Effective July 1, 2022, Colorado imposes a retail delivery fee on all retail sales delivered by motor vehicle to a location in Colorado and include at least one item that is subject to Colorado state sales tax.

Retailers or marketplace facilitators that collect sales or use tax on retail sales delivered in Colorado, including delivery by a third party, are liable to collect and remit the retail delivery fee. The retail delivery fee is imposed on a per sale basis and must be listed separately on the receipt or invoice and labeled as “Retail Delivery Fee”.

The retail delivery fee is calculated at a rate of $.27 per sale. Each sale for delivery is considered a single “retail delivery” regardless of how many shipments are needed to deliver the items.

A delivery is considered to be “delivery by motor vehicle” when at any point post-order, items are delivered by motor vehicle to a purchaser in Colorado, either from Colorado or elsewhere. If every item in a sale is exempt from sales tax, the sale is also exempt from the retail delivery fee. However, if at least one item in the sale is subject to sales or use tax, the sale is subject to the retail delivery fee.

The retail delivery fee will be reported and paid on the Retail Delivery Fee Return, Form DR 1786. Only one return is required per sales tax account regardless of the number of business or delivery locations in Colorado. A return is required for every period regardless of whether any fee is due for the reporting period. The filing frequency and due dates will be the same as the sales tax or retailer’s use tax frequency and due dates.

Retailers with an active sales tax account, a retailer license, and any sales tax liability reported after January 1, 2021 will automatically be registered for a retail delivery fee account by July 1, 2022. This applies to both in-state and out-of-state retailers. There is no license required or registration fee due.

Retailers who open tax accounts after July 1, 2022 will be able to register through Revenue Online, by filing the Retail Delivery Fee Return, form 1786, or by submitting form CR 0100AP.

Retailers and others who participated in a recent Department of Revenue workshop on the Retail Delivery Fee shared significant concerns about the ability to properly and cost-effectively implement the requirements. There were also a number of questions regarding how the Fee applies to leases, subscriptions, damaged goods, and returns. The Colorado Department of Revenue addressed some of these situations and admitted additional thought is required for leases, construction projects, and other situations.

RubinBrown State and Local Tax (SALT) professionals can help answer your questions or evaluate the impact this development may have on your business. Please contact one of the SALT professionals or your primary RubinBrown contact for assistance.

 

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