How does Shopify handle the Colorado Retail Delivery Fee?
Topic summary
Main issue: Correctly charging and reporting Colorado’s Retail Delivery Fee (CRDF)—a per-delivery state fee (not sales tax) that requires a separate return.
Current behavior: Test orders in Colorado show Shopify calculating CRDF and adding it to the tax line. Reporting details and how the fee is identified for the separate filing remain unclear.
Avalara integration: Conflict noted—Shopify adds CRDF as tax, while Avalara (tax compliance software) prefers a $0 line item on the invoice coded specifically for the fee. Users seek examples from Shopify–Avalara setups that work.
Workarounds: Some created a CRDF item in Shopify and auto-added it to Colorado orders via Shopify Flow or scripts; one suggested a “bogo” automatic discount tied to a customer segment. Screenshots were mentioned but not essential to the discussion.
Latest update: The script/line-item approach is still not working reliably. Shopify’s response was “we have it working,” without details.
Open/ongoing: How to properly identify CRDF in reports and align with Avalara’s requirements. No definitive solution yet.
Note: One participant heard Colorado may allow simply paying $0.27 per delivery, which could simplify handling; timing and certainty are unknown.
Thanks for asking the question. I sure wasn’t aware of yet another fee by the state. I emailed our acct rep. I’ll let you know if I get an answer.
Here is a link to the fee if anyone wishes to know more.
https://tax.colorado.gov/retail-delivery-fee
I ran a couple of test transactions in Colorado and saw that the retail delivery fee was calculated and added to the total tax. I have not followed this through to the reports to see how it is identified, and I know it’s a separate return (separate from sales tax) that needs to be filed.
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They add it as a line item to the taxes. Unfortunately, for those of us who use Avalara for tax compliance, this is not how they (Avalara) wants it to be handled. Avalara wants a $0 value line item added to the invoice, using a code tied to their code for the tax,
I would like to hear from a Shopify-Avalara user who has been successful in getting this to work.
Did you get an answer to this? We use Avalara with Shopify and export our Shopify orders to an ERP which also uses Avalara. I created an item in Shop as configured in my screenshot attached. Using Shopify Flow, I automated a task to add the item to a created order anytime the order contained a CO address. You could potentially do this without Flow using a ‘bogo’ automatic discount based on a customer segment.
The only answer I received from Shopify was that “we have it working”. Not very helpful. We ended up doing the same thing - a script to the CRDF as a line item. We just turned it on today.
Hi there, are you still using this as a solution for your store? I’m considering doing the same but wondering if a proper solution has been put into place now that we’re almost 10 months from the start of collection..
We are but it is still not working. We understand that Colorado may allow sellers to simply pay the $0.27 so this may go away soon.