Retail Delivery Fee (RDF) – Colorado First to Charge (Online) Retailers for their Infrastructure

Do you sell taxable items that will be delivered by a motor vehicle to a location in Colorado (including deliveries made by a third party)? If the answer is yes, this impacts you! You will be required to charge, collect, and remit a new fee to the Colorado Department of Revenue (CDOR).

Highlights

• Begins July 1, 2022.
• Applies to all retail sales delivered by a motor vehicle to a location in Colorado.
  • Includes third-party deliveries.
• $0.27 per retail sale for delivery.
• Charged to the purchaser.
• Collected by the retailer and remitted to CDOR.
• Follows sales tax filing frequencies and due dates.
• Filed on a separate return, form DR 1786.

Those impacted

• Retailers licensed to make sales in Colorado.
• Examples include, but are not limited to:
  • Restaurants that deliver.
  • Grocery Stores that deliver.
  • Flower delivery services.
  • Sales that require delivery:
    • Furniture.
    • Appliances.
    • Electronics.
  • Online stores that ship orders.
  • Business-to-business retail sales (excluding wholesale sales).

Transactions subject to the Retail Delivery Fee (RDF)

• All retail sales that:
  • Have at least one item delivered by motor vehicle; and
  • Include at least one item that is subject to Colorado state sales tax.
• If in doubt about whether or not the fee applies, contact us for clarification.

Registration

• As a courtesy, retailers with an active sales tax account, a retailer license, and any sales tax liability reported after January 1, 2021, will be automatically registered for an RDF account by July 1, 2022.
• Additionally, any open out-of-state retailers or retailer’s use account holders will be automatically registered for an RDF account.
• No registration fee.
• No additional license required.
• Retailers cannot opt out of the automatic registration.

Retailers who open accounts after July 1, 2022, or who don’t meet the criteria above, will be able to register:

• Through Revenue Online.
• By filing the Retail Delivery Fee Return, form DR 1786.
• Or by submitting form CR 0100AP.

Action items: What you need to do

• Charge purchaser on delivery orders – RDF must be listed separately on the receipt or invoice and labeled as “Retail Delivery Fee”.
• File RDF return and remit fees to CDOR.
  • Filing frequency and due dates will be the same as your sales tax or retailer’s use tax frequency and due dates.
  • A return is required to be filed each period, even if there are no fees to report.
  • Only one return is required per tax account (sales tax or retailer’s use), regardless of the number of sites.
  • Can be filed through multiple channels:
    • Retail Delivery Fee Return, form DR 1786.
    • Revenue Online.
    • Sales and Use Tax System (SUTS) – functionality expected before the end of the year.
  • EFT Payment – ACH Debit payment method will not be available until later in 2022, but all other electronic payment methods listed here will be available for your first filing.

I don’t need the RDF account: Now what?

• Retailers that do not make any sales of taxable tangible personal property, for delivery by a motor vehicle, to a location in Colorado, will not be required to open an RDF account.

If you do not make retail deliveries that require the filing of the RDF return and do not file any RDF returns, the account will automatically be closed by February 28, 2023.

• Note: If you do not file returns while the account is open, you may receive letters from the Department suggesting that you file a return if you are required to collect and remit the Retail Delivery Fee.

If you do not wish to receive letters, you may close the Retail Delivery Fee account at any time:

• Through Revenue Online.
• By submitting form DR 1108.
• Or by contacting the Taxpayer Helpline at 303-238-7378.

Exemptions

If all of the property sold is exempt from Colorado state sales tax, the delivery will be exempt from the RDF. This includes sales that are entirely wholesale sales. Sales that include both exempt and taxable tangible personal property are subject to this fee when delivered by motor vehicle to a location in Colorado. A delivery that is made to a purchaser who is exempt from paying the state sales tax (such as a government or a charitable organization) is exempt from the RDF.

More info here.

Let TABS guide you

As part of our sales tax services that we provide to clients you may contact us to find out how this implies to your company.