Did you know effective July 1, 2022 the State of Colorado is imposing a ¢0.27 Retail Delivery Fee on all deliveries in Colorado with at least one tangible personal property subject to state sales and use tax?  The Retail Delivery Fee is imposed even when shipping is free.

Below are instructions on how to setup the Colorado Retail Delivery Fee.  However if you would like to automate the process Net at Work has created a VBScript that automatically adds the Miscellaneous Charge / Item to the S/O Sales Order or Invoice when the Ship To State is CO (Colorado), please reach out if you would like additional information.

1. Schedule the retail delivery fee return.

You will need to create the return in Avalara AvaTax, for the CO DR 1786 (Colorado Retail Delivery fee return)

1. • Effective date 7/1/22
   • Your registration ID / account number will be the same as your company’s active sales tax account with ‘RDF’ as the suffix

Find your account number by logging into the Colorado e-filing website and check the details of your state Retail Deliver Fee account.

Example account number: 12345678-123-RDF
Filing frequency will be the same as your company’s active sales tax account

2. Adopt the Retail Delivery Fee Tax Code

• If you’re managing your tax code mapping within AvaTax under the “What you sell” area, you will need to follow these steps to set up a new Item and map it to the new Tax Code. See Map the items you sell to Avalara tax codes.
• If you’re managing your Tax Code Mapping within your integration, you will need to set up a new item and map it to the Colorado Retail Delivery Fee Tax Code

Note: Merchants subject to this fee will need to determine when this fee applies, and add a $0 line item with the OF400000 tax code to any orders that are subject to the retail delivery fee. (If you are unable to add a $0 line item, please see the FAQs below.)

3. Pass the new Tax Code as a line on applicable transactions

• When you determine the Retail Delivery Fee should be applied to a Colorado transaction, add a $0 Delivery Fee item as a separate line on the transaction using the new Item you set up in Step 2.
• AvaTax factors in product taxability and your customer’s exempt status when calculating the fee. If no sales tax is collected because all of the products are non-taxable or your customer is exempt, the fee is not calculated.
• Depending upon how an integration displays tax amounts on an invoice, your integration technology partner may need to adjust the display to state the fee amount separately from the total tax. Avalara is currently testing and evaluating the impact of this change on supported connectors. We plan to update this help center article as soon as information is available. Please continue to monitor for updates.

Note: Some home rule cities have decided to treat the $0.27 retail delivery fee as taxable. For example, a city with a 3.7% sales tax rate would calculate $0.01 in sales tax on the fee. As of November 1, 2022, AvaTax will calculate sales tax on the Retail Delivery Fee in applicable cities and local jurisdictions.

4. Verify the Retail Delivery Fee Calculation

• When the Retail Delivery Fee Tax Code is passed, you can verify it is working by looking for a $0.27 fee that is calculated on the line item with the retail delivery fee tax code OF400000.
• If applicable, you can test transactions in your Sandbox account on June 18, 2022 using the new Retail Delivery Code.
• On June 28, 2022, at 10:30 a.m., you can begin entering transactions for the July 2022 period.

Note: The Colorado retail delivery fee must be separately stated on invoices. Customers will need to configure this themselves within their integration, or work with their integration partner to have it configured to be separately stated.

5. File your Delivery Fee Return

At the end of every filing cycle, you will need to file your Colorado Delivery Fee Tax Return. If you are a Returns customer, Avalara can file the return on your behalf. If you are not a Returns customer, you will be able to download a report in AvaTax to assist with filing the Colorado Delivery Fee Tax Return.

Click here for additional information on the Colorado Retail Delivery Fee, including Who is impacted, What transactions are subject to the retail delivery fee, and the State Registration requirements.