Rental operators in Colorado beware of new retail delivery tax

On July 1, 2022, a new Colorado retail delivery tax went into effect as part of Senate Bill 21-260, which imposes new fees to fund the state’s transportation system.  

After looking into it, the American Rental Association’s (ARA) Government Affairs came to an understanding that rental companies in Colorado are subject to the retail delivery fee if their rental or lease is subject to sales tax where the rental company is collecting that tax on the revenue stream rather than on the purchase price.

As of July 1, according to the Colorado Department of Revenue website, the delivery fee will be imposed “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.

“The retailer or marketplace facilitator that collects the sales or use tax on the tangible personal property sold and delivered, including delivery by a third party, is liable to collect and remit the retail delivery fee. Deliveries include when any taxable goods are mailed, shipped or otherwise delivered by motor vehicle to a purchaser in Colorado.

“The retail delivery fee is due at the same time as your sales tax return. Returns are generally filed on a monthly basis and must be filed on or before the 20th day of the month following each reporting period. Retailers permitted to file state sales tax returns on a quarterly, annual or other basis will file the retail delivery fee return on the same schedule.

“The retail delivery fee will be reported and paid on a new return, the DR 1786 form. The retail delivery fee is collected statewide, does not need to be separated by jurisdiction and is calculated per sale.”

For more information and guidance on the fee, visit the Colorado Department of Revenue – Retail Delivery Fee.