Lawmakers are rethinking the details around the 27-cent retail delivery fee, including the mandate that the fee be listed separately on customer receipts, while the legality of the charge moves to court. Here’s what we know.
Lawmakers are rethinking the details around the 27-cent retail delivery fee, including the mandate that the fee be listed separately on customer receipts, while the legality of the charge moves to court. It is too early to say what this might mean for businesses.
Constituents and businesses have been vocal about their vexation over the fee and the required process around it. The retail delivery fee was enacted as part of Senate Bill 260, a revenue raising law with the goal of funding roadway and transportation improvements. The 27-cent fee is added to any retail delivery made by a vehicle, including all door-to-door shipments of goods and food. Read more:
- Colorado’s Delivery Fee Drops July 1, 2022
- TaxOps’ Response to the New Colorado Delivery Fee
- Colorado Retail Delivery Fee
The contentious delivery fee is likely to make its way to court, where the justice system will make the call about whether the law violates the state’s restriction TABOR laws. TABOR, or the Taxpayer’s Bill of Rights, requires that any tax increases be put to the vote of the general population. By naming the retail delivery fee a fee, lawmakers may be attempting to circumvent TABOR requirements to get revenue to the bottom line. Also at issue is that the fee must be listed separately on receipts and invoices, requiring system changes, the cost of which is born by business, both businesses in Colorado and remote sellers.
Allowing businesses to collect and pay the fee rolled into the cost of the shipment is one solution under consideration. This adjustment avoids many of the issues for businesses but for consumers, it makes the fee less transparent.
Enforcement is postponed while the many issues are being considered. According to Ed Sealover at the Denver Business Journal:
Both Democrats and Republicans on the state’s Sales and Use Tax Simplification Task Force said they would support a bill to remove that restriction and to allow businesses to collect and pay the fee as part of the overall cost of their shipments. And Fenberg, noting that the Colorado Department of Revenue has agreed to postpone enforcement of the receipt-breakout provision for now, said he too would support a clean-up bill in the 2023 legislative session that would remove that requirement as long as companies are paying the fees.
Another issue noted is whether tax should be applied to the fee, resulting in a fee on fees. Listen in to hear what the SALTovation team thinks about the many facets of this issue:
- Colorado Retail Delivery Fee: What is it?
- Colorado Retail Delivery Fee: Out-of-State Implications
- Colorado Retail Delivery Fee: How it Applies
- Colorado Retail Delivery Fee: How Taxpayers Should Handle It
- Colorado Retail Delivery Fee and Delivery Businesses
A lot can happen as this issue makes its way through both the courts and boomerangs back to lawmakers for a second time. Sales tax software system providers are in catch up mode, as are the companies who manually process sales and use taxes. Judy Vorndran, a member of the Sales and Use Tax Simplification Task Force, testified recently before legislators and members about this and other issues. Judy has seen firsthand on this Task Force how ideas become solutions with the Sales and Use Tax System (SUTS).
The only thing for sure is that this first-of-its-kind fee is being watched by other states. We’ll keep you posted.
More Tax News
- Don’ts and Do’s in Sales Tax and Business Registrations
- Guide to Colorado’s Sales and Use Tax System (SUTS)
- IRS New Rules for Amortizable Research Expenses and Automatic Accounting Changes
- Break Down of Key Changes in Proposed Form 6765
- The Power of Data: Vertex’s Approach to Keeping Pace with Tax Changes with Mike Bernard