FAQ: The New Colorado State Delivery Fee & Florists
Soon after the Colorado Department of Revenue announced their new Retail Delivery Fee (a new sales tax on pretty much anything delivered by motor vehicle in the state) we published an in-depth guide on how this would affect retail florists. It covers a lot of ground any florists in the state of Colorado should review it.
Some florists asked if we could present the same material in condensed FAQ format to help them ease into it, and we are happy to provide that below:
I’m a retail florist in Colorado. Do I have to charge the new Retail Delivery Fee?
Almost certainly. You will be required to be collect and remit a new Retail Delivery Fee of $0.27 on each sale that is delivered by motor vehicle (even electric) to a location in Colorado with at least one item of tangible personal property subject to state sales or use tax.
I’m a retail florist in Colorado. Do I have to charge the new Retail Delivery Fee on orders that I wire outside the state?
No. According to the Colorado Department of Revenue Taxation Division:
The retail delivery fee applies only to retail sales of tangible personal property for delivery by a motor vehicle to a purchaser at a location in Colorado. However, the retail delivery fee does apply to deliveries by motor vehicle from another state to a location in Colorado.
I’m a florist outside Colorado, but I sometimes take orders that I wire to florists in Colorado to fill. Do I have to charge the new Retail Delivery Fee?
You likely are not set up to remit taxes to the state of Colorado so no, but the filling florist may charge you the new Retail Delivery Fee so you may want to build that into the Delivery or Outgoing Wire Fee you charge your retail customer.
When do I have to start charging the new Retail Delivery Fee?
You need to start charging collecting and disclosing the new retail delivery fee on July 1, 2022.
When do I have to report/remit the new Retail Delivery Fee?
The new retail delivery fee return is to be filed at the same time as traditional Colorado state sales taxes, typically on or before the 20th day of the month following each reporting period. That means most florists will file their first DR 1786 Retail Delivery Fee Return some time after July 31 and before August 20 2022.
Merchants that have special permission to file their sales tax returns on a different basis (quarterly, annually, etc.) file the new retail delivery fee return on that same schedule.
Do I need a new sales tax account?
Yes, but you probably don’t need to worry about it. The state of Colorado will automatically register you for the new account if you have…
- an active sales tax account
- a retailer license
There is no license required or registration fee due.
How do I have to report/remit the new Retail Delivery Fee?
By filing the new form DR 1786 (Retail Delivery Fee Return) and paying the amount collected to the Colorado Department of Revenue.
How does this affect my invoices/receipts?
Florists must show the total of the new taxes on receipts and invoices as a single item called “retail delivery fees”.
My website/pos system might not be set up for that. Can I just add $0.27 to my existing delivery charge?
No. The rules are clear and the new fee must be disclosed separately. If you aren’t sure your technology can handle it you need to talk to your providers ASAP to make sure they will have you covered by July 1 2022.
What kinds of sales are subject to the new Retail Delivery Fee?
Pretty much any delivery a florist might make in the state of Colorado:
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.
Are any sales exempt from the new Retail Delivery Fee?
Cash and carry sales are exempt.
Pick-up orders are likely exempt, but…
If the retailer has to use a motor vehicle to transport the items at any point after the items are sold, the retail delivery fee applies.
So if for example a florist had multiple locations and needed to move a product from one store (where it was prepared) to another (from where it would be picked up) after it was sold, it seems the new retail delivery charge should be applied. Strictly speaking it seems the delivery fee would apply even if the florist had to use a motor vehicle to pick up supplies needed to fill the order after the sale was made.
But pretty much any delivery order within the state of Colorado will be eligible for the new retail delivery fee, with the following exceptions…
Tax Exempt Customers & Products
If every item in a retail sale is exempt from sales tax, the delivery is also exempt from the retail delivery fee. However, if one or more items in the transaction are subject to sales tax, the retail delivery fee is due.
So it seems that if any part of the delivery order is subject to Colorado state sales tax the new retail delivery fee must be applied…
…but if the entire sale (including service and delivery charges) is tax exempt then it is also exempt from the new retail delivery fee. Examples could include sales to tax-exempt organizations but, again, the entire sale would need to exempt of all sales taxes.
Wholesale sales are not subject to the retail delivery fee.
It seems that if a florist also sells wholesale, or supplies a fellow flower shop that is low on product the new delivery fee would not be applied as long as no sales tax is being applied to anything in the order.
But, again, if any product on the sale is taxed, then the new delivery fee applies.
If delivery by motor vehicle to a location in Colorado includes both items for resale (wholesale sales) and goods subject to state sales or use tax, then the seller must collect the retail delivery fee.
Deliveries Without The Use Of A Motor Vehicle
The fee is due on retail sales that are delivered by a motor vehicle. A motor vehicle is any self-propelled vehicle that is designed primarily for travel on the public highways and is generally and commonly used to transport people and property over the public highways or a low-speed electric vehicle.
It seems the new retail delivery fee should only be applied if the delivery is made by a motor vehicle (including electric; possibly even electric bikes and scooters) so deliveries made by bicycle or on foot might be considered exempt.
However the new rules also say:
The retailer must consider all modes of transportation used to make the delivery; including, from the time immediately after the acceptance of the order, until the items are delivered to the purchaser’s specified location.
That could suggest that if a florist took an order on Tuesday, for delivery by foot on Thursday, but used a truck to pick up the supplies needed to make the order on Wednesday then the retail delivery fee would still apply.
It is probably safest to apply the fee to all deliveries regardless of how they are to be made.
What if I use a 3rd party delivery service? Do I still need to charge the new Retail Delivery Fee?
Yes. The new retail delivery fee has to be collected, disclosed and remitted even if the motor vehicle that delivers the goods to the customer is owned and/or operated by another party.
If I use a 3rd party delivery service do they also charge me the new Retail Delivery Fee?
They might. If your delivery service charges you sales/use tax for their services now they would likely also be required to also charge you the new retail delivery fee as well. Florists may need to build that into their traditional delivery charge
What if I offer free delivery? Do I still need to charge the new Retail Delivery Fee?
Yes. Even if you offer free/bundled delivery the new retail delivery fee must be applied if the sale contains even one item that is eligible for state sales or use tax.
How do I best prepare for this new sales tax?
- automate the correct calculation of these new delivery fees
- properly disclose the new fee on receipts and invoices
- offer a simple report that makes filling out the new form DR 1786 quick and easy
Please consider letting us give you a demo.