Adding an Retail Delivery Fee - New Legislation in Colorado

[NinaAaron]

Hello - can you tell me how to add a Retail Delivery Fee to any order placed in Colorado? 

Effective July 1, 2022, Colorado will impose a retail delivery fee on all deliveries by motor vehicle to a location in Colorado with at least one item of tangible personal property subject to state sales or use tax. More info here:

https://tax.colorado.gov/retail-delivery-fee 

Highlights

• Begins July 1, 2022
• Applies to all retail sales delivered by a motor vehicle to a location in Colorado
• Includes third-party deliveries
• $0.27 per retail sale for delivery
• Charged to the purchaser
• Collected by the retailer and remitted to CDOR
• Follows sales tax filing frequencies and due dates
• Filed on a separate return, form DR 1786

Meaning any online sales made in Colorado (where my business is located), I will need to charge a retail delivery fee of $0.27 per order. I will need to file RDF return and remit fees every quarter (same as our Colorado sales tax). I will need this to show as a separate line item at checkout (after taxes) so I can report these to the Colorado Department of Revenue.

Please advise!

Thanks,

Nina

[kd312]

Okay Shopify!  All your Colorado vendors will need your help here.  We will need a separate line item for each order with a CO shipping address starting July 1.  

[aaronwalls]

I also received this email from the state of Colorado this morning. Unless Shopify figures out an easy way to do this, I think we'll have to create a new shipping profile just for Colorado customers which calls out the $0.27 fee in the name of the shipping profile so it shows up on their receipt, then manually figuring out the rates for each weight and dimension class. It's a horribly manual hack. Knowing Shopify, they won't do anything and will wait for a 3rd party plugin to be developed that charges you $100/month to add some stupid text to the checkout screen and receipt.

[Maxwell_Eugene]

What's not clear for me, is the charge only applied to orders when the customer resides and the delivery takes place in Colorado, or is it charged to every order?  I'm located in Colorado too but hardly any of my sales take place in Colorado, so I just want to make sure the fee gets charged to the correct customers.

Does anyone have any feedback?

Thanks

[aaronwalls]

It is a tax on Coloradans collectable by the companies who ship to them and also reside in Colorado. We're located in Boulder and any shipment we make to a CO address we will need to collect this in addition to the sales tax we already have to collect from them. If we ship to California, we do not need to collect this extra fee.

[Maxwell_Eugene]

Thank you for clarification.

[mikeCAlpine]

+1 - would love guidance from Shopify on this. Please god don't make it into an app.

[slimgenicsdirec]

Hello- 

Has anyone figured out how to add this to the checkout yet? Definitely needs some help with this!

[jason_lew]

Bumping up this thread; we need a solution soon!

[Mahays]

Here is the response I got back from Shopify Support:

"I was able to check in with our internal Tax Support team for further clarification on this. They were able to look into this further and check in with our Developers as well. They have confirmed that because we currently don't have the functionality to determine the type of vehicle that is being used for delivery, we would not be able to automatically charge the Retail Delivery Fee on orders.

As a workaround, you can set up Colorado specific shipping rates that include this fee. If you need to have this presented on the checkout screen, you can indicate in the shipping rate name that the shipping rate itself includes the Retail delivery fee. When it comes to adding shipping rates, this is the guide that you can refer to for detailed instructions: Setting up shipping rates · Shopify Help Center."

Really hoping they will add a better solution, but this helps for now. I am wondering if this workaround will be itemized enough for reporting? 

[mikeCAlpine]

We already have shipping rates for Colorado, so unless we can add two rates (one for shipping and one for retail delivery) I'm not sure it will work?

[Mahays]

It also wouldn't allow customers to take advantage of free shipping promos because it would remove the fee as well... there has to be a better way! 

[Elloroboulder]

Thanks for this info. We’re hoping Shopify allows a separate fee line as well, it’s a little ridiculous that there is not optimization for a customized separate fee line already. 

[EWoodwardWSS]

Suggesting a janky work around that doesn't work in a lot of common situations? Exactly the kind of response I've come to expect from Shopify support. As was said above: someone will likely soon launch an expensive app that will do Shopify's work for them.

[kd312]

I think our best hope is that Shopify sees this as a tax, which it seems like to me.  From Shopify's support: "Our tax team updates our tax tables on a monthly basis, so if this new tax rate would be something that is required to update on our end, then we would do the update."

[eric_moore]

This solution may suffice in the short term - indeed it's the only solution available at the moment.  But it has two major problems:

1. It's not at all connected to sales tax.  Per CO Dept of Revenue, the fee is applicable on "...all deliveries by motor vehicle to a location in Colorado with at least one item of tangible personal property subject to state sales or use tax."  (emphasis added)  This means that a sales tax-exempt customer should not pay this fee, and puts the merchant at risk if they collect the fee erroneously.
2. Unless you offer Free Shipping, it does not split the Retail Delivery Fee into its own, separate line item, which is spelled out as a requirement in the law.  The best you can do is say "Standard Shipping (includes $0.27 Retail Delivery Fee)....$5.27"  

[GeorgeG2]

Following.

[GeorgeG2]

HI All, 

Thank you to everyone that followed up on this with Shopify and a big thank you to Shopify for incorporating the Retail Delivery Fee directly into sales taxes. I ran a quick report and saw that the RDF was calculating correctly for us here at HappyLuckys.com. Last thing any of us wanted to do was add another app or worse, calculate this by hand. 

[Mahays]

Hi everyone!

Are there any issues with the RDF not being itemized as a separate line item on the customer invoice? Also for reporting is it included in the tax rate and not itemized as Retail Delivery Fee? How is everyone working around those issues?

Thanks!

[CurtHayes]

I was told by Shopify that the RDF was currently included in the tax rate, but they are working on adding it as a separate line item. Unfortunately, no timeline was give for that feature.

[eric_moore]

The RDF is itemized as its own tax line item, just like State tax, County tax, and local taxes are itemized - which is to say, in the background (JSON).  In the Orders admin console in Shopify, you can click "Show tax rates" and see the itemized details.  

[shawnastm]

That's awesome to see we are at least collecting the fee, but Colorado does state the RDF is not a TAX, but a FEE. Also, we have vendor accounts so some orders are not charged tax at all, which means they will NOT be charged the fee. Currently Shopify is including the RDF in with the total tax line.

Colorado wants the fee stated on a separate line on the customer's invoice, we use Order Printer and I added this code above my tax line so it will at least show up on a separate line on the invoice only if the shipping State is Colorado. Hope that helps someone else, for now, that's the best solution we could implement.

{% if shipping_address.province == 'Colorado' %}
Taxes include CO $.27 RDF
{% endif %}

[eric_moore]

@shawnastm The distinction between tax and fee is largely political, I think.  The RDF is connected to sales tax in multiple ways:

1. If you don't have to collect sales tax in CO, you don't have to collect the fee.
2. If you have a sales tax account already in CO, they automatically set up an RDF account for you.
3. RDF is remitted on the same schedule as your sales taxes.
4. Most importantly, if a sale is not taxable, no RDF gets applied either.  This is why it makes the most sense to include it as a tax_line.  This way, Shopify can take advantage of existing logic for tax-exempt sales and not apply the RDF.

[eric_moore]

@shawnastm give this a try in the Order Printer Invoice template.  If shipping to CO and total tax > $0, this shows the RDF on it's own line and subtracts the $0.27 from the total tax amount shown.

  {% if tax_price > 0 %}
  <tr>
    <td>Total tax:</td>
    <td>
        {% if shipping_address.province_code == "CO" %}
            {{ tax_price | minus: 27 | money }}
        {% else %}
            {{ tax_price | money }}
        {% endif %}
    </td>
  </tr>
  {% endif %}
  {% if shipping_address.province_code == "CO" %}
      {% for tax_line in tax_lines %}
          {% if tax_line.title contains "Retail Delivery Fee" %}
              <tr>
                <td>{{ tax_line.title }}:</td>
                <td>{{ tax_line.price | money }}</td>
              </tr>
          {% endif %}
      {% endfor %}
  {% endif %}

[rbritt313]

we need Shopify to charge the .27 to the customer when they place an order if the ship to address is in Colorado.  

[rbritt313]

how did you get the Colorado retail delivery fee to show up? for my Colorado orders it is not adding it. 

[CurtHayes]

We had this issue, and it was due to us using Shopify's Legacy Tax system. Once we upgraded to their Active Tax system (registration based), the fee was added.

[MikeCDG]

We really need a solution here please Shopify

[Cody_Andersen]

We use a nice little app called Bespoke Shipping that takes care of most state or zip code charges like this. We got it to charge different shipping to AK and HI. It will work for this too. ...in case anybody was interested or desparate. 🙂

[CurtHayes]

Does Bespoke Shipping allow you to add the RDF as a separate line item on your invoice/receipt? It seems that the requirement is that retailers show the total of the fees ($0.27) on the receipt or invoice as one item labeled “retail delivery fees”.

[Mahays]

Good news! I just spoke with Shopify and they assured me they are adding this functionality for Colorado retailers. Not a lot of details but she said it would likely show up on the home page when logging in, and that it should be up and ready by July 1st. I highly recommend requesting a call back and talking with someone - I finally feel like we have a solution in the works! 

[Liquify]

I second the last comment.  I've also been told Shopify are rolling this out natively but waiting on clarity on date. They will need to roll it out on time since all merchants need it.

What we did as a temp solution (and this would be a Plus only solution) was use the ajax api to add the line item which takes care of all orders except accelerated checkout.  We used the Flow app to manage orders without it by editing orders after the event.

I'd wait for this to be done natively and not use an app tbh.

In my experience (10 years plus of Shopify dev) shipping apps can be clunky/slow and sometimes don't even load rates at all.

[Wagan_Tech]

I'm hoping something happens really soon, July is a few days away!

[robintownhallco]

Agreed...watching this closely. Thanks all! To complicate things, our kids hand deliver our products on bikes in our little community. So, hoping that we are able to (manually?! ugg) select which deliveries get this fee applied to them.

[robintownhallco]

Just got an email from Shopify with more details!

[mikeCAlpine]

Can you give us the details once you figure it out please? Thanks!

[CurtHayes]

We received an email from Shopify yesterday that read:

You may have recently received a notice from the State of Colorado informing you of your requirement to collect a new Retail Delivery Fee, effective July 1, 2022. Merchants will soon be required to collect a non-refundable $0.27 fee on most deliveries made by motor vehicle to a location in Colorado. The fee is required when the delivery includes at least one tangible item subject to state or sales use tax. 

As a merchant who is currently collecting sales tax in Colorado, the retail delivery fee will be automatically collected on taxable sales delivered to customers located in Colorado beginning July 1st, 2022. No action is required within your Shopify admin to collect the new fee, but you are responsible for reporting and paying the fee at the same time as your Colorado sales tax return. The retail delivery fee will need to be reported and paid on a new return, the DR 1786 form.  The Colorado Department of Revenue is automatically registering existing Colorado retailers for collection and payment of this fee. 

After July 1, 2022, the fee will be listed as a tax line item on the order details and on your sales tax report as “Colorado Retail Delivery Fee”. To learn more about the Colorado Retail Delivery Fee, visit the Colorado Department of Revenue website. 

[Wagan_Tech]

Here's their reply to me:

Hey Justin,

Abby here from Shopify Support - hope this email finds you well! It is a pleasure to assist you today!

Thank you for reaching out and sharing the details of your tax inquiry. I have spoken to our escalated Taxes team regarding the upcoming Colorado Retail Delivery Fee, and they have advised that we do not have the ability to determine the type of vehicle that is being used for delivery, so currently we won't be able to automatically charge this on orders. And rest assured Shopify will be supporting this and implementing a solution expected by July 1st.

One recommendation I have is to include "RDF included" in the specific Colorado shipping rate and ensure the shipping rate is only for Colorado.

You can look into another way to include this new fee on your Colorado orders. For example, you can add it to your shipping fee, handling fee, or set up Colorado-specific shipping rates, as mentioned above. Sometimes merchants create separate products for their shipping surcharges that then become a separate line item, such as with shipping insurance products.

There are also third-party apps that facilitate custom surcharges, such as Order Surcharge & Product Fees by Mageworx, from our Shopify App Store.

That being said, our Tax team updates our Tax tables on a monthly basis, so if this new tax rate would be something that is required to update on our end, then we would do the update.

Since this new tax rate will only be taking effect from July, there is time for our Tax Team to look at whether this will need to be updated on our Tax system or not. Our system covers State, County and City taxes and if this is something that would be added into one of the rate types then we would be updating our system.

Overall, because this is a taxation question, I would recommend reaching out to your local tax professional to confirm what exactly this RDF will need to look like on invoices and receipts, and our team can then advise accordingly for the best implementation.

You may want to ask them something like:

• Is it enough to incorporate the RDF into the shipping fee, and add an additional line of text to the order invoice stating that $0.27 of the shipping fee is meant to cover the RDF...
• or else, does the RDF have to be a separate line item entirely, and cannot under any circumstances be incorporated into the price of another line item?

On the side note, since you're using Facebook as one of your sales channels, I want to grab this opportunity to share a good article that will help you enhance your marketing strategy via Facebook.

• Tips for successful marketing through Facebook

Please remember that Shopify is always here for you and your business to grow successfully.

[JasonH · Accepted solution]

Hi @NinaAaron,

We have rolled out the Retail Delivery Fee to all merchants collecting tax in Colorado. You can read more about the fee here.

Thanks!

[tmc222]

@JasonH 
Unfortunately, this doesn't satisfy the requirement spelled out by Colorado that "The fee must be charged to the purchaser as a “retail delivery fee” and separately stated from the purchase price of the item(s), the sales or use tax, and any other fees or charges applied."

[ErinM4412]

Not only that, but some municipalities (like Aurora) are assessing their local sales tax ON THE FEE. So while I agree with @eric_moore's logic, there are additional complications that Shopify needs to address.

[EWoodwardWSS]

This is why I HATE Colorado sales tax: the state allows way too much latitude for municipalities and special districts to decide their own special tax rules that don't have to align with anyone else's.

[MichaelDeMas]

My order detail report and sales tax report do not show the RDF for my Colorado reports in July.  What do I do?

[kd312]

I was able to “Create Custom Report”, then Taxes Collected Over Time. Select the time period you want, then filter for Tax Name [Is]. In our store it is called Colorado Retail Delivery Fee, but I suppose it could be called some thing different in yours. Good luck!

[BetterReports-K]

Hi @MichaelDeMas,

Keanna here from the Better Reports support team.

I would recommend our app Better Reports for viewing your Colorado retail delivery fees! We can create custom fields separating the shipping amount charged to the customer, the tax on shipping and the retail delivery fee. This will allow you to easily report the aggregate amount collected or view the fee per order.

In addition to custom reporting capabilities, Better Reports offers more than 60 built-in reports that cover your most common reporting needs including sales, current inventory, refunds, payouts, and more. Our reports can even be scheduled to send at a set frequency to your email or Google Drive!

I encourage you to install Better Reports and start your free 14-day trial and I'll be happy to set this up for you.

[avandermeeden]

I read through the 3 pages of comments on this issue and did not see anyone mention in-store pickup. Colorado says you cannot charge for that, but the Shopify solution is automatically charging for that. I've brought it up to Support, but haven't gotten a solution other than remove the fee and figure out a way to charge it elsewhere. Does anyone have a solution for this? It's really frustrating and a bit mind-boggling to think that a bunch of Colorado retailers are incorrectly collecting this fee on in-store pickup orders because of how Shopify has it set up. Also, this still does not show up as a line item for customers. You can see it on the Shopify side, but the customer doesn't see it.

[NinaAaron]

Hi Jasoh - Colorado has now updated the legislation saying that we do NOT have to collect Retail Delivery Fees if we made less than $500k in sales. See full email below:

"

The passage of Senate Bill 23-143 created a small business exemption from the Retail Delivery Fee for businesses with $500,000 or less in retail sales during the prior calendar year. Businesses qualified for the exemption are not required to collect, report, or remit the Retail Delivery Fee.

Our records indicate that from January 1, 2021, to December 31, 2022, you reported $500,000 or less in gross retail sales as reported on your Sales Tax or Retailer’s Use Tax filing(s) excluding wholesale sales reported on Schedule A, Line 1 of the Sales Tax report.

As a result, the Department has determined that you are exempt from collecting, reporting and remitting the Retail Delivery Fee for calendar years 2022 and 2023

The Department has closed your Retail Delivery Fee account as of July 01, 2022 and removed any estimated returns for the July 2022 through June 2023 periods. If applicable, a waiver of the penalties and/or interest has been granted, and any estimated returns have been removed for periods where a filing is no longer required.

If you collected the fee from your customer on any transactions during this time period, you must either report and remit the fee to the Department or refund the fee to your customer.

If you did not collect the fee from your customers, you are not required to report or remit any retail delivery fees during calendar years 2022 or 2023. Refunds based on this exemption are not allowed for any fee amount reported and paid for any July 2022 to June 2023 periods.

If your gross retail sales exceed $500,000 in the current or a subsequent calendar year, you will be required to pay the Retail Delivery Fee for retail deliveries starting the subsequent January 1. For example, if your gross retail sales exceed $500,000 during calendar year 2023, you will be required to pay the Retail Delivery Fee for retail deliveries starting January 1, 2024.If your retail sales were $0.00 during the prior calendar year, you are not required to pay the retail delivery fee on retail deliveries until the first day of the period after 90 days after your retail sales exceed $500,000 within the current calendar year.

For additional information about or a copy of the bill, visit leg.colorado.gov/bills/sb23-143.

If you are required to reopen the Retail Delivery Fee account at a future date: Go to Colorado.gov/RevenueOnline, click “Additional Actions” under the Retail Delivery Fee account, select “Reopen Account”, and enter the start date in the “commence date” field, or contact the Department using a method below."

How is Shopify going to amend this for existing Colorado shops that make less than $500k and apply the retail delivery fee only for shops that make $500k+?

Please advise.

Thanks,

Nina

[Bierfrucht]

Do you have any solution to this query? How can you eliminate the Colorado retail delivery fee when your sales do not exceed $500,000?