The new Colorado Retail Delivery fee is now in effect, but not without a lot of controversy.  The Colorado Department of Revenue (DOR) hosted a public hearing and recorded the meeting.  In the meeting, many questions were asked and scenarios were presented.  The DOR provided some answers.  One answer is of great significance as I’ll address later in this post.

You can review our prior blog about the Retail Delivery Fee.

Here is the 6/24/22 DOR email notice about it:

To All Interested Parties,

On June 23, 2022, the Colorado Department of Revenue, Division of Taxation, held a stakeholder workgroup to discuss the promulgation of the following new retail delivery fees rule and rule amendments. The meeting was recorded, and at the request of stakeholders, we are making copies of that recording accessible for those who wish to review it. You may access the recording by clicking the link below.

Retail Delivery Fee Meeting Recording

The Department has prepared the following draft rules to aid in the process of soliciting public comments.

• 39-21-116.5. Penalties for Officers of Members. The purpose of this amendment to the rule is to add the retail delivery fees imposed pursuant to sections 24-38.5-303, 25-7.5-103, 43-4-218, 43-4-805, 43-4-1203, and 43-4-1303, C.R.S., to the list of fees to which the penalty in section 39-21-116.5, C.R.S., applies.
• 43-4-218. Retail Delivery Fees. The purpose of this rule is to set forth the manner in which retail delivery fees are collected, administered, and enforced.

The Department continues to welcome questions and comments about these rules. If you have feedback on how the rules may be improved, please submit your feedback to dor_taxrules@state.co.us.

What is a Stakeholder Workgroup?

A stakeholder workgroup is a forum for the Department to gather information from stakeholders for the development of new rules or for the revision of existing rules. Stakeholder workgroups occur in advance of a rulemaking hearing.

Sincerely,

Colorado Department of Revenue
Taxation Division

STC COMMENTARY:

Of Significance from the public hearing:
The DOR is exercising it’s enforcement discretion.  They are not enforcing the law’s requirement about stating the fee on customer invoices.  This  seems to allow for remittance without the burden of collecting the fee.

Clearly, many businesses will face per return filing fees and other compliance costs that will likely far exceed the fee total due.  Why is a separate return required?  If not and the fee was to be remitted on the State sales tax return, it would have to be reported by Branch ID.

Why do we have to report by Branch/ site ID anyway?
I was told essentially it was because cigarette tax allocation is tied to sales tax revenues by location.  There was some other obscure tax or reason, but nothing that outweighs my call for removing the branch id system.  I advocate consolidating sales tax reporting into a single state return vs. one return for each physical or nonphysical location Branch ID.  The new Retail Delivery Fee could then also be added as a line on the consolidated return.

It’s also my opinion that the DOR and the legislators behind this new TAX, thinly disguised as a “Fee”, would be hard pressed to continue the Retail Delivery Fee if it was widely boycotted.

Just as complying with the requirements will likely often cost businesses more than the revenues they’ll be reporting, audit enforcement of the fee would likely cost the DOR far more than the revenues generated by audit enforcement.

Call  a tax a tax and put it to a vote as required under TABOR – The Colorado Taxpayers Bill of Rights.   Just calling a new tax a “fee” is the same game some cities play to avoid a required vote on the new revenue source.