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Effective July 1, 2022, a new Colorado Retail Delivery Fee began to be assessed on all deliveries by motor vehicle in the state of Colorado. This fee will apply to both online and in-store sales and is intended to help the state in infrastructure repair from an increase in “delivery trucks and services contributing to wear and tear on our roads” according to Colorado’s governor, Jared Polis. In this blog post, we will discuss what the new Retail Delivery Fee is, how it will be assessed, and what it means for your business.
What Is The Colorado Retail Delivery Fee?
The Colorado Retail Delivery Fee is a new fee on all deliveries by motor vehicle to a location in Colorado with at least one item of tangible personal property subject to state sales or use tax. The retail delivery fee is collected state-wide, does not need to be separated by jurisdiction, and is calculated per sale. The retail delivery fee is made up of six different fees. The rates are listed below:
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- Community Access Retail Delivery Fee $ 0.0690
- Clean Fleet Retail Delivery Fee $ 0.0530
- Clean Transit Retail Delivery Fee $ 0.0300
- General Retail Delivery Fee $ 0.0840
- Bridge and Tunnel Retail Delivery Fee $ 0.0270
- Air Pollution Mitigation Retail Delivery Fee $ 0.0070
- Total Retail Delivery Fee $ 0.27
How Is The Colorado Retail Delivery Fee Assessed?
The Colorado Retail Delivery Fee is assessed on the delivery of items subject to state sales or use tax by a retailer, whether online or in-store. The retail delivery fee will be imposed at the time of sale and must be separately stated on the customer’s receipt. Customers will pay the fee but retailers are responsible for collecting and remitting the retail delivery fee to the Department of Revenue.
What Does The Colorado Retail Delivery Fee Mean For Your Business?
If your business makes deliveries by motor vehicle to customers in Colorado, you will be responsible for collecting and remitting the new retail delivery fee to the state. This fee is in addition to any other sales or use tax that may be due on the transaction. You will need to make sure that your accounting and point-of-sale systems are updated to account for the new fee, and that your customers are aware of the fee before they complete their purchase.
Do I Need To Register A Colorado Retail Fee Account?
In short, it depends. Some businesses will automatically be registered with the new system. Retailers with an active sales tax account, a retailer license, and any sales tax liability reported after January 1, 2021, in the state of Colorado, will be automatically registered for a retail delivery fee account.
An out-of-state retailer with no physical presence in Colorado is required to register for Colorado sales tax if their sales into Colorado meet or exceed the state’s economic nexus threshold. Per the Colorado Department of Revenue, “Any retailer who does not maintain a physical location in Colorado is exempted from state sales tax licensing and collection requirements if the retail sales of tangible personal property, commodities, and/or services made annually by the retailer into Colorado in both the current and previous calendar years are less than $100,000.”
If you need to create an account you can do so via Colorado’s Revenue Online portal. Go to the “More” tab. Then in the “Additional Actions” panel, click on the “Add Retail Delivery Fee Account” link.
When Are Colorado Delivery Fees Due?
Colorado’s retail delivery fees are due on the 20th day of each month, following the reporting period. For example, if you make retail deliveries between July 21 and August 20, your report and payment for those fees would be due on September 20.
What Happens If I Don’t Pay My Retail Delivery Fees?
If you don’t pay your retail delivery fees, the state of Colorado can assess a penalty of up to $500 per month, plus interest. The state can also file a lien on your property or take legal action to collect the unpaid fees.
What Do I Need To Do To Comply With The New Colorado Retail Delivery Fee?
If you are registered for sales tax in Colorado, you will automatically be registered for the retail delivery fee and will begin receiving monthly statements from the state. If you are not registered for sales tax, but meet the economic nexus threshold, you will need to register for both sales tax and the retail delivery fee. You can register for both taxes via Colorado’s Revenue Online portal.
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If you make deliveries in Colorado, it is important to be aware of the new retail delivery fee and to make sure you are registered and compliant. The state of Colorado has set up a helpful page with more information on the new fee, which can be found here: https://tax.colorado.gov/retail-delivery-fee.
Need help making changes to your eCommerce store to be in compliance with this new fee? Reach out to EYStudios, we’re always happy to help!