Updates to Colorado's Retail Delivery Fee
Disclaimer: This blog was originally published on June 6, 2022 detailing the new Colorado retail delivery fee (effective July, 1, 2022) and was updated on May 12, 2023 to reflect new rules and regulations that are set to go into effect on July 1, 2023.
On July 1, 2022, the State of Colorado began collecting a retail delivery fee (RDF) for taxable items that are delivered by motor vehicle to a location within the state. New rules and regulations to the RDF are set to go into effect on July 1, 2023.
What are the new changes to the retail delivery fee effective July 1, 2023?
- The RDF increases to $0.28 per retail sale for delivery (up from $0.27 prior to July 2023).
- An exemption is available for companies with Colorado retail sales with less than $500,000 in the previous calendar year.
- It is no longer required for a company to separately state the RDF on your customers' invoices, as the retailer may choose to pay the fee on behalf of the customer.
No refunds are available for payments of the RDF before July 1, 2023.
Does this fee pertain to me?
If you sell taxable items that will be delivered by motor vehicle to a location in Colorado—including deliveries made by a third-party—you may be impacted by the retail delivery fee. 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 fee?
- Originally went into effect July 1, 2022
- Applies to all retail sales delivered by a motor vehicle to a location in Colorado
- Includes third-party deliveries
- $0.28 per retail sale for delivery (up from $0.27 prior to July 2023)
- As of July 1, 2023, it is no longer required that retailers separately state the RDF on the receipt or invoice.
- 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 account, or retailer's use account, as of January 1, 2021 were automatically registered for an RDF account by July 1, 2022.
- Currently, when a retailer registers for Colorado's sales and use tax, the RDF will be included as part of the registration.
- 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.
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.
- An exemption is available (as of July 1, 2023) for companies with Colorado retail sales with less than $500,000 in the previous calendar year.
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, 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.
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