Notice Regarding Taxation of Leaded Racing Fuel
February 11, 2002
Effective March 1, 2002 the North Carolina Motor Fuels Tax Division will no longer assess and collect motor fuel tax on leaded racing fuel. North Carolina General Statute 105-449.60 (15) defines "gasoline" as any of the following:
- All products that are commonly or commercially known or sold as gasoline and are suitable for use as a fuel in a highway vehicle, other than products that have an American Society for Testing materials octane number of less than 75 as determined by the motor method.
- A petroleum product component of gasoline, such as naptha, reformate, or toluene.
- Fuel grade ethanol.
The Internal Revenue Service has found that there are two types of petroleum products which are generally sold for use as "racing fuel," and are not diesel fuel, kerosene, or a gasoline blendstock. The first type of product includes fuels that contain lead and have an octane rating of 110 or higher. These fuels do not have detergent additives and do not conform to the Reid Vapor Pressure standards for either reformulated or oxygenated gasoline. Additionally, these fuels do not meet the ASTM specification (D 4814) for gasoline and are not suitable for use as a fuel in a highway vehicle. The second type of petroleum product sold as racing fuel does not contain lead, has an octane rating of 100, and has detergent additives. This product meets the ASTM specification (D 4814) for gasoline and can be used in registered highway vehicles.
The Motor Fuels Tax Division, concurring with the IRS, has determined that leaded racing fuel having an octane rating of 110 or higher, that does not contain detergent additives, does not conform to the Reid Vapor Pressure standards for reformulated or oxygenated gasoline, and does not meet ASTM specifications for gasoline, is not "gasoline" as defined by G.S. 105-449.60(15). Therefore, this product is not taxable under Chapter 105, Article 36C of the North Carolina General Statutes. Racing fuel that does not contain lead, has detergent additives and an octane rating of 100, meets ASTM specifications for gasoline, and is suitable for use as a fuel in a highway vehicle will continue to be taxable.
This determination by the Motor Fuels Tax Division regarding leaded racing fuel will subject this product to applicable State sales and use taxes. The exemption from sales and use tax pursuant to N.C.G.S. 105-164.13(11)(a) for sales of motor fuel will not apply to this product. Sales of leaded racing fuel will be subject to the 4 1/2 % State and applicable county rates of sales or use tax.
If you have questions involving the application of the sales and use tax to this product, you may call the Taxpayer Assistance Division toll-free at 877-252-3052. If you have any questions concerning this or any motor fuels matter, you may telephone the Motor Fuels Tax Division toll-free at 877-308-9092.