Everything You Need to Know About the Colorado Retail Delivery Fee

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When Does the Colorado Retail Delivery Fee Go Into Effect?

Effective July 1, 2022, the state of Colorado will impose a retail delivery fee on all deliveries by motor vehicle to a location in Colorado, even if the delivery originates in a different state. 

What is the Colorado Retail Delivery Fee?

The retailer or marketplace facilitator that collects sales tax on taxable items delivered in Colorado, is liable to collect and remit the retail delivery fee. Therefore, if a third-party delivery service handles 100% of your deliveries and collects and remits the sales tax on all those deliveries, your business will not be liable to collect and remit the retail delivery fee.

In this scenario, when a third-party delivery service collects and remits sales tax on 100% of the business’ deliveries, that third-party is responsible for collecting and remitting the retail delivery fee.  

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If your business handles the delivery of taxable items, and your business collects the sales tax on the delivered taxable items in Colorado, you need a retail delivery fee account to collect and pay the retail delivery fee. The retail delivery fee is an account separate from your sales and use tax account, so you will need to have both account types in this scenario.

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 by the state of Colorado for a retail delivery fee account. There is no license required or registration fee due.  

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About the Colorado Retail Delivery Fee Itself

  • The retail delivery fee is collected state-wide, so it does not need to be separated by taxing jurisdiction and is $0.27 per delivery order. The retail delivery fee is imposed upon the purchaser and is collected when sales tax on the delivered taxable items is collected.  
  • The retail delivery fee is also collected and remitted by a business that mails, ships, or otherwise delivers taxable items by motor vehicle to a purchaser in Colorado.  
  • The retail delivery fee applies to both in-state and out-of-state retailers.  
  • The retail delivery fee is remitted to the Colorado Department of Revenue.  
  • Wholesale sales are not subject to the retail delivery fee. However, if a delivery by motor vehicle to a location in Colorado includes both items for resale (wholesale items) and goods subject to state sales or use tax, the seller must collect the retail delivery fee. 

For more details and FAQs on the Colordao Retail Delivery Fee, visit the Colorado Retail Delivery Fee website here: https://tax.colorado.gov/retail-delivery-fee   

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Questions to Help You Decide if the Colorado Retail Delivery Fee Needs to be Collected by Your Business: 

1) Does your business collect sales tax, or pay use tax, on taxable items that are delivered by motor vehicle in the state of Colorado?  

If your answer to this question is ‘YES,’ your business is responsible for collecting and remitting the retail delivery fee.  

If your answer to this question is ‘NO,’ your business may not be responsible for collecting and remitting the retail delivery fee. 

2) Does your business collect sales tax, or pay use tax, on some deliveries of taxable items and not on other deliveries of taxable items by motor vehicle in the state of Colorado?  

If your answer to this question is ‘YES,’ your business is responsible for collecting and remitting the retail delivery fee on the deliveries in which sales tax is collected and remitted by the restaurant, i.e., not collected by a third-party delivery service.  

The third-party delivery service would collect the retail delivery fee on the taxable items delivered when they are responsible for collecting the sales tax.  

If your answer to this question is ‘NO,’ your business may not be responsible for collecting and remitting the retail delivery fee. 

3) Does your business mail or ship taxable items using USPS/UPS/FedEx to locations within the state of Colorado and collect sales tax on those taxable items? 

If your answer to this question is ‘YES,’ your business is responsible for collecting and remitting the retail delivery fee on the deliveries in which sales tax is collected by the restaurant (and not collected by a third-party delivery service). 

If your answer to this question is ‘NO,’ and your answer to the prior two questions was also ‘NO,’ your business is not responsible for collecting and remitting the retail delivery fee. 

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I am Required to Collect and Remit the Colorado Retail Delivery Fee, What Needs to be Done to Prepare? 

1) The retailer must list the fee as a separate item labeled “retail delivery fees” on the receipt or invoice issued to the purchaser. Clients that handle the delivery of food will need to set up the retail delivery fee to apply a one-time fee of $0.27 per delivery.  

2) Communicate the newly created POS charge to your accountant.

3) Provide your retail service fee account number to your accountant. 

4) Begin collecting the retail service fee of $0.27 on all deliveries made by motor vehicle in the state of Colorado on July 1, 2022, and thereafter.  

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How can Restaurant Technology Help with the Colorado Retail Delivery Fee?

RASI’s knowledgeable compliance team stays up-to-date with the latest legislation and relays the information to both our clients and our tech team. This ensures that our software can adjust and comply to any new regulations that crop up – on state, federal, and local levels!

Request a Demo Today and learn how we can help protect your valuable assets, employees, stakeholders, and business!

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