Colorado’s Retail Delivery Fee (RDF) was implemented in July 2022. This fee will applies to all retail sales delivered by a motor vehicle to a location in Colorado. If you are a DTC seller who ships orders to Colorado customers or if you have a business-to-business retail sales operation in Colorado, then you need to be aware of this tax and your obligations.
We’ll review everything you need to know about the Colorado Retail Delivery Fee in this article.
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How does the Retail Delivery Fee work?
The fee is tallied at $0.27 per retail sale for delivery and it will be charged to the purchaser. You do not need to configure any new taxes or collect any additional amounts yourself.
Which DTC sellers are impacted by the new CO tax?
The RDF applies to all retail sales that:
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Are to a buyer located in Colorado
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Are from a seller that is required to remit sales tax to the State of Colorado (i.e. has made more than $1000,000 in sales in CO)
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Have at least one item delivered by motor vehicle (i.e. a delivery truck)
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Include at least one item that is subject to the tax (i.e. it is already a taxable order)
How is the Retail Delivery Fee reported to the CDOR?
The Retail Delivery Fee will be filed on a separate return, form DR 1786. The filing frequencies and due dates for the RDF follow sales tax filing frequencies and due dates.
This means that if you are already registered to file sales tax in Colorado, you will simply need to file one additional return.
How does the RDF impact Etsy sellers?
In exactly the same way as other marketplace facilitator taxes are remitted, Etsy will handle the collection and sending of these amounts directly to the Colorado Department of Revenue (CDOR).
Etsy will handle the collection and remittance of the Retail Delivery Fee to the Colorado Department of Revenue (CDOR) on your behalf. You do not need to configure any new taxes or collect any additional amounts yourself.
Etsy will show the total of the fees on your invoices as one item called “Retail Delivery Fees”.
How does the RDF impact on Shopify sellers?
If you are a Shopify merchant currently collecting sales tax in Colorado, the retail delivery fee is automatically collected on taxable sales delivered to customers located in Colorado.
No action is required within your Shopify admin to collect the fee, but you are responsible for reporting and also paying the fee at the same time as your Colorado sales tax return.
The fee will be included in the taxes on the Shopify order. The fee will also be listed as a tax line item on the order details and on your sales tax report as “Retail Delivery Fee”.
Frequently Asked Questions About Colorado’s Retail Delivery Fee
If a customer returns an item, do they get the fee back?
Unfortunately, no. The Retail Delivery Fee, once charged, is not eligible for reimbursement, according to the directives of Colorado’s Department of Revenue. This applies even when the customer returns the purchased item.
What happens when one order requires multiple shipments, is the fee applied per shipment?
The fee structure for the Retail Delivery Fee is per order, not per shipment. This means a single order that necessitates multiple shipments for delivery will only incur one Retail Delivery Fee.
Is the fee still applicable if the order contains both taxable and non-taxable items?
Yes, the fee is still applicable. The Retail Delivery Fee is levied per order, regardless of the mix of taxable and non-taxable items within the order. It is important to note that the fee is only charged once, even if there are several taxable items in the order.
Is the Retail Delivery Fee applicable to digital products like digital downloads?
No, the Retail Delivery Fee is not applied to digital products.
Is the Retail Delivery Fee different in various jurisdictions within Colorado?
No, the Retail Delivery Fee is the same throughout the state.
Do I have to pay the Retail Delivery Fee if I’m located in Colorado and ship to an out-of-state address?
No, the Retail Delivery Fee only applies to orders that are shipped to addresses within Colorado.
Is the Retail Delivery Fee refunded if a customer returns their purchase?
According to the Colorado Department of Revenue, the Retail Delivery Fee is non-refundable, even when the purchased item is returned.
Is the Retail Delivery Fee levied even when shipping is free?
Yes, the Retail Delivery Fee is still applicable and will be added to any taxes applied to an order, irrespective of whether shipping is free or not.
Who do I contact if I have questions about the RDF?
To learn more about the Colorado Retail Delivery Fee, visit the Colorado Department of Revenue website.
For questions more specific to your business situation, ensure that you speak to your tax professional or contact the Colorado Department of Revenue Taxpayer Helpline at 1-303-238-8737.
