New Filing Requirement Alert! “Retail Delivery Fee” in Colorado Taking Effect for Retailers on July 1, 2022
Sellers in Colorado need to prepare to adjust their invoicing and checkout systems come July 1, 2022, to collect a new fee on Colorado transactions.
The Retail Delivery Fee (RDF) is a $0.27 fee on each transaction of taxable tangible goods delivered to addresses in Colorado via motor vehicle. Delivery by motor vehicle is a wide net that includes traditional 3rd party shippers (UPS, USPS, FedEx), but also captures emerging services such as on demand grocery delivery (Instacart), food delivery (DoorDash) and delivery by company vehicles (Amazon Prime). With the popularity of these services the state expects to bring in $16.8 million in fees for FY 2022-23 and $18.8 million in FY 2023-24 (Legislative Council Staff).
Critics of the new fee decry it as a workaround to Colorado’s Taxpayers Bill of Rights (TABOR) requirement that voters in the state approve new taxes. TABOR does not specifically address fees, so they may be enacted and increased by the state legislature without voter approval. Coloradans have been hit with many such fees since TABOR was enacted back in 1992.
So, who needs to file the Colorado Retail Delivery Fee?
Sellers who ship taxable tangible goods in the state, and who have sales tax nexus, need to collect and remit the fee. Nexus for the RDF follows nexus for sales tax. If a seller has Colorado sales tax nexus, they also have RDF nexus. The filing frequency follows the sellers sales tax filing frequency.
To add the RDF to your Revenue online account:
- Go to Revenue Online and log in.
- Go to the “More” tab.
- Then in the “Additional Actions” panel, click on the “Add Retail Delivery Fee Account” link.
Or, sellers can file the RDF return (using the DR 1786 form) and that will trigger registration for an RDF account.
Sales and Use Tax System (SUTS) users will need to file through Revenue Online or file a paper return. The state estimates that SUTS and RDF functionality will be live at the end of 2022.
Sellers should reach out to their commerce platform providers to configure the new fee on their applicable Colorado transactions. If you have any other questions, please visit our State and Local Tax page for more information and further resources.