Is racing gasoline used off-road at tracks or in speedboats subject to South Carolina's motor fuel user fee?

Plain-English summary

South Carolina Revenue Ruling #18-6 says all racing gasoline used or consumed in South Carolina is subject to the motor fuel user fee, unless a specific exemption applies.

The rule is not limited to fuel used on public roads. Section 12-28-310 imposes the fee on gasoline, gasohol, and gasoline-containing blended fuels used or consumed for any purpose in the state. Racing fuel used in high-compression race-car engines or speedboats therefore remains covered.

Product labeling does not control. The Department says racing gasoline remains gasoline because it is commonly or commercially known or sold as gasoline suitable for motor-fuel use. Higher octane, lead content, vapor pressure, and other racing specifications do not turn it into a different product.

The ruling points to specific exemptions as proof of the broad general rule. Gasoline used exclusively in qualifying farm equipment can support a refund claim, and gasoline used in aircraft is exempt. Registered buyers can purchase qualifying aviation gasoline free of the fee when the seller obtains the required certification.

What this means for you

Race teams and track operators

Budget the motor fuel user fee into racing gasoline bought or consumed in South Carolina. Off-road use at a racetrack does not remove the fee.

Fuel distributors

Treat products sold as racing gasoline or racing fuel consistently when they meet the statutory gasoline definition. Maintain documentation for any claimed farm or aviation exemption.

Boat racers

The same conclusion applies to racing gasoline used in speedboats. The taxable-use rule is not confined to highway vehicles.

Common questions

Q: Is leaded 110-octane race fuel outside the gasoline definition?
A: No. The ruling says its racing properties do not change its character as gasoline.

Q: Does labeling the product 'racing fuel' avoid the fee?
A: No. Commercial substance, not the label, controls.

Q: Are there any exemptions?
A: Yes. The ruling cites qualifying farm-equipment and aircraft uses, subject to their statutory requirements.

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 — use and consumption presumption
• S.C. Code Ann. § 12-28-710(15) and (16) — farm and aircraft exemptions
• Act No. 40 of 2017 — scheduled motor fuel user-fee increases

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR18-6.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #18-6

SUBJECT:

Racing Gasoline
(Motor Fuel User Fee)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

SC Revenue Ruling #06-3, Revenue Ruling #93-2, and all previous
advisory opinions and any oral directives in conflict herewith.

REFERENCES:

S. C. Code Ann. Section 12-28-310 (2014) (as amended by Act No. 40
of 2017)
S. C. Code Ann. Section 12-28-330 (2014)
S. C. Code Ann. Section 12-28-110 (2014 and Supp. 2016)
S. C. Code Ann. Section 12-28-710(15) (2014)
S. C. Code Ann. Section 12-28-710(16) (2014)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2014)
S. C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public. 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 Department advisory opinion.

Purpose of Update:
The purpose of this advisory opinion is to update SC Revenue Ruling #06-3 concerning racing
gasoline to address: (1) the application of the motor fuel user fee to gasohol and blended fuels
containing gasoline and (2) the phased-in increase in the motor fuel user fee to 28 cents per
gallon from 16 cents per gallon from July 1, 2017 to July 1, 2022, as provided in Act No. 40 of
2017, “The South Carolina Infrastructure and Economic Development Act.”
Question:
Are racing gasolines, racing gasohol, and racing blended fuels containing gasoline (all of which
are referred to as “racing gasolines” for purposes of this document) subject to the motor fuel user
fee imposed under Code Section 12-28-310?
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Conclusion:
All racing gasolines 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.”
Facts:
Racing gasolines are designed for use in high-compression ratio or turbocharged, high-powered
engines installed in race cars and speedboats. They generally contain high levels of lead
antiknock (although some racing gasolines are unleaded) and have 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” or “racing fuel,” and may interchangeably refer to the same
product as both “racing gasoline” and “racing fuel.”
Racing gasolines may legally be used only in racing vehicles and are not intended for street or
highway use. Racing gasolines 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 user fee 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, gasohol, or blended fuels containing gasoline that are used or
consumed for any purpose in this State; and
(2) all diesel fuel, substitute fuels, or alternative fuels, or blended fuels
containing diesel fuel that are 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.
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(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.
(D) On July 1, 2017, and each July first thereafter until after July 1, 2022, the
department shall permanently increase the amount of the user fee imposed
pursuant to subsection (A) by two cents, for a total of twelve cents. All the funds
raised by the increase in the motor fuel imposed by this subsection must be
credited to the Infrastructure Maintenance Trust Fund. (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 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, gasohol, or blended fuels containing 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 motor fuel. (Emphasis added)
Therefore, the user fee is imposed on “all gasoline, gasohol, or blended fuels containing gasoline
that are used or consumed for any purpose in this State….”
Code Section 12-28-110 defines the following terms:
(3) “Blended fuel” means a mixture composed of gasoline or diesel fuel and
another liquid, other than a de minimis amount of a product such as carburetor
detergent or oxidation inhibitor, that can be used as a fuel in a highway vehicle.

(27) “Gasohol” means blended fuel composed of gasoline and fuel alcohol.
(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.
The above cited imposition section and definitions demonstrate that all gasoline, gasohol, or
blended fuels containing 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.

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This interpretation is further supported by the exemptions listed in Code Section 12-28-710. This
section specifically exempts from the user fee:
(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 user fees. 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.
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 and SC Revenue Ruling #06-3.

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Based on the above, all racing gasolines used or consumed in South Carolina are subject to the
motor fuel user fee under Code Section 12-28-310.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
May 2
, 2018
Columbia, South Carolina

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