Sales Taxes and Motorsports – An Overview

In the past, this blog has been exclusively focused on some of the issues affecting the motorsports community raised by the U.S. Federal income tax. It’s time to “shift gears” (pun intended) and discuss U.S. sales taxes.

In the U.S. sales taxes are levied by most states on retail sales. Many political sub-divisions of certain states – counties and cities – also impose sales taxes. The money collected by state and local governments from sales taxes forms a large part of their budgets, so it’s no wonder that the enforcement of sales tax laws is usually rigorous.

Sales tax laws tend to be “form driven,” that is, if the proper documentation isn’t present, a sales tax exemption won’t be given regardless of the law. As an example, if a store sells office supplies to a church, the sales tax would apply unless the office supply firm has an exemption certificate on file from the church. Although the state sales tax law may specifically exempt churches, no exemption is granted for any sale to that church from that office supply store unless the store has an exemption certificate from the church on file. If the state should conduct a sales tax audit of the office supply store, the store would have to pay the sales taxes due on merchandise sold to the church unless the store can produce a sales tax exemption certificate.

The type and amount of exemption varies from state to state. For example, many states have a sales tax exemption for manufacturing. But the definition of “manufacturing” and when manufacturing begins and ends can be (and often is) different from state to state.

Regarding motorsports: some states have sales tax exemptions for parts, fuels and lubricants used by racing teams. Specific state laws must be consulted for the exact definition of “motor sports.” and “racing teams.” In addition, the transaction dates must also be considered. Some states have enacted sales tax laws effective as of a certain date. Other jurisdictions are allowing motorsports-related tax exemptions to expire after a given date.

In the next few postings, I’ll review the sales tax exemptions for certain selected states as they relate to motorsports. If you want me to review a specific state, drop me a line.

*   *   *   *   *

Thanks for your patience in waiting for this post. I’ll try and continue to post monthly.

*   *   *   *   *

Contact me an email at phil.schurrer.racingprof@gmail.com if you or your group would be interested in a detailed presentation about this topic or other tax and financial aspects of motor sports. I'd also be interested in any comments you have about the blog or suggestions for future topics

Until next time …


Phil Schurrer, CPA


“This posting is intended to provide general information regarding the subject matter covered. It is provided with the understanding that the author is not engaged in rendering legal, accounting, or other professional services. This information should not be used as a substitute for professional advice in specific situations. If legal advice or other expert assistance is required, the services of a professional should be sought.”

-      Adopted from a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.

To insure compliance with the requirements imposed by the IRS, you are informed that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of

-      Avoiding penalties under the Internal Revenue Code, or

-    Promoting, marketing or recommending to another party any transaction or matter addressed therein.

Taxpayers should seek professional advice based on their particular circumstances.

Attorneys and other professionals dealing with specific matters and situations should also research original sources of authority.