Confusion swirls as Colorado imposes new retail delivery fees, catching businesses by surprise | Company

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Colorado consumers will start noticing a 27-cent fee on receipts for nearly everything delivered to them, including food from restaurants, after Colorado’s new “retail delivery fee” takes effect on May 1. July.

Fees must be collected and paid to the state by retailers “on all motor vehicle deliveries to a Colorado location with at least one tangible personal property subject to state sales or use tax” , according to new law.

The new fees come at a time of record inflation, soaring home prices and a general sense of how unaffordable life in Colorado has become, especially in metro Denver. It is also happening even as elected officials promise to do everything in their power to ease the economic burden on residents.

Proof of residency no longer required to apply for a business license in Denver

It’s part of the transportation package the Legislature passed in 2021 and is expected to generate hundreds of millions of dollars in the coming years for road improvements, transit projects and electric vehicle programs.

The Colorado Department of Revenue didn’t finalize draft rules for the new fees — which are effectively four fees rolled into one — until May, and the final rules are still weeks away. A department spokesperson said it sent letters to retailers “both by mail and email based on what we had on file in our GenTax system” and held a public hearing on the drafting. period on June 23, which was attended by hundreds of people. The department has also created a Q&A site on its website tax.colorado.gov.

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Department officials “self-registered” all sales tax-related activities to collect the new fees, tax policy officer Erika Hoxeng told attendees.

But many business representatives who attended that meeting said they were unaware of the new fees, complained that it was incredibly difficult to comply with and worried about the increase. prices for customers who were already experiencing the worst inflation the country has seen in decades.

It also comes at a time when many Coloradans have grown accustomed to the convenience of door-to-door delivery after years of the pandemic.

Americans for Prosperity, which advocates “economic freedom” and limited government, sued the state, alleging lawmakers circumvented TABOR requirements that voters must approve all new taxes by creating four new companies to collect taxes. costs. State prosecutors deny the request and have asked a judge to dismiss the lawsuit.

“It’s definitely been a challenge for our tax teams,” said Chris Howes, president of the Colorado Retail Council. “It’s a really unique tariff. The first in the country. … We work with authoring software that will enable our members to comply.

The council represents 1,800 outlets in the state, including all major retail chains and giant Amazon.

While Amazon officials declined to specifically address retail delivery charges, they said, “Amazon complies with all applicable tax laws.”

And of course, Amazon customers in Colorado will notice on receipts since July 1 an “estimated $0.27 regulatory fee.”

Predictably, the issue divided people along political lines.

“These delivery and ride-sharing fees are the latest example of Democrats being out of touch,” said Michael Fields, president of Advance Colorado and an applicant in Americans for Prosperity court case, told The Denver Gazette in an email. “With 9% inflation in Colorado, families are struggling to make ends meet. The government should not be raising taxes or fees on anything at this time.

The nonprofit organization Advance Colorado describes itself as an educational group in “the areas of tax accountability and transparency, limited government, free enterprise, lower taxes, strong public safety and ‘a responsible education system’.

Gov. Jared Polis countered that the transportation package has received bipartisan support and is needed to help Colorado’s struggling roads, bridges and transportation infrastructure.

“Coloradons are smart enough to understand that these trucks and delivery services are contributing to the wear and tear on our roads, and in order to keep the roads in good condition for the rest of us and to improve public transit, there has a fee that goes to transportation,” Polis said via a spokesperson.

The governor’s response continued his oft-repeated theme of “saving Colorados money” when he outlined the transportation package.

“The same invoice that provided for the delivery charge also reduced the vehicle registration fee,” Governor’s spokesman Conor Cahill said by email. “A family with two cars saves money overall unless they have more than 82 deliveries.”

“Benefit the health and safety of all Coloradans.

The motion describes the law as fully compliant with TABOR.

The lawsuit, filed in April in Denver District Court, alleges that “legislature sleight of hand is unlawful.”

“Rather than listen to people, the General Assembly took its intrigues to a new height with SB 21-260,” the lawsuit states. “In this bill, the General Assembly decided that several aspects of Colorado’s transportation system needed more funding. Instead of going to voters to authorize new taxes, as TABOR would require, the General Assembly decided to use their preferred revenue generator: corporations and royalties.

The region’s chambers of commerce are split on fee support.

“While SB21-260 is far from perfect, it was a bill grounded in the reality of our current situation and the funding we desperately need to address the serious transportation issues plaguing the Colorado,” said Adam Burg, vice president of government affairs at the Metro Denver Chamber of Commerce, via email. “The Denver Metro Chamber supported this bill on the understanding that its constitutionality will be challenged and determined by the courts.”

“These fees are not business or consumer friendly,” Jeff Keener, president and CEO of the South Metro Denver Chamber, replied via email, referring to the new delivery fees. “It also appears from the information available that the sums collected and the allocation of these funds are not well planned. The South Metro Denver Chamber objected to these additional charges.

Confusion over retail delivery charges is swirling, as evidenced by questions posed at the June 23 meeting and at the Colorado Retail Council.

What happens if a taxable good is delivered via a bicycle or e-bike?

Are the fees subject to sales tax? (No, according to Revenue Department officials.)

Is a customer refunded the costs if they return a product delivered by companies like Amazon?

Can a business not charge its customers and just pay the fees instead?

“The cost of programming the systems to collect these fees will be high and it will be much more cost effective for us to just pay the fees,” a company representative said.

“It’s a bit more complicated than what was portrayed to the business community when the bill passed the Legislative Assembly,” Howes said. “Many of our members are concerned about liability issues. What if we charge a customer too much or too little? »

As a precaution, many board members are simply paying the cost of new fees in a “escrow-like situation,” Howes said.

There is also the question of the delivery of non-taxed items, such as fruits, vegetables or ground beef, for example.

“If a single item in that order is taxed, like a tube of toothpaste, that triggers the charge,” he said.

Food delivery services, such as UberEats, DoorDash, InstaCart, or even pizza places, are now required to charge the fee.

“As required by Colorado law, we now collect and remit a retail delivery fee from customers on every in-state delivery order,” according to a DoorDash spokesperson. “Colorado customers now see this fee displayed on the checkout screen before placing their order, as well as on their receipt.”

Although the Department of Revenue does not have the ability to delay implementation, it appears to sympathize with business owners trying to comply and will “not prioritize enforcement”.

“We understand that some retailers may have difficulty implementing this new retail delivery fee program by July 1,” according to the ministry’s website. “State law generally requires retailers to add retail delivery charges to the sale and show them on the receipt or invoice as a separately listed item. However, the Department does not currently intend to prioritize enforcement of this provision so long as retailers pay the full amount of fees owed pursuant to their liability under Section 43-4-605 ( 6) (c), CRS

“Additionally, for retailers who are making a good faith effort to comply with these new requirements, we plan to be generous in granting requests to waive late production and payment penalties and interest.”

Editor Luige Del Puerto contributed to this report.

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