Colorado Enacts a Delivery Fee on the Sale of Tangible Personal Property
By Mary Jo Dolson, Partner, Tax & Business Services
The state of Colorado has adopted a $.27 delivery fee on all taxable tangible personal property delivered into the state. The fee is effective July 1, 2022, and must be charged by all retail vendors delivering taxable tangible personal property via motor vehicle to a customer in Colorado. Delivery fees collected are reported to the state on DR 1786 form separately from Colorado sales tax, but with the same frequency as sales tax filings.
The following is a brief overview of the new retail delivery fee charges:
- Any retailer already registered for sales tax purposes with the state of Colorado will be automatically registered for the $.27 retail delivery fee; there is nothing that needs to be done by existing taxpayers to register for, collect and/or remit the fee.
- The seller charges the delivery fee to its customers when the goods are delivered to a customer in Colorado.
- The $.27 delivery fee charged must be reflected on the customer’s invoice.
- The delivery fee is due on all retail sales delivered by a motor vehicle. A motor vehicle is defined as any self-propelled vehicle that is designed primarily for travel on public highways and is generally and commonly used to transport people and property over the public highways. The definition of motor vehicle includes low speed electric vehicles. Retailers must take into account all modes of transportation used to make delivery from the time immediately following acceptance of the order until the items are delivered to the purchaser’s specified location.
- If all items reflected on the invoice are exempt from sales tax, there is no requirement to charge the $.27 delivery fee. If the invoice includes a mixture of taxable and exempt items, the delivery fee will need to be charged. The delivery fee is charged at the invoice level. If the customer orders multiple items shipped on separate invoices, the delivery fee will be due on each invoice issued.
- The retail delivery fee is collected state-wide, does not need to be separated by jurisdiction, and is calculated per sale.
The state has indicated it will be lenient initially to allow taxpayers to acclimate to collecting and remitting the $.27 delivery fee. More information is available on the state’s website.