Arizona Justices Will Consider Use Tax on Rented Hospital Linens

A business that sanitizes linens for hospitals convinced the Arizona Supreme Court to review whether its equipment is used in a “processing operation,” qualifying it for a use tax exemption.

9W Halo OPCO LLC, doing business as Angelica Textile Services, asked the justices to review a 2024 state tax court opinion denying a use tax refund on its purchase of sanitation equipment. Although Angelica’s business may include some processing, it isn’t commonly understood to be a processing operation because it doesn’t transform raw materials.

Angelica sanitizes more than 30 million pounds of soiled health care textiles—including scrubs, bed sheets, gowns, ...