TaxByte: Colorado Introduces $0.27 Delivery Fee for Remote and E-Commerce Sales Effective July 1st, 2022
Effective July 1st, 2022, Colorado will impose a retail delivery fee of $0.27 for all orders delivered by a motor vehicle to a location in Colorado.
Starting July 2022, Colorado will impose a retail delivery fee of $0.27 any time an order is delivered to a Colorado address that contains taxable tangible personal property that is subject to the state sales or use tax. The tax will be paid on a separate form and will be due at the same time that the state’s sales tax return is due. If you have a Colorado state sales tax account, a separate account for this fee will be created for you automatically.
Who needs to pay the Colorado delivery fee?
Any merchant that is making taxable sales of tangible personal property to Colorado will need to begin filing and paying this tax. The tax should be separately stated on the invoice or receipt. This is a “pass through” tax such that the purchaser is responsible for paying the fee to the merchant, and the merchant is responsible for remitting the tax to the state.
The fee only needs to be charged once per sale. For example, if an order contains three taxable items to be shipped to Colorado, there will only be one $0.27 fee due. If a sale requires multiple shipments, only a single fee payment is required. The fee is due regardless if you deliver the items yourself, use a common carrier or any other means of delivery. A credit cannot be provided for returned items. The fee is due even if shipping and handling are free.
If you make sales through a marketplace facilitator, like Amazon, then the marketplace facilitator is responsible for handling the fee.
How will the Colorado delivery fee be paid?
The retail delivery fee will be reported and paid on a new return, the DR 1786 form. The fee can also be reported and paid via your Colorado Revenue Online account.
Why didn’t Colorado just increase the sales tax rate, rather than create this new Fee?
The Colorado Bill of Rights requires taxpayer approval before tax rates can be increased. Since this is a “fee” and not a “tax”, the legislature was able to create this new fee without voter approval. Yes, this is the definition of “funny business”.
How am I supposed to set up my sales channels to handle this fee?
We expect many e-commerce merchants will have difficulty adding this fee as a separate line item to their orders. We are actively evaluating the largest e-commerce sales channels to determine if they will be providing support for this functionality.
More information can be found on the Colorado Department of Revenue — Retail Delivery Fee page.
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Disclaimer: Our attorney wanted you to know that no financial, tax, legal advice or opinion is given through this post. All information provided is general in nature and may not apply to your specific situation and is intended for informational and educational purposes only. Information is provided “as is” and without warranty.