If you operate an e-commerce business, especially if you already collect sales tax in Colorado, you’ve probably heard about the new Colorado Retail Delivery Fees. It’s not a new tax per se, but the fee is being collected on all orders shipped into the state of Colorado.
Colorado Retail Delivery Fees At-a-Glance
- The fees are effective July 1, 2022.
- The total fees $0.28 (or 28 cents) per order, even if the order ships in multiple shipments. You can see the breakdown of the fees here.
- The fee amount will increase yearly. The $0.28 amount is correct through June 30, 2024.
- The retail delivery fees themselves are not taxable.
- The fees should be charged to the customer, listed separately on order receipts, and be labeled “Retail Delivery Fees”
- If the entire transaction is non-taxable, then the fee should not be added to the invoice; however, if even one (1) item in the transaction IS taxable, then the fee should be included.
Because the CO Retail Delivery Fees are a fee and not a tax, the AccurateTax system itself will not report this, at present. However, we have added the ability for our customers to include the RDF in your invoices as an option to our plug-ins to facilitate collection by our clients. If you use one of our provided sales tax plug-ins, you should upgrade to the latest version in order to support this fee.
In our plug-ins, the option to collect this fee can be turned on or off only at this time. If the option is turned on, and the conditions for including the fee are met, then the fee will be added to the order and displayed to your customer as a separate charge during checkout.
You should not change the “Retail Delivery Fees” wording. The Colorado Department of Revenue requires the proper wording to be listed on all affected orders.
Retail Delivery Fee Registration and Filing
Retailers who have an “active sales tax account, a retailer license, and any sales tax liability reported after January 1, 2021,” do not need to register; they will be automatically registered for the new fees. There is no process to opt out of the automatic registration.
There is also a new return to complete, which will be due on the same schedule as a retailer’s sales tax returns. This new return is DR 1786. For example, if you file monthly, your sales tax return is due on the 20th of the month following a given collection period. Your DR 1786 return and payment of the retail delivery fees will also be due on the 20th of the month.
A return is required to be filed every period, even if no fees were collected. In other words, even if you had no taxable orders to Colorado, you must file a zero dollar return using DR 1786.
You do NOT need to break down the fees by jurisdiction or location.
What You Need to Do
If you’re an AccurateTax customer using a platform for which we provide a plug-in, simply download the latest version by logging in to your account. You can also contact your account representative for an update.
Update your website(s) with the new version of the plug-in, go into Settings, and turn the retail delivery fee on.
Then simply make sure to submit your DR 1786 by the due date each period.
If you have a custom integration with AccurateTax, you will need to add support for the Colorado Retail Delivery Fees for all taxable orders shipping to a Colorado location.
For more information about the fees themselves, visit the Colorado Department of Revenue website.