The Transaction Privilege and Use Tax includes business activities such as retail sales, restaurants, lodging, leasing, amusements, construction, transportation, communications and other activities.
Vendors are not required to pay the transaction privilege tax on business with qualifying health care organizations, community health centers, organizations providing free meals to the indigent or providing job placement, training and rehabilitation services for the mentally or physically handicapped.
Qualifying health care and other nonprofit organizations must annually apply for an exemption letter with the Arizona Department of Revenue. For more information on this process, visit: https://azdor.gov/transaction-privilege-tax-tpt.
In other words, nonprofits that provide the services just listed above are exempt from paying 'sales tax'.