By analogy to the terminology used by for-profit corporations, these component entities are similar to divisions within a corporation. Three divisions of the organization regularly serve prepared breakfasts and dinners to the needy at no cost. The fourth division operates a medical clinic and the fifth division operates a shelter for the homeless. Because the organization regularly serves meals to the needy at no cost, all types of tangible personal property sold to any division of the organization qualify for the exemption. First, the organization must serve meals.
Meals are hot or cold prepared food.
Many organizations also provide canned or other prepackaged food items to the needy. The needy then prepare the food on their own. Providing these goods does not constitute the serving of meals and the organization would not qualify for this exemption. A qualifying organization may also serve meals which they purchased from a catering service or other similar business. The sale of prepared meals by a catering service is taxable under the restaurant classification pursuant to A.R.S. 42-1310.14.