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.”
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
So 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.
Alan Smith is director of Sales Tax Colorado, LLC. He can be reached at [email protected].