Effective July 1, 2022, Colorado will begin imposing a retail delivery fee on all deliveries by motor vehicle to a location in the state with at least one item of tangible personal property that is subject to state sales or use tax. Retailers will have to collect the $0.27 fee every time they deliver taxable goods to a Colorado address.
The Colorado Retail Delivery Fee
In line with existing sales tax filing frequencies and due dates, the fee must be charged to the purchaser, collected by the retailer, and remitted to the Colorado Department of Revenue (CDOR) on a separate return (Form DRF 1786). Due to inflation, the fee is subject to increases beginning in 2023. The fee applies regardless of who owns (or operates) the vehicle used to make the delivery and whether the delivery originates in Colorado or another state.
A FEW THINGS TO BE AWARE OF:
- The Retail Delivery Fee (RDF) must be charged, collected, and remitted with the same frequency and dates as your Colorado sales tax filings.
- Colorado Sales Tax filers are automatically registered for an RDF account.
- After July 1, 2022 there will be additional ways to create an account, noted here»
- Only one return is due for the entire state.
- The retailer must list the fee as a separate item called “retail delivery fees” on the receipt or invoice issued to the purchaser.
- This all becomes effective July 1, 2022.
EXAMPLES OF IMPACTED BUSINESSES
- Restaurants that deliver
- Grocery stores that deliver
- Flower delivery services
- Sales that require delivery
- Online stores that ship orders
- Business-to-business retail sales (excluding wholesale sales)
When the Colorado Retail Delivery Fee Does Not Apply
- 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 all the property delivered is exempt from the state sales tax. However, if a delivery includes both taxable and exempt goods, the delivery fee will apply.
Tax Filing & Payment Requirements
A return is due even when there are no fees to report. It can be filed through multiple channels including Retail Delivery Fee Return (Form DR 1786) or Revenue Online. Additionally, the CDOR’s Sales and Use Tax System (SUTS) is expected to be available for RDF filing by end of 2022. Payment methods include EFT, ACH Debit, e-check, and via credit card. Some payment methods may not be immediately available.
WE WELCOME YOUR QUESTIONS
REDW’s national state and local tax professionals are staying on top of this new legislation and advising our retail clients on next steps. If your business is affected by the Colorado retail delivery fee and you’d like our help with this (and/or other sales and use tax matters), please contact James Ortiz or Americo Rodriguez below.