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May 5, 2023

Colorado makes Retail Delivery Fee collection optional for retailers, increases small-seller threshold

On May 4, 2023, Colorado Governor Jared Polis signed into law SB 23-143, which amends the state's Retail Delivery Fee (Fee) provisions by making collection optional for the retailer and raising the small-seller threshold to $500,000. These changes are effective July 1, 2023.

The Fee applies to retail sales orders placed on or after July 1, 2022, for tangible personal property that is delivered by motor vehicle to a Colorado location. Currently, the Fee applies to Colorado purchasers and requires retailers to collect and remit the Fee to the Colorado Department of Revenue (CO DOR) if they are responsible for collecting sales and use tax on the tangible personal property sold and delivered. Retailers must also collect the Fee on deliveries made from out-of-state or by a third party. (See Tax Alert 2022-0902). The Fee is currently $.27 per order, but it is indexed and will be increasing to $.28 on July 1, 2023.

Under the amended provisions, retailers will be given the option of continuing to collect the Fee from customers and remitting it to CO DOR or directly paying the Fee. If the retailer opts to pay the Fee directly, it may not show a separate line item for a "retail delivery fee" on customer receipts or contracts.

Retailers with $500,000 or less of Colorado retail sales in the previous calendar year are exempted from paying the Fee until the first day of the calendar quarter after the retailer's annual retail sales exceed $500,000. In justifying the small-seller exemption, SB 23-143 specifically notes that "there are administrative costs for a retailer when the state imposes a fee on retail deliveries, and the benefits from the fee revenue need to be balanced with the potential economic impacts on the retailers." Accordingly, the bill explains that "fees on retail deliveries should only be imposed on retailers that are large enough to absorb these administrative costs without significant economic harm."


Although the new law provides some relief to retailers with $500,000 or less in Colorado retail sales, and formally recognizes the cost burdens of complying with the Fee, retailers that exceed the exemption threshold must still deal with the administrative issues associated with collecting, remitting and reporting the Fee. While the new law allows retailers to simply pay the tax, the fact remains that the option will either become a new cost of doing business or require retailers to raise their prices to offset the Fee.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Rachel Quintana (

Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor