Multistate: Marketplace Facilitator Update for Food Delivery Services

Recently, some states have enacted tax and regulatory provisions aimed at marketplace facilitators engaged in food and alcohol delivery services. In Colorado, Senate Bill 21-035, which takes effect September 11, 2021, places restrictions on “third-party delivery service[s],” stating that such services may not arrange for the delivery or pickup of an order from a retail food establishment without the establishment’s consent. A “third-party delivery service” is defined as “any company or website, mobile application, or other internet service that offers or arranges for the sale and same-day delivery or same-day pickup of prepared food or beverages from a retail food establishment.” Grocery stores and convenience stores are excluded from “retail food establishment.” If a retail food establishment is included on a third-party delivery service’s platform without the establishment’s consent, the establishment may seek civil penalties of up to $1,000 per violation. Other states (e.g., CT and RI) are considering similar legislation.

Vermont House 436 provides that, effective July 1, 2021, an “operator” (a person operating a hotel or charging for a taxable meal or alcoholic beverage) now includes “taxable meal facilitators.” A “taxable meal facilitator” is defined as “a person who facilitates the sale and collects the charge for a taxable meal or alcoholic beverage through an Internet transaction or any other means.”  The fiscal note for the bill clarifies that delivery services are required to collect and remit the meals tax on the full sale price, including related fees and charges, of the meal or beverage. Per the fiscal note, this language is designed to clarify that a meal facilitator is required to collect meals tax on not only cost of the meal itself, but also any associated fees. Please contact Stephen Metz with further questions on Colorado SB 21-035 and Ryanne Tannenbaum with further questions on Vermont H. 436.