Colorado’s New Retail Delivery Fee

Date:

Fee highlights and some potential impacts on contractors

From the Colorado Department of Revenue’s (DOR) Retail Delivery Fee webpage:

“Effective July 1, 2022, Colorado imposes a retail delivery fee on all deliveries by motor vehicle to a location in Colorado with at least one item of tangible personal property subject to state sales or use tax.

The retailer or marketplace facilitator that collects the sales or use tax on the tangible personal property sold and delivered, including delivery by a third party, is liable to collect and remit the retail delivery fee. Deliveries include when any taxable goods are mailed, shipped, or otherwise delivered by motor vehicle to a purchaser in Colorado.”

RELATED: Time and Material vs. Lump Sum Billing

There is a whole lot of difficulty and questions surrounding this new $0.27 fee so the information below should not be deemed complete.

Active Retailers were automatically registered for a retail delivery fee account on July 1st, 2022.

Reporting and remitting the fee requires a separate return which can be handled through filing the paper return or online:

  • Retail Delivery Fee Return (DR 1786)
  • Revenue Online

Where are contractors most likely to be impacted by filing requirements?

If you sell whole goods such as appliances (think apartment complex rehab), replacement HVAC or plumbing equipment, or sell and install goods that are treated as Tangible Personal Property versus performing construction under a contract to improve real property, chances are you’ll owe the fee.

One particularly relevant FAQ: If I make a service call to a customer’s location as a plumber, electrician, locksmith, repair service, etc., and sell a part or item to the customer that is subject to sales tax, does the retail delivery fee apply?

The retail delivery fee does not apply when the primary purpose of the job is a service call to a customer’s location in order to repair something or diagnose a problem. For example, if there is an issue with a water heater, and in order to complete the job you sell a part or have to replace the item, the service call is not subject to the retail delivery fee. This is regardless as to whether you have the part or item with you when you arrive at the customer’s location or need to make a separate trip to obtain the part or item to complete the job.

The retail delivery fee does apply when the primary purpose of the job is to replace an item that requires delivery by motor vehicle to the customer’s location. The transaction is subject to the retail delivery fee because the customer purchased tangible personal property for delivery by a motor vehicle.

VIEW FULL ARTICLE IN OUR DIGITAL EDITION

Author

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Preparing for Emergency Calls

In our world of third-party warranty management, we have a definitive list of emergency calls that qualify to dispatch a subcontractor.

3D Home Printing Company Moves to Greeley

Alquist 3D, which built the first 3D printed home in the nation, moved to Greeley, thanks to incentives from the city and the state.

Essential Workwear for Construction Professionals

Construction apparel can not only maximize comfort and performance but also help keep workers safe while on the job.

Related articles

Building Permit Reconciliations

A number of Colorado towns, cities and counties require a use tax deposit to be paid with a building permit.

Tax Tips for Working in Home Rule Jurisdictions

Here are some tax tips for working as a contractor in a home rule jurisdiction, using Denver as an example.

Time and Material vs. Lump Sum Billing

Contractors face many factors that impact profits, but there’s one that commonly comes back and hits profits years later upon audit.

Tax Challenges for Growing Building Companies

Builders who are expanding into more local jurisdictions in Colorado will have to deal with more sales and use tax compliance issues.