Colorado Retail Delivery Charges – Tax Authorities

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Recently, Colorado’s new $0.27 retail delivery fee went into effect. The charge applies to all deliveries made by a motor vehicle comprising at least one taxable and tangible movable property. This new levy affects both in-state and out-of-state retailers, requiring those entities to register with the Colorado Department of Revenue and remit funds to the state.

A delivery occurs when one of these items is posted, shipped or otherwise transported by a motor vehicle. The bill’s preamble specifically targets the growing culture of consumer delivery and big business. But the bill itself does not discriminate, it affects anyone and everyone selling items that must be delivered within the state of Colorado.

While the fees target retailers who use delivery, the costs are passed on to consumers and collected by retailers. Retail delivery charges apply statewide and are calculated per sale. Invoices and receipts presented to customers should contain a separate line called “retail delivery charge”. The levy contains certain exemptions such as eligible wholesalers who currently enjoy sales tax exemptions. Fees automatically adjust in proportion to inflation.

The purpose of the bill is to support Colorado’s transportation system and create more funding for infrastructure development while protecting the environment. The bill’s sponsors also hope to encourage the purchase and use of electric vehicles and the phasing out of gas-powered vehicles through the financial costs implemented by the bill in pursuit of a greener Colorado. The retail delivery fee is part of at least five other fees implemented by this state under the guise of environment and infrastructure funding. The legislature projects the bill will raise $5.4 billion by 2032 for infrastructure, public transit and green energy.

Business groups and a State Senator filed a lawsuit alleging SB 21-260 violated the Prop 117 ballot initiative, which won more than 53% of voters in the election. Proposition 117 was a 2020 ballot initiative that required statewide voters to approve new state-owned enterprises when the enterprise’s projected or actual revenue from fees and surcharges exceeds $100 million. during its first five years. They allege that these new fees are nothing more than taxes in disguise and are a way for the state government to circumvent the tax liability purposes of Prop 117.

The costs are codified in Colo. Rev. Stat. § 43-4-218 and enacted by State Senate Bill 21-260from July 1, 2022.

Put into practice : The new fees took effect July 1, 2022. Retailers doing business in Colorado must ensure they are registered with the Department of Revenue or update registrations as necessary. Retailers, including those using third-party delivery services, should speak with their tax professionals and e-commerce managers about implementing a process to comply with the new fees.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


Personal Planning Strategies – July 2022

Proskauer Rose LLP

A recent decision by the New York Court of Appeals has major implications for people who own a home in New York State but do not consider themselves New York State tax residents.

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