How to solve the Colorado Delivery Fee issue in Sage 100
Effective July 1, 2022, the Colorado Delivery Fee went into effect for businesses that ship to Colorado. Retailers must collect the $0.27 fee every time they deliver taxable goods to a Colorado address. The $0.27 fee applies to retailers selling taxable tangible goods for delivery by motor vehicle to Colorado consumers, no matter who owns or operates the vehicle used to make the delivery, and whether the delivery originates in Colorado or another state. 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.
Exceptions: The fee doesn’t apply when otherwise taxable goods are delivered to a purchaser that is exempt from the state sales tax, such as a government or charitable organization. Likewise, the fee doesn’t apply to deliveries of nontaxable goods, including wholesale sales, so long as the property delivered is exempt from the state sales tax. If a delivery includes both taxable and exempt goods, the delivery fee will apply.
How can you easily handle the Colorado Delivery Fee in Sage 100?
Option 1: Use a Miscellaneous Charge line item
This new Miscellaneous Charge can be set up to default to $0.27, and you must manually add this Miscellaneous Charge to a Sales Order or S/O Invoice that is for a Colorado Ship-To Address, and has at least one line item that is Taxable. The Revenue Account should be assigned to a new account specific to the Colorado Delivery Fee, for ease of reporting.
Option 2: Use a new Sales Tax Code
If you’d prefer to handle the tracking of the Colorado Delivery Fee as a Sales Tax line, then you can create a Sales Tax Code called “CO Delivery Fee” and assign it to a Colorado Tax Schedule. The Tax Rate assigned would be 100% and the Taxable Limit set to $0.27. By doing this, an Order/Invoice that has a Taxable amount greater/equal to $0.27 will automatically calculate the $0.27.
NOTE: In the circumstance that the Order/Invoice has a Taxable amount less than $0.27, the user will need to override the CO Delivery Fee to equal $0.27.
Option 3: Use AvaTax to add the Delivery Fee to the Tax Amount
This option requires that a Miscellaneous Charge be set up with a Tax Code = “OF400000”. See Option 1 above on the setup of this Miscellaneous Charge. Set the default charge to $0.00 instead of $0.27.
AvaTax has a built-in tax rule that if this Miscellaneous Charge is added by the user to the Order/Invoice, and the Order/Invoice Date is greater/equal to July 1, 2022, then a $0.27 amount will be added to the tax amount for the STATE Tax Code.
NOTE: In the circumstance that the Taxable amount on the Order/Invoice is $0.00, the user is required to manually remove the Miscellaneous Charge so that the $0.27 Tax is not calculated.
Option 4: Use DSD Extended Solution SO-1052 Automatic Addition of Miscellaneous Item
With Extended Solution SO-1052, the user can set up a Miscellaneous Charge for the Colorado Delivery Fee (as outlined in Option 1 above) and the solution will automatically add this Miscellaneous Charge to an Order/Invoice if (1) there is a Taxable Amount on the Order/Invoice and (2) The Ship to State is “CO”. The solution will also automatically remove the Miscellaneous Charge if the Taxable Amount is set up to $0.00 or the Ship to State is changed.
If the user ALSO has AvaTax installed, then the Miscellaneous Charge should be defaulted to $0.00 so that AvaTax handles the Delivery Fee as a tax.
Which Option is best?
The disadvantages to Options 1 and 3 are that the user has to manually add/remove the Miscellaneous Charge on the Order/Invoice. Option 2 has disadvantages as well, since a line item does not exist on the Order/Invoice that shows the Delivery Fee, and the user has to alter the Tax if the Order/Invoice has a Taxable Amount less than $0.27.
Option 4 is really the best option since the SO-1052 solution automatically adds/removes the Colorado Delivery Fee on the Order/Invoice. Also, SO-1052 can be integrated with the AvaTax solution for a complete solution!
For more information on SO-1052 Automatic Addition of Miscellaneous Item, please visit the SO-1052 Product Page.