New Retail Delivery Fee for the State of Colorado

New Retail Delivery Fee for the State of Colorado

Coming up quick! Colorado is implementing a new retail delivery fee starting July 1, 2022. Both in and out of state retailers will be responsible for collecting a fee on all taxable items delivered to any location within Colorado. That means not only will you have to tax the item, being delivered by vehicle; you must now add a $0.27 delivery fee.

How will this fee be calculated?

This fee will be calculated per sale, and is an accumulation of 6 fees in total, all of which you must list, individually, on the receipt of sale or invoice as one item called “retail delivery fees”. The retail delivery fee is calculated for a single sale, regardless of how many shipments are needed to deliver the items purchased.

So how does this effect you?

Retailers are responsible for collecting this fee for each taxable order delivered, by vehicle, even if using a 3rd party delivery service. If you are already registered to make taxable sales for delivery in Colorado, then you will need to collect this delivery fee and report it at the same time you file your Colorado sales tax return. You will need to add a retail delivery fee account to your existing registration with the Colorado Department of Revenue, at time of filing.
The new retail delivery fee will need to be reported and paid on a new return called the DR-1786 form. Fortunately, it is collected state-wide and does not need to be separated by jurisdiction, but it is.

Exceptions

You may be wondering, when does the delivery fee not apply, if ever? If your business does not have nexus and doesn’t collect sales tax in the state of Colorado, then you are also not required to collect the delivery fee. The retail delivery fee will not apply to nontaxable goods or to taxable sales delivered from Colorado to another state. If every item in the sale is exempt from sales tax, the delivery is exempt from the retail delivery fee. If one or more items in the same retail transaction are subject to sales tax, the retail delivery fee will need to be imposed. Also, wholesale sales are not subject to the delivery fee either, unless the delivery includes both resale and wholesale items.

This may leave you scrambling to find a quick solution to adding this fee to your sales orders. Although the State of Colorado has confirmed that they “plan to be generous in granting requests to waive late filing payment penalties and Interest”, you are still liable for any uncollected fees, so we encourage you to work fast at finding the best solution to stay compliant.

The Colorado Department of Revenue has published FAQs on the new Retail Delivery Fee which can be found here.

If you have questions about automating your tax collection and remittance, please contact us.