Starting July 1, 2022, Colorado’s new Retail Delivery Fee (RDF) will go into effect. This fee will apply to all retail sales delivered by a motor vehicle to a location in Colorado. If you are an Etsy 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 new tax and what your obligations are.
We’ll go over everything you need to know about the Retail Delivery Fee in this article.
Why is the Colorado Department of Revenue (CDOR) implementing this new tax?
The RDF is a way for the state to raise revenue to fund a range of different projects - the fee is broken down as follows:
-
Community Access Retail Delivery Fee: $0.0690
-
Clean Fleet Retail Delivery Fee: $0.0530
-
Clean Transit Retail Delivery Fee: $0.0300
-
General Retail Delivery Fee: $0.0840
-
Bridge and Tunnel Retail Delivery Fee: $0.0270
-
Air Pollution Mitigation Retail Delivery Fee: $0.0070
-
Total Retail Delivery Fee: $0.27
How does the Retail Delivery Fee work?
The new fee will be $0.27 per retail sale for delivery and it will be charged to the purchaser. 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).
You do not need to configure any new taxes or collect any additional amounts yourself.
Which Etsy sellers are impacted by the new CO tax?
The RDF applies to all retail sales that:
-
Are to a buyer located in Colorado
-
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)
-
Have at least one item delivered by motor vehicle (i.e. a delivery truck)
-
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 should Etsy sellers show the fee on their invoices?
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”.
