Hello everyone,
In the second installment of things deferred until after the election effective January 1st, retailers need to begin assessment of carryout plastic and paper bag fees.
Here is the Departments guide and read below for some questions we have been getting after reviewing:
Carryout Bag Fee
About the Carryout Bag Fee
In 2021, the Colorado General Assembly enacted House Bill 21-1162. Beginning January 1, 2024, the act prohibits stores and retail food establishments from providing single-use plastic carryout bags to customers. Certain retail food establishments, and small stores that operate solely in Colorado and have 3 or fewer locations, may provide single-use plastic carryout bags.
Between January 1, 2023, and January 1, 2024, a store may furnish a recycled paper carryout bag or a single-use plastic carryout bag to a customer at the point of sale if the customer pays a fee of 10 cents per bag or a higher fee adopted by the municipality or county in which the store is located. On and after January 1, 2024, a store may furnish only a recycled paper carryout bag to a customer at the point of sale at a fee of 10 cents per bag or a higher fee imposed by the municipality or county in which the store is located.
A store is required to remit, on a quarterly basis beginning April 1, 2024, 60% of the carryout bag fee revenues to the municipality or county within which the store is located and may retain the remaining 40% of the carryout bag fee revenues.
The carryout bag fee does not apply to a customer that provides evidence to the store that the customer is a participant in a federal or state food assistance program. (read below for some details here)
The act does not apply to materials used in the packaging of pharmaceutical drugs, medical devices, or dietary supplements or any equipment or materials used to manufacture pharmaceutical drugs, medical devices, or dietary supplements.
Please review the full text of HB21-1162 for a complete discussion of the requirements, restrictions, and penalties imposed under the act.
Frequently Asked Questions
1. Is the carryout bag fee collected or administered by the Colorado Department of Revenue?
No, the carryout bag fee is not collected or administered by the Colorado Department of Revenue. Section 25-17-505(3)(d), C.R.S., requires that stores remit the carryout bag fee to the finance department or division or equivalent agency of the municipality within which the store is located. If the store is not located within a municipality, the carryout bag fee must be remitted to the finance department or division or equivalent agency of the county in which the store is located.
2. Can I pay the carryout bag fee through the SUTS system?
At this time, the carryout bag fee cannot be paid through the Sale and Use Tax System (SUTS).
Section 25-17-505(3)(d), C.R.S., requires that stores remit the carryout bag fee to the finance department or division or equivalent agency of the municipality within which the store is located. If the store is not located within a municipality, the carryout bag fee must be remitted to the finance department or division or equivalent agency of the county in which the store is located. Contact these agencies for more information on how to remit the fee.
4. Is the fee subject to sales tax?
The fee is not subject to state and state-administered local sales tax. The Colorado Department of Revenue does not collect sales and use taxes for certain home-rule municipalities. You will need to contact these self-collecting home-rule municipalities directly to determine whether these fees are subject to their local sales tax. For a complete listing of jurisdictions, including state-administered jurisdictions and self-collecting home-rule municipalities, please refer to Department Publication DR 1002.
Here are questions we are getting from our members -
1. Federal law prohibits the treatment of coupon (federal term for assistance) holder differently how is this compliant.
The law specially exempts SNAP and WIC customers from the fee:
How are SNAP recipients treated: SNAP Assistance programs cannot be used to pay Bag Fees. The Food and Nutrition Service does not have authority to exempt SNAP clients from this fee. Therefore, grocery bag fees must be paid for using cash, credit card, or non-SNAP debit. Stores that give discounts at the point-of- sale if customers bring their own bags must treat SNAP clients in the same manner.
If a store wants to give SNAP-only customers a free cloth or reusable bag that they can use when buying groceries, but not provide the free cloth bag to non-SNAP customers, it would violate the equal treatment requirement in Section 7 CFR 278.2(b). Only if the store gives them to all of their customers during a specific period of time would it be allowed for SNAP customers.
CWPMA note: Intrinsically this provides a problem at the point of sale by telling a SNAP recipient that they cannot use assistance cards for the fee portion of the purchase you risk treating them differently then a person using a normal credit or debit card. If a recipient is splitting the purchase say for qualified and non qualified products ...then trying to determine that is burdensome on the clerk. Similarly, by exempting SNAP folks from the program all together you are in tacit violation of the non discrimination clause as well. We brought this up repeatedly and were ignored by the the environmental proponents of the bill. With State law as guidance regardless of conflicting federal regulation as a practical matter I think this is one of those instances where Colorado's behavioral control community is simply ignoring federal law, similar to Marijuana. If you get a complaint from a non SNAP customer, it won't be worth the person filing suit so my best "non-legal" advice is simply to not charge federal and state benefit customers bag fees at all.
2. Can localities be more restrictive.
Yes, this law essentially sets a baseline and a locality cannot be more permissive but as they repealed the state preemption of banning certain products in the same legislation (something that certain localities were willfully violating anyway before the passage of this) home rule cities could be more restrictive relative to fees, uses of the revenue share etc. Denver provides a good example..The fee is substantially the same as the State but the uses retailers must put the revenue to is restrictive whereas state law is permissive.
3. Why do I have to pay directly to the city or county and in the case of statutory cities not simply remit the money as I do state sales tax.
As the Department notes, there is nothing that is set up currently that helps with this. If your County or locality hasn't set this up, then my suggestion would be to comply with state and collect the fee, then simply keep it as a payable on your balance sheet till the locality catches up.