Certain vendors are now required to collect a new retail delivery fee of 27 cents per transaction beginning July 1, 2022. The retail delivery fee is imposed on sales of tangible personal property (TPP) delivered to a Colorado consumer if the delivery of the TPP is made by motor vehicle.
The fee applies to sales and deliveries made on or after July 1, 2022.
Retailers and marketplace facilitators who collect the sales tax on the TPP and deliver or cause TPP to be delivered are required to collect this fee and must separately list the fee specifically as retail delivery fees on their invoice or receipt issued to the purchaser.
Based on feedback from industry and tax advisors that listing and collecting the fee would be difficult to implement by July 1, 2022, the Colorado Department of Revenue Service (CDOR) has provided informal guidance that failing to separately state the fee won’t result in penalties or other adverse consequences as long as the retailer makes good faith efforts to implement the separate statement requirement. Additionally, their guidance states that the fee will still be due on a sale whether the vendor collected from the customer or not.
Although vendors will still be obligated to pay the fee on deliveries subject to it even if they are not able to separately state it, the state has provided that vendors should not suggest that the fee is already included in the price or will not be collected until such time that it can be separately stated.
Instead, retailers are generally advised to not mention the fee at all until it can be separately stated. State guidance further provides that the consumer need not separately accrue for the fee; the proposed regulation explicitly states that consumers aren’t obligated to pay the fee outside of the context of the retail transaction itself.
Fee Details
- All sales of TPP subject to sales tax and delivered to the purchaser by in-state and out-of-state retailers with nexus in Colorado incur the fee.
- The fee applies per transaction if a motor vehicle is used post-sale to transport the items.
- The fee applies regardless of whether the delivery is made by the retailer or a third party. The fee applies only once to all items that are purchased in a single transaction regardless of how many shipments are required.
- The fee applies to mixed transactions containing both a taxable and nontaxable items. However, the fee doesn’t apply to sales solely containing items that aren’t subject to Colorado state sales tax. (The exemption rule is specifically for state sales tax. An item exempt from state tax but subject to local tax is considered exempt for purposes of determining if the fee is due.)
Note that multiple items purchased in one transaction are considered a single retail delivery. More details can be found on the Colorado Department of Revenue (CDOR) website.
Registration and Filing
All retailers with an active sales tax account with CDOR will automatically be registered for this fee and will need to file a return to report and pay the fee. The return for the retail delivery fee is a separate return from the sales and use tax return but will have the same due date as the sales and use tax return.
We’re Here to Help
For questions about this new delivery fee or your State & Local Tax services, contact your Moss Adams professional.