Colorado Institutes New Retail Delivery Fee

Colorado Institutes New Retail Delivery Fee

by Teri Grahn, CMI

Beginning July 1, 2022, the State of Colorado will begin collecting a new fee for taxable items that are delivered by motor vehicle to a location within the state.

Does this new fee pertain to me?

If you sell taxable items that will delivered by motor vehicle to a location in Coloradoβ€”including deliveries made by a third-partyβ€”you may be impacted by this new Retail Delivery Fee (RDF). You may be required to charge, collect, and remit this fee to the Colorado Department of Revenue.

This includes all retail sales that have at least one item delivered by motor vehicle and include at least one item that is subject to Colorado state sales tax.

What are some of the specifics of the new fee?

  • Goes into effect July 1, 2022
  • Applies to all retail sales delivered by a motor vehicle to a location in Colorado
  • Includes third-party deliveries
  • $0.27 per retail sale for delivery
  • Charged to the purchaser
  • Collected by the retailer and remitted to the Colorado Department of Revenue
  • Follows sales tax filing frequencies and due dates
  • Filed on a separate return, form DR 1786

What do I need to do if the fee applies to me?

  • Retailers with an active sales tax accounting, a retailer license, and any sales tax liability reported after January 1, 2021 will be automatically registered for an RDF account by July 1, 2022.
  • Any open out of state retailers or retailer’s use account holders will be automatically registered for an RDF account.
  • Retailers that do not make any sales of taxable tangible personal property, for delivery by a motor vehicle, to a location in Colorado, will not be required to open an RDF account.
  • In addition, retailers will need to charge the purchaser on delivery ordersβ€”the RDF must be listed separately on the receipt or invoice and labeled as β€œRetail Delivery Fee.”

Are there any exemptions?

  • If all of the property sold is exempt from Colorado state sales tax, the delivery will be exempt from the RDF. This includes sales that are entirely wholesale sales. Sales that include both exempt and taxable tangible personal property are subject to this fee when delivered by motor vehicle to a location in Colorado. A delivery that is made to a purchaser who is exempt from paying the state sales tax (such as a government or a charitable organization) is exempt from the RDF.

Who can I contact for more information? 

For more information and further details, you should visit the Colorado Retail Delivery Fee webpage.

If you have further questions, you can reach out to Teri Grahn, Redpath Sales and Use Tax Practice Lead, by clicking here or by visiting our Contact Us webpage.

Teri Grahn, CMI

Teri Grahn, CMI

Teri Grahn, senior manager is the sales and use tax service area leader and is a certified member of the Institute for Professionals in Taxation. She educates and assists commercial entities with multi-state sales and use tax procedures and compliance, and works with clients to review internal records and practices and educates their staff on processes. She also helps clients navigate the unknowns of entering new states and jurisdictions by researching specific products and services, system and invoice set up to remain compliant with future transactions. Teri also supports clients through sales and use tax audits by investigating assessments and answering questions throughout the process. Teri works with clients in various industries including manufacturing and distribution, construction and real estate, and technology. Prior to joining Redpath and Company in 2003, Teri performed sales and use tax audits for the Minnesota Department of Revenue for 9 years.