from the Arizona Tax Court No. TX2014-000458 The Honorable
Christopher T. Whitten, Judge
T. Garrett, LLC, Woodruff By Daniel T. Garrett Counsel for
Arizona Attorney General's Office, Phoenix By Macaen F.
Mahoney, Kenneth J. Love Counsel for Defendant/Appellee
Lawrence F. Winthrop delivered the opinion of the Court, in
which Presiding Judge Randall M. Howe and Judge Jon W.
Arizona Electric Power Cooperative, Inc. ("AEPCO")
appeals the tax court's summary judgment in favor of the
Arizona Department of Revenue ("the Department").
Because AEPCO's purchases of coal and natural gas are
subject to use tax, we affirm the judgment of the tax court.
AND PROCEDURAL BACKGROUND
AEPCO, a non-profit Arizona cooperative corporation, owns and
operates the Apache Generating Station, an electric
generation facility in Cochise County. AEPCO sells most of
the electricity it produces to cooperative members, and sells
the remainder to the general electricity market.
To generate electricity, AEPCO uses coal and natural gas,
most of which AEPCO purchases from out-of-state suppliers,
who are not subject to Arizona's transaction privilege
tax. AEPCO originally paid use tax on those purchases, but
later filed two refund claims with the Department, requesting
a refund of use tax paid between 2003 and 2010.The Department
denied both claims. After an unsuccessful protest before the
Office of Administrative Hearings, AEPCO appealed the
Department's final order to the tax court pursuant to
Arizona Revised Statutes ("A.R.S.") section
In the tax court, the parties filed cross-motions for summary
judgment. The tax court granted the Department's motion
and denied AEPCO's cross-motion, determining that
AEPCO's purchases of coal and natural gas were subject to
use tax. After entry of final judgment in favor of the
Department, AEPCO timely appealed. We have jurisdiction
pursuant to A.R.S. §§ 12-120.04(G) (2016),
-120.21(A)(1) (2016), and -170(C) (2016).
This court reviews de novo the tax court's grant
of summary judgment and its interpretation of relevant
statutes. See CCI Europe, Inc. v. Ariz. Dep't of
Revenue, 237 Ariz. 50, 52, ¶ 7, 344 P.3d 352, 354
(App. 2015). Although we liberally construe statutes imposing
taxes in favor of taxpayers, we strictly construe tax
exemptions, given the general policy that all taxpayers
should share the common burden of taxation. State ex rel.
Ariz. Dep't of Revenue v. Capitol Castings, Inc.,
207 Ariz. 445, 447, ¶ 10, 88 P.3d 159, 161 (2004). We
apply these standards to determine whether AEPCO's
purchases of coal and natural gas from out-of-state vendors
are subject to Arizona's use tax.
AEPCO 's Purchases of Coal and Natural Gas Are Within the