Have a client in Tempe with APS gas service. They manufacture metal brackets and have been paying Arizona TPT (transaction privilege tax) on natural gas used for their furnaces. Filed Form 5000 for manufacturing exemption but APS is pushing back saying the gas heats the building, not just production equipment. Anyone dealt with this before?
Arizona manufacturer charged sales tax on natural gas - APS claiming it's not production use
APS can be tricky on this. You need to show the gas is used "primarily" in manufacturing under ARS 42-5159. If it's a dedicated line to production equipment, that's your best argument. Mixed use gets complicated.
Had similar issue with TECO in Florida. Document the BTU usage - production vs. general building heat. If more than 50% goes to manufacturing processes, you should qualify. Get engineering drawings if needed.
Arizona is strict on this. I've seen cases where they want separate meters for production gas vs. comfort heating. Worth the fight though - had one client save $24K annually after we proved production usage.
Update: Got the exemption approved! Key was showing furnace logs and production schedules. Gas usage directly correlated with manufacturing output. APS accepted it after 3 months of back-and-forth. Refund came to $16,800.