Colorado’s new tax – retail delivery fees

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Brand new just this month: Retail Delivery Fees! Effective July 1, 2022, Colorado began 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. To be clear: this is not a tax, but a fee, that looks a lot like an additional sales tax.

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What the new retail delivery fees means

From now on, if your business sells property to a purchaser in Colorado, a $0.27 fee must also be charged. Like sales tax, the fee must be charged to the purchaser, collected by the retailer and remitted to the Department of Revenue on a separate return (Form DRF 1786). Filing frequency mimics sales tax filing frequencies as well.

No, it does not matter who owns or operates the vehicle used to make the delivery.

No, it does not matter whether delivery originates within Colorado or outside Colorado.

Yes, there must be a separate line item called “retail delivery fee” on the receipt or invoice. Yes, every. single. time.

All businesses that have sales that require delivery into Colorado are affected. Restaurants, grocery stores, flower deliveries, online stores – anything that is delivering a taxable sale on wheels. The fee doesn’t apply, however, when the purchaser is exempt (i.e., government, charitable organization) or when the goods delivered are solely nontaxable or exempt wholesale sales.

Going Forward

The fee is currently required, and returns are due even when there are no fees to report. The fee is subject to increases as well, at the beginning of 2023. If you make sales into Colorado, now is the time to take action to avoid any unnecessary fees, interest, and penalties.

Consult with a tax advisor that has experience handling state and local tax matters to make sure you and your business stays compliant with retail delivery fees. For any questions or concerns, please contact Brian Ess, J.D.; BrianE@hhcpa.com; (480) 483-1170.

Brian Ess, JD

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