ACTION NEEDED: Colorado Retail Delivery Fee begins July 1, 2022

Beginning July 1, 2022, the state of Colorado is imposing a $0.27 Retail Delivery Fee (RDF) on all deliveries by motor vehicle to a location in Colorado with at least one item of tangible personal property subject to state sales and use tax.

Retailers must separately state the retail delivery fee on all customer invoices and receipts.

Note: The fee is levied on all qualifying deliveries, even when shipping is free.

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https://epiccare.epicor.com/epiccare?id=epiccare_kb_article&sys_id=5e5bbe701b8c15508205ce4a5a4bcbf8&table=kb_knowledge

Anyone impacted by this and how do you plan to handle it? It is my understanding that you will need a special Misc Charge on all SO for Colorado?

Or Will Epicor Handle it. I am reading their KB Article but still not quite understanding it.

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You will be able to create a Tax product Category with the code they mentioned and will be able to manually add that as a Misc Charge tied into that Tax Category to the order. Depending on how you have it you certainly you can automate this with a BPM.

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Additional note (from Avalara Help Center doc):
|Question|
Are there exemptions to the fee?
|Answer|
If all of the property sold is exempt from Colorado state sales tax, the delivery will be exempt from the RDF. This includes sales that are entirely wholesale sales. Sales that include both exempt and taxable tangible personal property are subject to this fee when delivered by motor vehicle to a location in Colorado. A delivery that is made to a purchaser who is exempt from paying the state sales tax (such as a government or a charitable organization) is exempt from the RDF.

Setting up this miscellaneous charge seems very similar to setting up one for freight charges, except that the charge is a fixed fee rather than a variable calculated tax. It’s interesting that the document states “when you determine the Retail Delivery Fee should be applied to a Colorado transaction”… isn’t that presumably what AvaTax is supposed to do in exchange for the consideration paid?

So, per Terry’s suggestion, if we create a BPM that adds a $0.27 miscellaneous charge (e.g. ShipMisc.MiscCode = CRDF) to only Customer Shipment headers destined for a Colorado address and assign Avalara’s new tax code to that miscellaneous charge, then when the shipment is processed, AvaTax should recognize whether the customer is tax-exempt or not tax-exempt and calculate the CRDF accordingly. Still, I have a question about where it makes sense to apply the charge. It seems to me that the miscellaneous charge cannot be applied at the sales order level because different releases could have different ship-to addresses. Am I somehow seeing this incorrectly?

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good point and what about OTS.

Thoughts @tmcgrady

@hasokeric & @ScottLepley - I would hope the different shipto’s (regular and OTS) on the same order should be addressed by Avalara applying the specific tax needed for each address. I can’t say I’ve ever tested that, since our orders have all lines going to the same place (and only 1 release).

Is the purpose of the tax to nudge people into reducing their deliveries?

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Hmm, I wonder if Avalara does take care of adding the fee to the tax calculation then all we would need to do is add a note to pack going to CO that the fee may be included in the Tax calculation on the SOA & AR Invoice.

I would presume that is the politicians’ rationalization, but if that is the true intention, how effective is a $0.27 delivery fee going to be, really? I mean, oh my gosh, do we now need to figure out how we can consolidate shipments or if we should require all shipments into Colorado to be “ship complete”?!? IMO, this is ludicrous, and a excellent example of governmental inefficiency, overreach and taxpayer-pocket-drilling!

After my post yesterday, I analyzed our YTD shipments into Colorado. So far, we have had all of 18 taxable shipments (some OTS), 9 of which were drop-shipments for customers not in Colorado. Those 18 shipments would have garnered a whopping $4.86 in revenue for Colorado if this fee had become effective 1/1/2022. We use Avalara Returns at $44 per return, and since the new statute requires CRDF returns separate from the regular sales and use tax returns, it would have cost us $264.00 just to file the CRDF returns related to that $4.86 of revenue! (Note to self: talk to Director of Finance about filing CRDF return ourselves!) Considering that, this seems more like a tax preparer subsidy program than a environmental protection program! It would be better for both Colorado and my company if the state would simply require us to remit a $25 environmental impact fee on each monthly sales and use tax return! But that’s probably too brazen for the politicians’ stomachs… better to bury the revenue mechanism in a bureaucratic morass, where it can much more easily be incrementally increased year after year after year…

Can you tell that I find this :poop: aggravating?!? :grimacing:

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Epicor Support mentioned that they create a new Part and tie it to Tax Category and then they create a new Line Item on the Invoice with that Part. Am I understanding this correctly?

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IMPORTANT:

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Not that I’m recommending this, but what happens if you ‘forget’? Maybe the penalty is less than getting compliant. It’s not just the extra for Avalara and the $4 revenue, but everyone’s time in administering this!

At least the FAA attempts to put a dollar amount to the cost of complying with new airworthiness directives. 23 hours inspection labor * $87 / hr * 6315 aircraft affected = $12,636,315 impact…

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We don’t use Avalara for taxes and the implementation plan from our sales tax provider was going to increase technical debt that will have to be overcome when we want to move to the Kinetic UI.

I’m currently working on a set of BPMs and a function to apply the .27 cent miscellaneous charge during order entry. It’s a work in progress, so I haven’t worked out all the details. The general plan is to run a pre-processing BPM on SalesOrder Update to test multiple conditions including, has the Release Ship To address changed? Is there already a delivery fee on the order? Is the new Ship to In Colorado? Is there a taxable amount on the Sales Order? If the conditions determine that a Delivery Fee should be added, it will enable a post-processing BPM that will add the Miscellaneous charge.

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Speaking of “taxpayer-pocket-drilling”, I wonder how much it costs for the U.S. Senate Committee on Finance to conduct a hearing on the impact of the Wayfair decision and remote sales tax:

One of the witnesses invited to the hearing specifically mentioned this new CRDF while testifying about the burden of compliance. It’s difficult to imagine anyone saying “complying with that whole economic nexus thing was a piece of cake!”

If you’d like to submit a statement of your own views for inclusion in the hearing record, you have one more week to do so. Visit the following:

I did some quick tests and it works with a misc charge or line, I don’t remember any specific avalara issues with misc charges, so I guess it is a matter of preference.

And also:
Note : The Colorado RDF must be separately stated on invoices.

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Our read is that the fee only gets charged once per order, regardless of how many shipments are delivered in CO. So a single order with 10 different delivery locations in CO – $.27. A single order with 1 shipment to CO and 9 to other locations in the country – $.27.

Thank you, @danvoss! I agree with your read! Delving a bit deeper at Retail Delivery Fee | Department of Revenue - Taxation shows the following:

The answer to FAQ #12 certainly clarifies how the CRDF should be applied for orders. IMO, it also reveals the faulty logic between the presumed intent of the statute and the application of it!

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Thank you for testing this!

This was my final message from Support.

Epicor development and I both successfully tested this with both sales orders and with AR invoices dated in July 2022 after you and I exchanged email replies for your support case earlier today. Our tests involved creating the Tax Category ID of OF400000 in Epicor’s Product Tax Category Maintenance screen, assigning that new Tax Category to the new test part on Part Maintenance with NO Avalara System Tax Code assignment / mapping done on the “What You Sell” screen in AvaTax for that new test part

I’ll take that as a suggestion. But I think we might prefer Misc Charges if no issues.

.EDIT More Notes from KB

As mentioned in the Avalara Help Center article, you need to create a new part for the Colorado Delivery Fee in your Epicor system. *

  • NOTE:  Avalara's Help Center article mentions creating a part not a miscellaneous charge. 
    

For this reason and because I have seen some unexpected AvaTax tax calculation outcomes occur with miscellaneous charges which can introduce complexities in some situations, I recommend creating a new part instead of a miscellaneous charge. In Epicor parts are created on the Part Maintenance screen which can be accessed from several different menu items including the Part menu item at this menu path: Material Management > Inventory Management > Setup *

  • NOTE:  When creating the part you can use any unique part number and part description you like as long as they accurately indicate the purpose of the part. I suggest using the part number of CO RET DEL FEE and the part description of "Colorado Retail Delivery Fee".
    

If your Avalara AvaTax system is configured for tax categories (tax codes in Avalara terminology) passed by Epicor to Avalara for transaction lines’ tax calculation requests to take priority over Avalara tax codes mapped in AvaTax you will need to create a new Tax Category on the Product Tax Category Maintenance screen in Epicor which can be accessed from multiple different menu items including the Product tax Category menu item at this menu path: Financial Management > Accounts Receivable > Setup *

  • NOTE:  When creating the new tax category for the Colorado Retail Delivery Fee you must use the Category ID of "OF400000" (without the quote marks) and whatever description you like that indicates its purpose; I suggest using the description of "CO Retail Delivery Fee".
    

If your Avalara AvaTax system is configured for tax categories (tax codes in Avalara terminology) passed by Epicor to Avalara for transaction lines’ tax calculation requests to take priority over Avalara tax codes mapped in AvaTax you will also need to assign / map the new tax category you created for the Colorado Retail Delivery Fee to the new part you created for it which can be done by selecting it from the drop-down list for the Tax Category field on the Part > Detail sheet of the Part Maintenance screen for your new part after which you need to save on the screen to preserve that change. This will cause the Colorado Retail Delivery Fee tax category you created to default into new sales order lines and new AR invoice lines when the part is used with them.

If your Avalara AvaTax system is configured for Avalara tax codes mapped in AvaTax to take priority over tax codes (tax categories in Epicor terminology) passed to AvaTax by Epicor for transaction lines’ tax calculation requests, as mentioned in Avalara’s Help Center article you can assign / map the Avalara System Tax Code of “OF400000” to your new part for the Colorado Retail Delivery Fee on the What You Sell screen in the AvaTax portal which is accessed from the Settings menu > “What you sell” menu item. On the What You Sell screen in AvaTax, click on the link “+ Add an item”, in the Item Code field input the part number for the new part you created in Epicor for the Colorado Retail Delivery Fee, in the Description field input the description of the new part you created in Epicor for the Colorado Retail Delivery Fee, input “OF400000” (without the quote marks) in the AVALARA TAX CODE field, then click the “Add item” button.

NOTE: Users would either need to manually add the new part for the Colorado Delivery Fee to AR to transactions when needed or your IT staff could look into the possibility of creating a BPM that automates the addition of that part line for transactions which have ship to addresses that are in the state of CO.

IMPORTANT NOTE: On 6/10/2022 I called Avalara Technical Support which confirmed Avalara personnel have not yet created the Avalara System Tax Code of “OF400000” mentioned in their Avalara Help Center article for the subject of “ACTION NEEDED: Colorado Retail Delivery Fee begins July 1, 2022”. The Avalara support rep. I spoke with said they do not currently have an ETA for when they will create that tax code but he said it will be created before 7/1/2022 which is when the new Colorado Retail Delivery Fee takes effect.

NOTE: As of 6/22/2022 I still could not assign the Avalara Tax Code of “OF400000” mentioned in Avalara’s Help Center article to my new CO RET DEL FEE part number (Item Code in Avalara terminology) on the What You Sell screen in AvaTax as I received the response of “No matching values were found” when inputting it in the AVALARA TAX CODE field there. However, Epicor Development and Epicor Technical Support both successfully tested the other method on 6/21/2022 which is to create the Tax Category ID of OF400000 in Epicor’s Product Tax Category Maintenance screen, assign that new Tax Category to the new test part on Part Maintenance in Epicor with NO Avalara System Tax Code assignment / mapping done on the “What You Sell” screen in AvaTax for that new test part.

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Looks like we’re going down this path with Avalara too.

  • Will you be setting it up as a separate $0 part per KB0121792?
  • Create a BPM to add it to Colorado shipto’s (anyone want to share?)
  • And ‘shipping’ it with the order, so AR pulls it into an invoice with ‘Get Shipments’?

I’m annoyed at the Colorado governor and state legislature for voting in this hack method to raise highway funds. The threads online about other shopping platforms are gold. See Shopify! At least we can craft a solution within Epicor…

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I think we will go the route of Misc Charge for now. Possibly on SO.

Adding Extra Notes from Avalara if you do refunds or credits.

A refund of the delivery fee on returned material is NOT refundable, even though the sales tax would be.

It is not a refundable fee. If you do a Credit Memo and then re-invoice the Customer or a Correction you must not include the fee again?!

If only there were some example BPMs laying around somewhere that we could use as a template to rapidly address this issue.

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Does anyone believe that Colorado will be the only state to implement this or something super similar?