Was racing gasoline used only in race cars or speedboats subject to South Carolina's motor fuel user fee under RR 06-3?

Plain-English summary

South Carolina Revenue Ruling 06-3 concluded that all racing gasoline used or consumed in the state was subject to the motor fuel user fee unless a statutory exemption applied.

The Department said the gasoline rule was broader than the diesel-fuel rule. Section 12-28-310 imposed the fee on gasoline used or consumed for any purpose in South Carolina, so the product did not need to propel a highway vehicle. Racing gasoline designed for high-compression race-car engines and speedboats remained covered.

Product labeling did not control. Whether a producer called the product "racing gasoline" or "racing fuel," its petroleum-hydrocarbon composition and commercial suitability as motor fuel kept it within the statutory gasoline definition.

RR 18-6 later superseded this ruling. That update retained the core conclusion and expanded the discussion to racing gasohol, gasoline-containing blends, and scheduled fee increases.

What this means for you

Race teams and track operators

Under the ruling, using racing gasoline only at a track did not avoid the fee. The gasoline rule applied to use or consumption for any purpose in the state.

Fuel sellers

A racing-fuel label did not change the classification when the product remained commercially known or sold as gasoline suitable for motor-fuel use.

Farmers and aircraft operators

The ruling cited specific farm-equipment and aircraft provisions as exceptions to the broad gasoline rule. Their statutory requirements still had to be met.

Common questions

Q: Did the fuel have to be used on a public highway?
A: No. The ruling contrasted gasoline with diesel fuel and treated gasoline used for any purpose in South Carolina as covered unless exempt.

Q: Did 110-octane or leaded fuel stop being gasoline?
A: No. The Department said the different racing specifications did not change the product's basic character as gasoline.

Q: Is RR 06-3 the latest guidance?
A: No. RR 18-6 expressly superseded it and addressed additional gasoline blends and later fee increases.

Citations and references

• S.C. Code Ann. §§ 12-28-110 and 12-28-310 — gasoline definition and motor fuel user fee
• S.C. Code Ann. § 12-28-330 — presumption concerning use or consumption in South Carolina
• S.C. Code Ann. § 12-28-710(15) and (16) — specified farm and aircraft exemptions
• SC Revenue Ruling #18-6 — superseding racing-gasoline guidance

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR06-3.pdf
• Superseding guidance: RR18-6.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 12265, Columbia, South Carolina 29211
Website Address: http://www.sctax.org

SC REVENUE RULING #06-3

SUBJECT:

Racing Gasoline
(Motor Fuel User Fee)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

All previous advisory opinions and any oral directives in conflict
herewith.

REFERENCES:

S. C. Code Ann. Section 12-28-310 (Supp. 2005)
S. C. Code Ann. Section 12-28-330 (Supp. 2005)
S. C. Code Ann. Section 12-28-110(15) (2000)
S. C. Code Ann. Section 12-28-110(28) (Supp. 2005)
S. C. Code Ann. Section 12-28-710(15) (Supp. 2005)
S. C. Code Ann. Section 12-28-710(16) (2000)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (Supp. 2000)
S. C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #05-2

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public
and to Department personnel. It is an advisory opinion issued to apply
principles of tax law to a set of facts or general category of taxpayers. It
is the Department’s position until superseded or modified by a change in
statute, regulation, court decision, or another Departmental advisory
opinion.

Question:
Are racing gasolines subject to the motor fuel user fee imposed under Code Section 12-28-310?
Conclusion:
All racing gasolines (volatile mixtures of flammable liquid hydrocarbons derived chiefly from
crude petroleum and used principally as a fuel for internal combustion engines) used or
consumed in South Carolina are subject to the motor fuel user fee under Code Section 12-28-310
since they are “commonly or commercially known or sold as gasoline suitable for use as a motor
fuel” within the meaning of Section 12-28-110(28). This is true whether the producer of the
product labels the gasoline as “racing gasoline” or “racing fuel.”

1

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 gasolines are sold) and has an octane rating of 110 or higher.
Racing gasolines are produced by various oil companies. These oil companies may label their
products as “racing gasoline,” “racing fuel,” or may interchangeably refer to the same product as
both “racing gasoline” and “racing fuel.”
Racing gasoline may legally be used only in racing vehicles and is not intended for street or
highway use. Racing gasoline could be used in “street or highway” automobiles and the high
octane level would not harm the engine; however, the lead would foul the emission control
system. The automobile would also be hard to start in cold weather and have poor warmup
driveability.
The issue is whether racing gasolines, which are not designed or produced for street or highway
use, are subject to the motor fuel user fee imposed in Chapter 28 of Title 12.
Discussion:
Code Section 12-28-310 provides for the tax on gasoline as follows:
(A) Subject to the exemptions provided in this chapter, a user fee of sixteen cents
a gallon is imposed on:
(1) all gasoline used or consumed for any purpose in this State; and
(2) all diesel fuel used or consumed in this State in producing or generating
power for propelling motor vehicles.
(B) The user fee levied on motor fuel subject to the user fee pursuant to this
chapter is a levy and assessment on the consumer, and the levy and assessment on
other persons as specified in this chapter are as agents of the State for the
collection of the user fee. This section does not affect the method of collecting the
user fee as provided in this chapter. The user fee imposed by this section must be
collected and paid at those times, in the manner, and by the persons specified in
this chapter.
(C) The license user fee imposed by this section is instead of all sales, use, or
other excise tax that may be imposed otherwise by any municipality, county, or
other local political subdivision of the State. (Emphasis added)
Code Section 12-28-330 states:
The department considers it a rebuttable presumption, subject to proof of exemption pursuant to
Article 7 of this chapter, that all motor fuel subject to the user fee removed from a terminal in

2

this State, or imported into this State other than by a bulk transfer within the bulk transfer
terminal system or delivered into an end user's storage tank, is to be used or consumed in this
State, in the case of gasoline, and is to be used or consumed on the highways in this State in
producing or generating power for propelling motor vehicles in the case of all other taxable
motor fuel. (Emphasis added)
Therefore, the user fee is imposed on “all gasoline used or consumed for any purpose in this
State” and is also imposed on “all diesel fuel used or consumed in this State in producing or
generating power for propelling motor vehicles.”
Code Section 12-28-110 defines the terms “gasoline” and diesel fuel” as follows:
(15) “Diesel fuel” means a liquid that is commonly or commercially known or
sold as a fuel that is suitable for use in a diesel-powered highway vehicle. A
liquid meets this requirement if, without further processing or blending, the liquid
has practical and commercial fitness for use in the propulsion engine of a
diesel-powered highway vehicle. However, a liquid does not possess this
practical and commercial fitness solely by reason of its possible or rare use as a
fuel in the propulsion engine of a diesel-powered highway vehicle. “Diesel fuel”
does not include jet fuel if the buyer is registered to purchase jet fuel subject to
federal taxes applicable to jet fuel and the seller obtains certification of that fact
satisfactory to the Internal Revenue Service before making the sale.

(28) “Gasoline” means all products commonly or commercially known or sold as
gasoline that are suitable for use as a motor fuel. It does not include a product
sold as a product other than gasoline and has an American Society for Testing
Materials octane number of less than seventy-five as determined by the “motor
method” and does not include aviation gasoline if the buyer is registered to
purchase aviation gasoline free of user fees and the seller obtains certification of
that fact satisfactory to the Department before making the sale.
Furthermore, diesel fuel contaminated by dye so as to be unsaleable and unusable as highway
fuel is exempt from the user fee (Code Sections 12-28-710(11) and 12-28-770). (Note: A backup
user fee is imposed under Code Section 12-28-970 on diesel fuel that contains dye and is used in
a highway vehicle.)
The above cited imposition section and definitions demonstrate the distinction the General
Assembly has drawn between gasoline and diesel fuel. All gasoline, regardless of whether it is
used to propel a highway vehicle, propel some other vehicle, or operate a machine or engine, is
subject to the user fee unless otherwise exempt. Diesel fuel, however, must be suitable for use in
a highway vehicle in order to be subject to the user fee.
This interpretation is further supported by the exemptions listed in Code Section 12-28-710. This
section specifically exempts from the user fee:

3

(15) gasoline subject to the user fee used in operating tractors or other farm
equipment used exclusively in farm operations, no part of which is used in any
vehicle or equipment driven upon the public roads, streets, or highways of this
State. A claim for refund must be made under Section 12-28-790;
(16) gasoline used in aircraft.
These exemptions for gasoline used in tractors or other farm equipment used exclusively in farm
operations and aircraft would not be necessary if gasoline were only subject to the user fee when
used to propel a highway vehicle.
In addition, the definition of “gasoline” in Code Section 12-28-110(28) does not include
“aviation gasoline” sold to a buyer furnishing satisfactory proof that it is registered with the
Department to purchase such fuel free of tax. This exception also demonstrates the breadth of
the statutory definition of “gasoline” and would not be necessary if gasoline were only subject to
the user fee when used to propel a highway vehicle.
Furthermore, in South Carolina, it is a commonly accepted practice to resort to the dictionary to
determine the meaning of words. Hay v. South Carolina Tax Commission, 273 S.C. 269, 255
S.E.2d 837 (1979). “Gasoline” is defined as a “volatile mixture of flammable liquid
hydrocarbons derived chiefly from crude petroleum and used principally as a fuel for internal
combustion engines and as a solvent, illuminant and thinner.” The American Heritage
Dictionary, Second College Edition.
While there are differences in the specific properties of “racing gasoline” and “gasoline,” such as
vapor pressure, specific gravity, distillation temperatures, and the amounts of octane, light
alkylate, and lead, these differences do not change “racing gasoline” into something other than
“gasoline.” The same basic ingredients -- petroleum hydrocarbons -- that are present in “racing
gasoline” are present in “gasoline.”
Finally, since the inception of the current law, the Department’s interpretation has been that
racing gasoline is taxable under Code Section 12-28-310. The longstanding administrative
interpretation of a statute is entitled to significant weight. Etiwan Fertilizer v. S.C. Tax
Commission, 217 S.C. 354, 60 S.E.2d 682 (1950). 1
1 The original version of Code Section 12-28-310, enacted by Act 136 of 1995 with an effective date of May 1,
1996, stated:
Subject to the exemptions provided in this chapter, a tax of sixteen cents a gallon is imposed on all
gasoline used or consumed in this State and upon all diesel fuel used or consumed in this State in
producing or generating power for propelling motor vehicles. The tax levied on taxable motor fuel
pursuant to this chapter is a levy and assessment on the consumer, and the levy and assessment on
other persons as specified in this chapter are as agents of the State for the collection of the tax.
This section does not affect the method of collecting the tax as provided in this chapter. The tax
imposed by this section must be collected and paid at those times, in the manner, and by those
persons specified in this chapter. (Emphasis added.)
Since the inception of this law in 1996, the Department’s interpretation has been that racing gasolines are taxable
under Code Section 12-28-310. (Note: A subsequent amendment substituted “user fee” for “tax.”)
In addition, the Department held that racing gasoline was taxable under the gasoline tax law in effect prior to 1996
under Chapter 27 of Title 12. See SC Revenue Ruling #93-2.

4

Based on the above, all racing gasolines (volatile mixtures of flammable liquid hydrocarbons
derived chiefly from crude petroleum and used principally as a fuel for internal combustion
engines) used or consumed in South Carolina are subject to the motor fuel user fee under Code
Section 12-28-310 since they are “commonly or commercially known or sold as gasoline suitable
for use as a motor fuel” within the meaning of Section 12-28-110(28). This is true whether the
producer of the product labels the gasoline as “racing gasoline” or “racing fuel.”

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Ray N. Stevens
Ray N. Stevens, Director

May 19
, 2006
Columbia, South Carolina

5