Qualifying Hospitals

The following organizations are considered “qualifying hospitals:”

• A licensed nonprofit hospital.
• A licensed nonprofit nursing care institution.
• A licensed nonprofit residential care institution.
• A residential care facility operated in conjunction with a licensed nonprofit nursing care institution.
• A licensed nonprofit kidney dialysis center.
• A hospital, nursing care institution or residential care institution operated by the federal government, this state or a political subdivision of this state.
• A facility that is under construction and that on completion will be any of the above.

See A.R.S. § 42-5001(11) for more information on the definition of qualifying hospitals.

Qualifying Hospital, Licensed Nursing Care Institution, or Licensed Kidney Dialysis Center

How to Apply:

This application procedure applies to the following three types of organizations:

• Qualifying Hospital
• Licensed Nursing Care Institution
• Licensed Kidney Dialysis Center

These organizations should submit the following information for review to the Department:

• Fully completed Health Care Exemption Application:
  • Complete all sections of the form, including the list of locations for Appendix A of the Exemption Letter.
  • Submit the application electronically via email to [email protected] along with each of the supporting pieces of documentation mentioned below.
• Copy of the organization’s current license(s) issued by the Arizona Department of Health Services (ADHS).
• Out-of-state institutions requesting exemption may include a copy of their current state license. 
  • NOTE: Only the locations on the license will be listed on the Exemption Letter.
• Copy of the organization’s I.R.C. § 501 C determination letter.
  • NOTE: The name on the determination letter must match the name of the organization seeking the Exemption Letter and the name on the license issued by the ADHS. (The organization may provide proof that it is operating as a subordinate organization under a group exemption if the names don’t match.)

The organization must submit their electronic application to the Department and fully answer any eligibility questions required by the Department for the purpose of the application. If the Department approves the application, the ensuing Exemption Letter is valid until the organization is no longer qualified for the Exemption Letter.

If an organization does not submit the required documentation, the Department will request further information within thirty (30) business days of receipt of the Exemption Letter request. An Exemption Letter will not be issued until all required documents are received by the Department. If the required documents do not substantiate that the organization is eligible for an Exemption Letter, a denial will be issued that may be appealed. See TPP 15-1 for Appeal of Agency Decision. All applications must be sent via email. Mailed applications will not be accepted.

Documentation for the Vendor
Once the organization’s documentation is approved, an Exemption Letter will be sent by email to the requestor. To qualify for exempt transactions, the qualified organization should give the vendor the Exemption Letter along with a properly completed Arizona Form 5000HC for each location(s). Please see TPP 15-1 for more detail.

Continuing Qualification
Please note, once an organization receives the required Exemption Letter with a date of January 2024 or thereafter, that Exemption Letter will remain valid until the organization no longer qualifies for the Exemption Letter. See A.R.S. § 42-5009(S)(1). At the beginning of each year, subsequent to the initial certification - an organization should review any statutorily relevant information to determine if they still qualify to use their Exemption Letter. Examples of an organization losing their qualification to use the Exemption Letter includes:

• A Hospital losing their ADHS Licensure, and/or
• A Hospital losing their I.R.C. 501(c)(3) nonprofit status.

NOTE: If the organization no longer qualifies for the Exemption Letter, it is their responsibility to:

• notify the Department and any vendors they have supplied it to that they no longer qualify for the exemption, and
• discontinue using the Exemption Letter. Regardless of the organization’s notification to the Department and its own vendors, if they no longer qualify for the Exemption Letter – yet continue to utilize it – then they are liable in an amount equal to any tax, penalty, and interest from the date they no longer qualify, that the seller would have been required to pay if the seller had not been given the Exemption Letter by the Hospital.

Unlicensed Residential Care Institution

How to Apply:

This application procedure applies to unlicensed residential care institutions operated in conjunction with a licensed nursing care institution.
These organizations should submit electronically the following information for review to the Department:

• Fully completed Health Care Exemption Application:
  • Complete all sections of the form, including the list of locations for Appendix A of the Exemption Letter.
  • Submit the application electronically via email to [email protected] along with each of the supporting pieces of documentation mentioned below.
• Copy of the nursing care institution’s current license(s) issued by the Arizona Department of Health Services (ADHS).
  • NOTE: Only the locations on the ADHS license will be listed on the Exemption Letter.
• Copy of the nursing care institution’s I.R.C. § 501 C determination letter.
  • Both the unlicensed residential care facility AND the Licensed Nursing Care facility MUST be nonprofit organizations.
  • NOTE: The name on the Nursing Care Facility determination letter must match the name on the license issued to the Licensed Nursing Care Facility by the ADHS. The organization may provide proof that it is operating as a subordinate organization under a group exemption.
• A description of the medical, nursing, or health-related services provided for residents of the residential units.
• Verification that the residential care facility is operated in conjunction with the licensed nursing care institution. Operated in conjunction with is generally defined to mean the residential care facility has common ownership and common management with the nursing care institution (TPR 99-8). Examples of acceptable documentation showing common ownership and management include:
  • A permit issued by the Department of Insurance, pursuant to A.R.S. § § 20-1801 through 20-1812 authorizing the organization to provide services under a life care contract.
  • A copy of the organization’s Articles of Incorporation and/or By-Laws indicating the affiliation and/or relationship between the two facilities. Copies of the organization’s financial statements indicating the affiliation and/or relationship between the two facilities.
  • A letter from the administrator of a licensed nursing care institution which itself holds an Exemption Letter from the Department. The administrator's letter must certify that the licensed nursing care institution is affiliated or otherwise related to the residential facility in question.

The organization must submit their electronic application to the Department and fully answer any eligibility questions required by the Department for the purpose of the application. If the Department approves the application, the ensuing Exemption Letter is valid until the institution is no longer qualified for the Exemption Letter. 

If an organization does not submit the required documentation, the Department will request further information within thirty (30) business days of receipt of the Exemption Letter request. An Exemption Letter will not be issued until all required documents are received by the Department. If the required documents do not substantiate that the organization is eligible for an Exemption Letter, a denial will be issued that may be appealed. See TPP 15-1 for Appeal of Agency Decision. All applications must be sent via email. Mailed applications will not be accepted.

Documentation for the Vendor
Once the organization’s documentation is approved, an Exemption Letter will be sent by email to the requestor. To qualify for exempt transactions, the qualified organization should give the vendor the Exemption Letter along with a properly completed Arizona Form 5000HC for each location(s). Please see TPP 15-1 for more detail.

Continuing Qualification
Please note, once an organization receives the required Exemption Letter with a date of January 2024 or thereafter, that Exemption Letter will remain valid until the organization no longer qualifies for the Exemption Letter. See A.R.S. § 42-5009(S)(1). At the beginning of each year, subsequent to the initial certification - an organization should review any statutorily relevant information to determine if they still qualify to use their Exemption Letter. Examples of an organization losing their qualification to use the Exemption Letter includes:

• An organization losing their ADHS Licensure,
• An organization losing their I.R.C. 501(c)(3) nonprofit status, and/or
• An organization is no longer operated by a licensed nursing care institution.

NOTE: If the organization no longer qualifies for the Exemption Letter, it is their responsibility to:

• notify the Department and any vendors they have supplied it to that they no longer qualify for the exemption, and 
• discontinue using the Exemption Letter.

Regardless of the organization’s notification to the Department and its own vendors, if they no longer qualify for the Exemption Letter – yet continue to utilize it – then they are liable in an amount equal to any tax, penalty, and interest from the date they no longer qualify, that the seller would have been required to pay if the seller had not been given the Exemption Letter by the Institution.

Hospitals, nursing care institutions, or residential care institutions operated by the federal government

How to Apply:

This application procedure applies to hospitals, nursing care institutions, or residential care institutions operated by the federal government, this state or a political subdivision of this state.

These organizations should submit electronically the following information for review to the Department:

• Fully completed Health Care Exemption Application:
  • Complete all sections of the form, including the list of locations for Appendix A of the Exemption Letter.
  • Submit the application electronically via email to [email protected] along with each of the supporting pieces of documentation mentioned below.
• Copy of the organization’s current license(s) issued by the Arizona Department of Health Services (ADHS).
  • NOTE: Only the locations on the ADHS license will be listed on the Exemption Letter.
• The organization must submit their electronic application to the Department and fully answer any eligibility questions required by the Department for the purpose of the application. If the Department approves the application, the ensuing Exemption Letter is valid until the organizations are no longer qualified for the Exemption Letter.

The organization must submit their written application to the Department and fully answer any eligibility questions required by the Department for the purpose of the application. If the Department approves the application, the ensuing Exemption Letter is valid until the Institution is no longer qualified for the Exemption Letter. 

If an organization does not submit the required documentation, the Department will request further information within thirty (30) business days of receipt of the Exemption Letter request. An Exemption Letter will not be issued until all required documents are received by the Department. If the required documents do not substantiate that the organization is eligible for an Exemption Letter, a denial will be issued that may be appealed. See TPP 15-1 for Appeal of Agency Decision. All applications must be sent via email. Mailed applications will not be accepted.

Documentation for the Vendor
Once the organization’s documentation is approved, an Exemption Letter will be sent by email to the requestor. To qualify for exempt transactions, the qualified organization should give the vendor the Exemption Letter along with a properly completed Arizona Form 5000HC for each location(s). Please see TPP 15-1 for more detail.

Continuing Qualification
Please note, once an organization receives the required Exemption Letter with a date of January 2024 or thereafter, that Exemption Letter will remain valid until the organization no longer qualifies for the Exemption Letter. See A.R.S. § 42-5009(S)(1). At the beginning of each year, subsequent to the initial certification - an organization should review any statutorily relevant information to determine if they still qualify to use their Exemption Letter. Examples of an organization losing their qualification to use the Exemption Letter includes:

• An Institution losing their ADHS Licensure, and/or
• An Institution losing their I.R.C. 501(c)(3) nonprofit status.

NOTE: If the organization no longer qualifies for the Exemption Letter, it is their responsibility to: 

• notify the Department and any vendors they have supplied it to that they no longer qualify for the exemption, and 
• discontinue using the Exemption Letter.

Regardless of the organization’s notification to the Department and its own vendors, if they no longer qualify for the Exemption Letter – yet continue to utilize it – then they are liable in an amount equal to any tax, penalty, and interest from the date they no longer qualify, that the seller would have been required to pay if the seller had not been given the Exemption Letter by the Institution.

Facility Under Construction and that upon completion will be an organization that qualifies as a qualifying hospital

How to Apply:

This application procedure applies to any qualifying Facility Under Construction and that upon completion will be an organization that qualifies as a qualifying hospital.

These organizations should submit electronically the following information for review to the Department:

• Fully completed Health Care Exemption Application:
  • Complete all sections of the form, including the list of locations for Appendix A of the Exemption Letter.
  • Submit the application electronically via email to [email protected] along with each of the supporting pieces of documentation mentioned below.
• Copy of the I.R.C. § 501 C determination letter.
  • If the organization has not received the I.R.C. § 501 C determination letter, they do not qualify as an I.R.C. § 501 C before the date issued.
  • The requirement for the I.R.C. § 501 C is waived if the facility under construction is operated by the federal government, this state or a political subdivision.
• Out-of-state institutions should include a copy of their current state license.
• Copy of the building permit at the address of the facility under construction.
• Copy of the organization’s current license(s) issued by the Arizona Department of Health Services (ADHS).
  • NOTE: Only the location on the building permit will be listed on the Exemption Letter.

The organization must submit their electronic application to the Department and fully answer any eligibility questions required by the Department for the purpose of the application. If the Department approves the application, the ensuing Exemption Letter is valid until the Institution is no longer qualified for the Exemption Letter. 

If an organization does not submit the required documentation, the Department will request further information within thirty (30) business days of receipt of the Exemption Letter request. An Exemption Letter will not be issued until all required documents are received by the Department. If the required documents do not substantiate that the organization is eligible for an Exemption Letter, a denial will be issued that may be appealed. See TPP 15-1 for Appeal of Agency Decision. All applications must be sent via email. Mailed applications will not be accepted.

Documentation for the Vendor
Once the organization’s documentation is approved, an Exemption Letter will be sent by email to the requestor. To qualify for exempt transactions, the qualified organization should give the vendor the Exemption Letter along with a properly completed Arizona Form 5000HC for each location(s). Please see TPP 15-1 for more detail.

Continuing Qualification
Please note, once an organization receives the required Exemption Letter with a date of January 2024 or thereafter, that Exemption Letter will remain valid until the organization no longer qualifies for the Exemption Letter. See A.R.S. § 42-5009(S)(1). At the beginning of each year, subsequent to the initial certification - an organization should review any statutorily relevant information to determine if they still qualify to use their Exemption Letter. Examples of a organization losing their qualification to use the Exemption Letter includes:

• A Hospital losing their ADHS Licensure, and/or
• A Hospital losing their I.R.C. 501(c)(3) nonprofit status.

NOTE: If the organization no longer qualifies for the Exemption Letter, it is their responsibility to:

• notify the Department and any vendors they have supplied it to that they no longer qualify for the exemption, and 
• discontinue using the Exemption Letter.

Regardless of the organization’s notification to the Department and its own vendors, if they no longer qualify for the Exemption Letter – yet continue to utilize it – then they are liable in an amount equal to any tax, penalty, and interest from the date they no longer qualify, that the seller would have been required to pay if the seller had not been given the Exemption Letter by the organization.

Applicable Deductions for All Organizations Considered Qualifying Hospitals