How did RR 93-2 tax racing gasoline and other racing fuels in South Carolina?

Plain-English summary

South Carolina Revenue Ruling 93-2 treated high-octane racing gasoline as taxable gasoline under historical Chapter 27 because no racing-use exemption applied.

Non-gasoline racing fuel, such as fuel not substantially gasoline-based, fell under historical Chapter 29 when used in a licensed or licensable motor vehicle. The ruling treated even a private racetrack as a highway for this purpose if it was accessible to licensed vehicles.

If the racing vehicle could not be licensed for highway use, non-gasoline racing fuel was not taxed under Chapter 29. The ruling also said purchasers could apply for a refund of covered Chapter 27 or 29 fuel taxes using the historical form and statute cited.

Common questions

Q: Was racing gasoline exempt because it was used on a track? No.

Q: Were all non-gasoline racing fuels taxable? Only when used in a licensed or licensable motor vehicle under the ruling's framework.

Q: Did the ruling describe a refund? Yes, under the historical special-fuel refund procedure.

Citations and references

• S.C. Code Ann. § 12-27-230 (historical gasoline tax)
• S.C. Code Ann. § 12-29-310 (historical motor-fuel tax)
• S.C. Code Ann. § 12-27-1510 (historical refund provision)

Subject

Racing Gasoline and Other Racing Fuels

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR93-2.pdf

Original ruling text

SC REVENUE RULING 93-2

SUBJECT:

Racing Gasoline and Other Racing Fuels
(Gasoline and Motor Fuel Taxes)

TAX ANALYST:

Jean Croft

EFFECTIVE DATE:

All periods open under statute

REFERENCES:

S.C. Code Ann. Section 12-27-230 (Supp. 1991)
S.C. Code Ann. Section 12-29-310 (Supp. 1991)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1991)
S.C. Revenue Procedure #87-3

SCOPE:

A Revenue Ruling is the Commission's official interpretation of how
tax law is to be applied to a specific set of facts. A Revenue Ruling is
public information and remains a permanent document until
superseded by a Regulation or is rescinded by a subsequent Revenue
Ruling.

Question:
Is high octane racing gasoline or other racing fuel subject to tax under Chapter 27 or Chapter 29
of Title 12?
Facts:
Racing gasoline is designed for use in high-compression ratio or turbocharged, high-powered
engines installed in race cars and speed boats. It generally contains high levels of lead antiknock,
although some unleaded racing fuels are sold. Racing gasoline can be used in automobiles. The
high octane level will not harm the engine, but the lead can foul the emission control system.
The automobile would also be hard to start in cold weather and have poor warmup driveability.
Racing gasoline may also be blended with motor gasoline to improve the octane level of the
motor gasoline. This could be attractive to owners of older high compression ratio automobiles
that were originally designed to use premium leaded gasoline which is no longer available. This
blending procedure would likely eliminate the starting and driveability problems, but does not
eliminate the lead fouling problems for emission controlled vehicles.
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Gasoline is not the only fuel used in racing vehicles. Some drag racers use pure alcohol while
others may use a mixture of gasoline and other fuels.
Discussion:
Chapter 27 of Title 12 provides for the imposition of two distinct, but complementary, license
taxes on "gasoline or any substitute therefor or combination thereof". For purposes of this
document, any reference to gasoline includes any "substitute therefor or combination thereof".
Article 1 of the chapter requires every oil company to pay to the State a license tax of 16 cents
per gallon on all "original sales" of gasoline. An original sale is defined, in part, as first sale of
gasoline or the first "distribution, transfer, consignment or bailment" of gasoline, other than tank
car lot, within the State. (See Code Sections 12-27-210, 12-27-220, and 12-27-230.)
Article 3 of the chapter requires any person importing gasoline for use to pay a license tax of 16
cents per gallon on all gasoline stored or used, provided it has lost its interstate character. (See
Code Section 12-27-510.) Furthermore, the statute provides that it is the intent of the law to levy
and assess the tax upon the consumer and to consider the dealer as the collection agent of the
State. (See Section 12-27-10.)
Chapter 27 provides several exemptions from the tax; however, there is no exemption provided
for the sale, storage, or use of racing gasoline. Therefore, the racing gasoline, as described in the
facts, is subject to the tax under Chapter 27 of Title 12.
We must now consider other types of racing fuel to fully understand the tax implications for the
racing industry.
It has been the longstanding policy of the Commission that only gasoline, or any substantially
gasoline based fuel such as gasohol or fuel ethanol blends, are subject to the taxes imposed under
Chapter 27. Administrative interpretations of statutes by the agency charged with their
administration and not expressly changed by the legislative body are entitled to great weight.
Marchant v. Hamilton, 309 S.E.2d 781 (1983).
Fuels that are not substantially gasoline based, such as diesel fuel, have not been taxed under
Chapter 27. It has been an established practice of the Commission to tax these fuels under the
provisions of Chapter 29.
S.C. Code Section 12-29-310 imposes a tax on all fuel sold or delivered by any supplier to any
person not licensed as a supplier. Code Section 12-29-10(1) defines fuel as all combustible gases
and liquids used, purchased, or sold for use, in an internal combustion engine or motor for the
generation of power to propel licensed motor vehicles on the highways except such fuels as are
subject to the tax imposed by Chapter 27 of this title. (Emphasis added.)

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"Highway", as defined in Code Section 12-29-10(2), "shall mean and include every way or place
of whatever nature whether public or private that is accessible for licensed, vehicular travel in
this State, including the streets and alleys in cities and towns". Therefore, any place, including a
racing track, which is accessible to licensed vehicles is deemed to be a highway for purposes of
this chapter.
Hence, any fuel which is not considered gasoline under Chapter 27 but is used in a licensed
motor vehicle is subject to the tax under Chapter 29.
Conclusion:
High octane racing gasoline is taxable under Chapter 27 of Title 12.
Racing fuel, other than gasoline or a substantially gasoline based fuel, is subject to the tax under
Chapter 29 of Title 12 when used in a licensed motor vehicle. If such racing fuel is used in a
racing vehicle that cannot be licensed for use of the State's highways, it is not subject to the tax
under Chapter 29 of Title 12.
A person who purchases and uses gasoline and other motor fuels taxed by Chapter 27 or Chapter
29 may apply for a refund of the fuel tax paid on Form L-325, Application for Tax Refund on
Special Fuel. (See Code Section 12-27-1510.)

SOUTH CAROLINA TAX COMMISSION

s/A. Crawford Clarkson Jr.
A. Crawford Clarkson, Jr., Chairman

s/T. R. McConnell
T. R. McConnell, Commissioner

s/James M. Waddell
James M. Waddell, Jr., Commissioner

Columbia, South Carolina
February 2
, 1993

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