What You Need to Know If You Sell Products in Colorado
If you are selling or plan to sell products in Colorado, there’s a new sales tax in Colorado for deliveries you need to be aware of. A new retail delivery fee is set to take effect on July 1, 2022, requiring retailers to collect a $0.27 fee each time taxable goods are delivered to a Colorado address. This fee applies to retailers selling physical goods by motor vehicle to Colorado consumers, regardless of who owns or operates the vehicle used in the delivery and where the delivery originates. Customer invoices or receipts must also indicate the new fee as “retail delivery fees.”
Serious online shoppers will feel the burden of the tax most, even though the fee is collected and remitted by retailers. Despite falling on consumers, businesses selling products to Colorado residents will still have some responsibility in ensuring the law is being followed.
Registration & Filing Requirements
Any retailer registered to make taxable retail sales in Colorado and delivers to state residents is required to register to collect and remit the fee. There will be no license or registration fee for signing up, but retailers are required to add a retail delivery fee account through the Colorado Department of Revenue.
It’s important to note this fee only applies for tangible taxable property, so if your product does not require physical delivery you are not required to register.
Retailers with a delivery fee account will need to report the fee separately on a retail delivery fee return (form DR 1786). Returns will be due every reporting period, which is the same time as the state sales tax return. They must still be reported even if no deliveries into the state were made during that time.
Exceptions to the Law
There are some instances where the fee is not required despite a delivery taking place. If otherwise taxable goods are delivered to purchasers exempt from the state sales tax, such a government or charitable organization, the fee will not be applied.
The fee also does not apply to deliveries of nontaxable goods, including wholesale sales, on the condition that all of the property in the delivery is exempt from the state sales tax. If the delivery does include both taxable and exempt goods, the fee will apply.
Solutions to Comply With the New Sales Tax in Colorado
With a new law for a delivery sales tax in Colorado, there is sure to be lots of confusion initially. If your business delivers in Colorado and you need help making sure you comply with this new law, there are solutions that can help.
TaxJar is a cloud based platform that automates the entire sales tax life cycle across your channels. With the ability to track sales per state with ease, TaxJar provides you with the needed reports to file your business’ sales tax returns in a timely manner. Save several hours a month with the automated sales tax solution that decreases sales tax liability and eases the burden of sales tax compliance.
Avalara is an automated tax compliance software designed to support small, midsize, and enterprise organizations. With Avalara, your business can automatically track your sales and see where you need to file, as well as allow you to easily manage your license portfolio to adjust for this new law. Automate your business’ filing and remittance and make a single payment Avalara will distribute to jurisdictions on your behalf. Avalara helps you save time and boost the accuracy of your sales taxes with easy integration that helps you avoid headaches.
Vertex is an end-to-end tax solution that allows you to actively and accurately manage your tax compliance. Vertex tax solutions automate compliance and reporting for your organization to improve efficiency and streamline compliance. Reduce your risk of audit and comply with tax laws in Colorado and other states with Vertex, the solution that provides tax compliance at the speed of commerce.
Blayzer Can Help You With Your Questions
Do you deliver to Colorado and have questions about any of the software? With years of experience and partnerships with ecommerce solutions, Blayzer can help you get in contact with and set up a solution to help you comply with this new law. Or, talk to a Blayzer ecommerce expert today if you’re unsure how this new law will affect your business.