduce the cost and complexity of fulfilling orders via shipping and delivery services, while leveraging the inventory that’s already in their stores. Store pickup also provides retailers an opportunity to enhance the customer experience during brief (yet potentially valuable) in-person interactions.

The option shows no sign of slowing down. On the contrary, even e-commerce giants have been figuring out ways to take advantage of the trend — for example, by offering same-day pickup, or partnering with physical store owners to handle in-store pickup of items bought on their website.

The trend has implications for indirect tax teams. It complicates the exercise of determining where tax should be collected, and the rate at which it should be applied. 

Imagine if someone in Maryland buys an item online from a retailer based in Chicago, and picks that item up in one of the retailer’s stores in Virginia. In that situation, it would take comprehensive knowledge of local tax laws in each jurisdiction, as well as of broader federal rulings, to calculate how sales tax is collected in the digital era.

Another component of in-store and curbside pickup that could cause trouble for the tax department is the ability for patrons only to buy online and pickup in the store (BOPIS), but also to buy online and then return the item to the store (BORIS). The latter option increases omnichannel flexibility for the consumer, but also comes with tax compliance complexities that demand attention.

It's important to ensure that existing retail tax solutions provide continually updated sales, use and value-added tax content that reflects the latest regulations and tax rate changes. The tools should also specifically account for the various situs rules, including the jurisdictions in which tax should be calculated, and the ship-from or ship-to location. The right tax tool should also contain retail-specific content that supports accurate tax determination in complex retail scenarios, including curbside and in-store pickup, BORIS and more.

While it may seem as though technology has caused a lot of challenges for indirect tax teams, that same technology can also be used to combat risks and provide a modern customer experience without sacrificing compliance.

Pete Olanday is director of retail consulting at Vertex Inc.