The Indy 500 is over, but off the track Indiana supports racing with sales tax exemptions

On Sunday, Dario Franchitti took his third checkered flag at the Brickyard and became the tenth driver to win at least three Indy 500s – a fantastic finish to the “Greatest Spectacle In Racing.” Indiana loves racing and supports the business of motor sports in part through sales tax exemptions that are discussed in the Indiana Department of Revenue’s Bulletin #67 (“Exemption Available to Professional Motor Racing Teams and Two-Seater Indianapolis 500-Style Race Cars”), published in April. You can view the bulletin at http://1.usa.gov/JO1ILp. There are two exemption provisions in Ind. Code § 6-2.5-5-37 (as amended by HEA 1325 § 2, see http://1.usa.gov/K5rOyf): one for race cars and their component parts (excluding tires and certain “accessories”) leased, owned or operated by a professional racing team and a second for property comprising “any part of a two-seater Indianapolis 500-style race car” (again, excluding tires and “accessories”) that is leased, owned or operated “by a company that is engaged in offering a competitive racing experience during a competitive racing event.”

The bulletin explains:

EXEMPTION AVAILABLE TO PROFESSIONAL RACING TEAMS

Chassis; engines; and their component parts, excluding tires and accessories, constitute a complete motor racing vehicle. Therefore, with the exception of tires and accessories, a motor racing vehicle purchased by a professional racing team is exempt from Indiana sales and use tax. Tires and accessories purchased by professional racing teams for any purpose are subject to Indiana sales and use tax.

EXEMPTION AVAILABLE TO INDY CAR TWO-SEATER

Effective Jan. 1, 2011 (retroactive), the owner, lessee, or operator of a company that is engaged in providing a competitive racing experience during a competitive racing event and the purchase of tangible personal property that comprises any part of a two-seater Indianapolis 500-style race car is entitled to the same sales tax exemption as is provided to a professional racing team.

The Department’s bulletin explains that a professional raising team is one that qualifies as a for-profit business under the Internal Revenue Code (i.e. it’s not a hobby).  Exempt “Chassis” are chassis of vehicles intended for use in competition and include paint and decals.  Replacement, rebuilding and component parts of a racing vehicle are also exempt.  Taxable “accessories” include any and all instrumentation and telemetry equipment that is not permanently attached to the racing vehicle; they include consumables and all elements of the motor vehicle driver’s protective clothing and headgear.

The taxpayer claims the exemption using the Department’s ST-105 general sales tax exemption certificate. See http://www.in.gov/dor/3504.htm.

 

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