How does Etsy handle Marketplace Facilitator Tax? (updated for 2025)
What every Etsy seller needs to know in 2025 about Etsy Marketplace Sales Taxes.
This blog post discusses Colorado's Retail Delivery Fee (RDF). It includes information on what the tax is for, how it works, and who needs to be aware of it.
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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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.
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)
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.
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”.
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”.
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.
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.
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.
No, the Retail Delivery Fee is not applied to digital products.
No, the Retail Delivery Fee is the same throughout the state.
No, the Retail Delivery Fee only applies to orders that are shipped to addresses within Colorado.
According to the Colorado Department of Revenue, the Retail Delivery Fee is non-refundable, even when the purchased item is returned.
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.
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.
Nicole Pascoe
Nicole is the co-founder of Craftybase, inventory and manufacturing software designed for small manufacturers. She has been working with, and writing articles for, small manufacturing businesses for the last 12 years. Her passion is to help makers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.
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