This is how you bring your Adobe Commerce instance into compliance with the Colorado Retail Delivery fee.

In summary
  • One $0.27 fee per order. This must be displayed to the customer.
  • Avalara has poor support. Vertex claims to have good support. TaxJar has no support.
  • You can "make do" with a module.

Two things are sure in life: death and taxes. Both are inevitable, and neither is any fun to think about. Great, this is going to be a conversation about taxes—say, what’s that new Netflix show about? Keep reading. You can find out later.

I usually don’t credit the government with forward-thinking, but Colorado’s delivery tax is an exception. What?! A new tax is a good thing? I’m not here to argue either way, but here’s what they were thinking, as written in their bill.

Gas taxes "fuel" road maintenance. Over the years, cars have become significantly more efficient. More efficiency means less gas tax revenue. Additionally, when Colorado introduced fuel taxes, they didn’t put clauses in the law to account for inflation. Road maintenance costs have increased, but revenue for this is decreasing.

The massive push for electric cars and increasing fuel prices have exacerbated the revenue gap. Thus, Colorado introduces the delivery tax. We will see many more states implement this in short order. However, most of the income for this is to be spent on clean energy, not highways. Either way, this idea is here to stay and grow.

What is the delivery tax?

The delivery tax charges the purchaser a flat fee of $0.27 per order.

This law/fee was enacted on July 1, 2022. Are you ready?!

This rate is effective through July 2023, after which it will increase yearly.

According to the official Colorado FAQ:

The retail delivery fee is based on each sale to the customer. Suppose a customer orders several items in a “cart” and purchases all of the items simultaneously. In that case, only one retail delivery fee is due regardless of how many deliveries are needed to complete the sale. Alternatively, suppose a customer orders several items and completes the purchase of each item at different times. In that case, the retail delivery fee is due on each sale, even if only one delivery is needed to complete the sale.

What you need to know:

  • This fee is not taxable (similar to the bottle tax in California). When configuring it, ensure it is excluded from the taxable totals.
  • The fee must be displayed on the order and order email. The customer needs to be well aware of the fact that they are paying this fee.
  • The purchaser is required to pay the tax—but the seller is required to collect and remit it. That’s why we are having this conversation.
  • You will need a separate Retail Delivery tax account. Yes, two returns. You will file this new return simultaneously as your sales tax return.
  • This fee applies only to orders with at least one taxable item.

How does this work with tax connectors?

I'm disappointed. Tax companies provide tax services, and two of the three of the big players have yet to provide an estimate for the delivery of this feature. The law was signed mid-last year. Vertex is the exception.

Avalara: custom development is required. Avalara must have a $0 product with the OF400000 tax class associated. Unfortunately, it's even more complex if you use Returns.

SwiftOtter is reviewing this information and will update as necessary.

TaxJar: no support whatsoever. This is on you, the merchant, from their perspective. Keep reading.

Vertex: Vertex has stated that the Colorado Retail Delivery fee is supported. I am awaiting documentation and will update this article as soon as I receive it.

How do we implement this in Adobe Commerce (formerly known as Magento)?

This is a fixed fee amount so you can’t just “add” a new sales tax rate. Magento has no concept of how to do this at an order level (bottle tax is a similar concept except that it’s done at the product level).

Amasty Extra Fee: this module allows you to create a fee that is applied to an order. You can select the Non-taxable tax class to prevent the fee amount from being taxed. You can configure this to only apply to a specific destination state.

Note: we have had many performance-related issues with Amasty modules. This one does way more than necessary—but it is what it is. Be judicious and deliberate with the modules you install. I am unaware of a better alternative.

Estimate: $39 + time to install, test, deploy

How do I implement the Retail Tax fee on Shopify?

MageWorx has built an app that handles this functionality on the Shopify platform.

Cost: $10/mo

However, Shopify appears to be coming out with a solution for this, so stay tuned.

How does BigCommerce work with the Retail Tax fee?

There is no way to implement this, unfortunately. It is the relatively few times like this where using a platform with more adoption or an open source environment is attractive for smaller merchants.

For more reading:

The Colorado guidebook.

Just in case you're wondering...

SwiftOtter provides engineering services for merchants using Adobe Commerce. Every one of our developers are certified. In fact, we have a side business of training developers—and this has allowed us to interact and hire the smartest talent in the industry. If you are in between providers or are getting poor service, reach out to me.

SwiftOtter, Inc.
It relates to <a href="" class="plain-tag">Magento 2</a>, <a href="" class="plain-tag">Project management</a> and <a href="" class="plain-tag">Quality Assurance</a>.
Joseph Maxwell - president / senior developer at Swift Otter

President / senior developer at SwiftOtter - @swiftotter_joe