Supreme Court Takes Up Catholic Charities’ Unemployment Tax Case

December 13, 2024, 7:45 PM UTC

The US Supreme Court on Friday said it will review a state court ruling that Catholic Charities Bureau Inc. and four of its subsidiaries must pay into Wisconsin’s unemployment insurance system to cover their employees because they don’t qualify for the state’s religious purposes tax exemption.

A split Wisconsin Supreme Court in March ruled that a charity only qualifies for the exemption if it provides “typical religious activities” that aren’t provided by secular groups. The charities here, which provide job training and daily living services to people with disabilities, don’t meet that definition, it said.

The Wisconsin high court majority based its decision on evidence that the charities are organized as separate corporations from the Catholic Church and they “neither attempt to imbue program participants with the Catholic faith nor supply any religious materials to program participants or employees.”

The US Supreme Court should review the case to resolve a split among state high courts over the proper test for determining whether religious organizations qualify for tax benefits, Catholic Charities’ August petition for review said. Requiring religious bodies to pay unemployment taxes takes away funds that otherwise could be helping the needy, it said.

The Wisconsin Legislature and groups representing a spectrum of religions urged the Supreme Court to take up the case and side with Catholic Charities.

Nothing in the language of the unemployment tax exemption “empowers state bureaucrats to discriminate against religious minorities who they think don’t fit a typical mold” by determining which practices are “typical,” the legislature’s amicus brief said. “No group should have to satisfy a panel of judges that it is religious enough for a tax exemption,” it said.

The Jewish Coalition for Religious Liberty and the International Society for Krishna Consciousness, joined by the Sikh Coalition, said in their briefs that Wisconsin’s ruling disadvantages minority religions that engage in less recognizable religious activities.

Wisconsin Attorney General Joshua Kaul asked the US Supreme Court to leave the state’s high court decision undisturbed.

“Courts routinely deny religious tax exemptions to entities that assert religious motivations without overly entangling themselves in religious matters,” his November brief said. “That effort does not violate the church autonomy principle because it does not regulate internal church governance or compel any activity.”

The case is Catholic Charities Bureau Inc. v. Wis. Lab. & Indus. Rev. Comm’n, U.S., No. 24-154, cert. granted 12/13/24.

To contact the reporter on this story: Richard Tzul at rtzul@bloombergindustry.com

To contact the editor responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com

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