How To Collect Colorado’s New Delivery Fee in Top E-Commerce Sales Channels
Colorado recently imposed a $0.27 fee for all transactions that are being shipped into Colorado, effective July 1st, 2022. Read this guide to learn which e-commerce sales channels will provide support for this fee.
Background on Colorado’s Retail Delivery Fee
Effective July 1st, retailers who ship taxable products to Colorado must begin collecting and pay $0.27 for each invoice for Colorado’s new retail delivery fee.
This fee was announced in May of 2022 which has not given sales channels, or tax consultants, ample time to prepare. We have reached out to various sales channels to determine if they will be providing support for e-commerce vendors to separately state this fee on their invoices. While the majority of sales channels do not currently support adding a separate shipping fee for Colorado deliveries, we hope to see additional support for this feature in the coming months.
Will AvaTax support Colorado’s Retail Delivery Fee?
Although technically not a sales channel, Avatax is a tax calculation plug-in that is used in a variety of sales channels that e-commerce sellers frequently use. Avalara has indicated that they will support calculation of the retail delivery fee, however merchants must programmatically add a $0 line-item “product” to each Colorado invoice and pair it to the Avatax tax code “OF400000”. This solution is problematic because it will require significant software development by e-commerce merchants in order to calculate the fee.
Will BigCommerce support Colorado’s Retail Delivery Fee?
BigCommerce currently has a workaround for collecting Colorado’s new Retail Delivery Fee. If the merchant is using the manual tax set-up, the current workaround is to create a ‘shipping zone’ for Colorado and add a handling fee of $0.27. Within the handling fee settings, there is a checkbox for “Show handling fee separately at checkout”. If you leave this box checked it will display the handling fee/charge as a separate line item in the cart when checking out.
We’d like to note that this is a workaround and not ideal because “handling” may be taxable based on the jurisdiction, and the fee should be nontaxable. In addition, Colorado’s statute tells us that we should separately state the fee and identify it as the Retail Delivery Fee. With this workaround, the fee would be incorrectly displayed as a separate line item for “handling”.
For instructions on how to do this in BigCommerce, see their knowledge base articles on how to Create Shipping Zones and Adding Handling Fees to Shipping Quote.
Will Magento support Colorado’s Retail Delivery Fee?
We have reached out to Magento regarding if they will be supporting the ability to charge the Colorado Retail Delivery Fee, and we have not heard a response back yet. We hope that they will be providing support soon. We will provide updates on this channel here as they become available.
Recharge (Shopify Subscription Plugin)✅
Will ReCharge support Colorado’s Retail Delivery Fee?
Recharge will add the Colorado Retail Delivery Fee (RDF) automatically within Shopify. For merchants using the Recharge Checkout on Shopify and the Recharge Checkout on BigCommerce, Recharge will add a $0.27 (cents) fee on charges with a Colorado destination address, as long as the item and/or customer is subject to sales tax.
For merchants using the Shopify Checkout Integration, Shopify automatically adds the fee to each individual charge. You will see this fee reflected on both checkout and recurring charges. See Shopify’s US Tax Reference for more details.
Will Quickbooks support Colorado’s Retail Delivery Fee?
Quickbooks has not yet announced whether they will provide support for Colorado’s Retail Delivery Fee. However, you can manually add a fee as a line item to applicable invoices. Since this is a manual process, it may be easy for the person generating the invoice to overlook.
We hope that in the coming months, Quickbooks will be able to provide better support for this fee for their merchants. However, this fee is new and Colorado has not provided technology companies with ample time to prepare. We will provide updates on this channel here as they become available.
Will Shopify support Colorado’s Retail Delivery Fee?
Shopify can collect the Colorado Retail Delivery fee, but only if you are paying for the premium Shopify Tax feature. Shopify’s Basic Tax feature will not collect the Colorado Retail Delivery, nor will the older “Manual Tax” feature. You can learn more on Shopify’s support article here.
Will Sovos support Colorado’s Retail Delivery Fee?
Sovos reports that it’s prepared to support the determination, collection, reporting, and remittance of this fee for its clients effective July 1. Additional functionality providing even more robust support will be available as part of its planned July 2022 SaaS release of their Global Tax Determination (GTD) engine. In the Sovos GTD solution, freight/delivery charges are supported through multiple avenues including a “delivery amount” field and freight-related product taxability (good/service) codes. The fee will properly apply for clients using either option and will also be supported in their Sales/Use Tax engine and Taxify solutions.
TaxJar SmartCalcs 🚫
Will TaxJar SmartCalcs support Colorado’s Retail Delivery Fee?
Although technically not a sales channel, TaxJar Smartcalcs is a tax calculation plug-in that is used in a variety of sales channels that e-commerce sellers frequently use. At this time, TaxJar’s Smartcalcs API does not support the ability to charge Colorado’s Retail Delivery Fee. They have also indicated that their sales tax return software will similarly not support paying the fee. We will provide updates on this channel here as they become available.
Will WooCommerce support Colorado’s Retail Delivery Fee?
WooCommerce has indicated that they will not be developing support for this Colorado’s Retail Delivery Fee since they rely on TaxJar Smartcalcs (above) for tax calculation. They also indicated that they would not be able to support separately stating this fee on invoices unless users were to enter their taxes manually to account for this case.
We hope that in the coming months, WooCommerce will be able to provide better support for this fee for their merchants. However, this fee is new and Colorado has not provided technology companies with ample time to prepare. We will provide updates on this channel here as they become available.
Disclaimer: Our attorney wanted you to know that no financial, tax, legal advice or opinion is given through this post. All information provided is general in nature and may not apply to your specific situation and is intended for informational and educational purposes only. Information is provided “as is” and without warranty.