Are you ready for the Minnesota retail delivery fee?

Retailers and marketplaces that collect Colorado sales or use tax on tangible personal property are liable for the retail delivery fee if their retail sales of commodities, services, or tangible personal property in Colorado in the previous calendar year exceed $500,000.

A business becomes liable for the RDF on the first day of the filing period that begins at least 90 days after it meets the $500,000 threshold.

Retailers with $1 million or more in retail sales in Minnesota during the previous calendar year are liable for the Minnesota RDF.

For marketplace providers, the $1 million threshold applies to direct sales only, not to third-party sales.

Retailers with less than $1 million* in Minnesota retail sales during the previous calendar year are not liable for the Minnesota RDF.

Marketplace sellers are excluded from the RDF if their marketplace sales in Minnesota totaled less than $100,000* during the previous calendar year. Thus, marketplace providers aren’t liable for the fee on sales facilitated for these businesses. 

*When calculating the retail sales threshold for the retailer exclusion, include all taxable and nontaxable retail sales except sales for resale.

The Colorado RDF applies to any transaction containing at least one taxable retail sale of tangible personal property for delivery by a motor vehicle to a location in Colorado.

The Minnesota RDF applies to many but not all taxable sales of tangible personal property delivered by motor vehicle to a location in Minnesota, plus clothing, when the transaction charges equal $100† or more. 

†The $100 threshold includes all charges that are part of the sale (including shipping) except for:

• Drugs
• Food, food ingredients, or prepared food 
• Medical devices, accessories, and supplies
• Most (but not all) tangible personal property not subject to sales tax
• Products delivered electronically
• Sales to a retailer for resale
• Utilities

The fee applies once per transaction even if a transaction results in multiple shipments or deliveries.

No taxable tangible personal products delivered by motor vehicle are exempt from the Colorado RDF fee. 

However, deliveries to a purchaser who’s exempt from the state sales tax (e.g., a government organization) are exempt from the RDF.

The following items are exempt from the Minnesota RDF, even if subject to sales tax and/or the transaction equals $100 or more:

• Certain baby products
• Drugs
• Food, food ingredients, or prepared food
• Medical devices, accessories, and supplies
• Products delivered electronically
• Sales to retailers for resale
• Utilities 

The fee also doesn’t apply to:

• Deliveries to a purchaser who’s exempt from sales tax
• Deliveries by a food-and-beverage service establishment (or a third-party delivery service acting on their behalf)
• Deliveries to a location outside of Minnesota
• Purchases picked up a retailer’s business location, including curbside delivery

Most products that are exempt from Minnesota sales tax are exempt from the fee.

However, the Minnesota RDF applies to clothing priced $100 or more.

Retailers required to collect the Colorado RDF must register for a Retail Delivery Fee account with the Colorado Department of Revenue.

If you’re already registered for Minnesota sales and use tax, the Minnesota Department of Revenue should automatically register you for the Retail Delivery tax line. 

If you’re not registered for the Retail Delivery tax line, follow these instructions to add the Retail Delivery Fee tax line.

Retailers liable for the Colorado RDF have two options:

1. Collect the fee from customers, and show it on the customer invoice or receipt.
2. Elect to pay the fee on behalf of customers without separately stating the fee on the invoice or receipt.

Retailers liable for the Minnesota RDF have two options:

1. Collect the fee from customers, and separately state it on the customer invoice or receipt as a Road Improvement and Food Delivery Fee.
2. Elect to pay the fee on behalf of customers without separately stating the fee on the invoice or receipt.

The Colorado RDF is reported on the Retail Delivery Fee Return, Form DR 1786.

Only one return is required per account, for all business locations.

Retailers that fail to file or pay the RDF on time as required will be subject to penalties and interest.

The Minnesota RDF is reported on the normal sales and use tax return as the Retail Delivery Fee.

Retailers may report the amount due (if paying the fee themselves) or the total collected (if passing the fee on to customers) on one return for all business locations.

Late payments and returns may incur penalties and interest.

The retail delivery fee itself is not subject to Colorado state sales tax. Local sales tax may apply in some home-rule jurisdictions.

If included in the sales price, Colorado sales tax applies to the RDF.

The retail delivery fee itself is not subject to state or local sales tax in Minnesota if separately stated.

If included in the sales price, Minnesota sales tax applies to the RDF.

A retailer may not refund the Colorado RDF when the purchased tangible personal property is returned to the retailer for a full refund. 

A retailer may claim a credit for previously paid RDFs for any retail sale canceled before the item was shipped if the retailer refunded to the purchaser the full purchase price, the RDF, and any applicable sales tax.

The Minnesota RDF is not refundable when some or all items in a transaction are returned or if the retailer provides a refund or credit totaling less than the purchase price.

The RDF must be refunded to the purchaser if the retail delivery fee is canceled by the customer, the delivery provider, or the retailer.