Go-Kart Fees Are Not Taxable in North Carolina

Apr 9th, 2021

The North Carolina Department of Revenue ("Department") recently ruled that fees charged by a go-kart racing venue were not taxable. The venue provided go-karts, helmets, and a rubberized racetrack for customers. Go-karts were randomly assigned, and racers were required to exit the go-karts at the end of each race. A go-kart was assigned to a different customer for each race. Two fees were charged to race: a yearly license fee and a race fee.

The Department determined that the license fee and race fee did not constitute a "lease or rental" of the go-karts. The venue owned the go-karts, could program them for pre-set racing speeds, could program them to reduce speed, and could remotely turn them off in an emergency. As a result, the venue neither lost dominion nor relinquished control of the go-karts.

In addition, the license fee and race fee were not taxable as admission charges. North Carolina does not tax amounts paid for the right to participate (other than to be a spectator) in a sporting activity.