Staying in Compliance – Colorado’s New Retail Delivery Fee

Starting July 1st, 2022, the state of Colorado will require retailers to collect a $0.27 fee any time they deliver taxable goods to an address in Colorado. With E-Commerce’s ability to interact with customers beyond state boundaries, this will impact many online businesses. Both in-state and out-of-state companies will have to add additional items to their checkout process in order to comply with Colorado’s new retail delivery fee.

What do I need to Know about the Colorado Retail Delivery Fee?

Any tangible taxable good delivered by a motor vehicle to a Colorado consumer will require the new retail delivery fee. Some other factors to consider concerning this scenario are:

  • Operation or ownership of the vehicle used to transport goods to a Colorado consumer does not affect the necessity of the retail delivery tax.
  • Whether your company is sending the good from inside the state of Colorado or out of state, the retail delivery tax still applies.
  • The inclusion of free shipping of your goods does not affect the necessity of the retail delivery tax.

Are there any Exceptions?

The exceptions concerning this tax are as follows:

  • Consumers such as government and charity organizations, which are exempt from state sales tax, are not affected by the retail delivery tax.
  • Nontaxable goods are not affected by the retail delivery tax as long as the property that the delivery is headed to is exempt from the state sales tax.

Note that if a mix of taxable and nontaxable goods are purchased together sent out for delivery in Colorado, the retail delivery tax will still apply.

What do I need to do to comply to this upcoming factor?

  • Be informed. Make sure that you know and understand the implications of this new fee and how it will impact you and your business. You can read more about this new tax here on the Colorado Department of Revenue webpage.
  • Add a $0 line item to your orders with the OF400000 tax code.
  • Include the retail delivery tax line on your customer’s invoices. This tax will need to be displayed separately from the total tax line.
  • Sign up for a tax compliant service. To learn more about this option, reach out to BCSE to get more information concerning a tax compliant service that keep your business up to date with these ever-changing tax requirements so you don’t have to!

Where can learn more about complying to this upcoming change?

BCSE is always here to help. If you have questions or concerns about this upcoming retail delivery fee, contact us and we will get you up to speed!