Large church in Mesa getting charged Arizona sales tax by APS. Filed form 5000 for religious exemption but got denied. APS says the facility has too much commercial activity - coffee shop, bookstore, daycare. Anyone dealt with mixed-use religious facilities?
APS Arizona - church exemption denied
Arizona is strict about mixed-use religious facilities. The commercial activities might disqualify the entire exemption. You might need separate metering for the commercial vs worship areas.
Had similar issue in Texas with a mega-church. Oncor required them to separate the commercial functions onto different accounts. The sanctuary and classrooms qualified for exemption but not the coffee shop or gift shop.
Idaho has the same mixed-use rules. Idaho Power approved exemption for the main worship facility but daycare had to be on separate account with full taxation.
Working with APS on separate metering for commercial areas. Expensive to install but the tax savings should pay for it in 18 months. Main sanctuary exemption should save $800/month.
Mixed-use religious facilities are challenging. Most states require clear separation between exempt religious activities and taxable commercial operations. Separate metering is usually the best solution.