Supreme Court to Consider Tax Exemptions for Religious Organizations

The Supreme Court recently agreed to consider Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission. The closely watched First Amendment case involves the availability of tax exemptions for religious organizations and marks the first religious case taken up by the Court this term.

Facts of the Case

Catholic Charities Bureau, Inc. (CCB), along with four of its sub-entities, seek an exemption from having to pay unemployment tax to cover their employees. They assert that they are exempt from coverage under Wisconsin’s Unemployment Compensation Act because they are operated primarily for religious purposes.

Pursuant to Wis.Stat. § 108.02(15)(h), Wisconsin exempts from its state unemployment tax system certain religious organizations that are “operated, supervised, controlled, or principally supported by a church or convention or association of churches” and that are also “operated primarily for religious purposes.” The Labor and Industry Review Commission (LIRC) concluded that CCB and the four sub-entities were not “operated primarily for religious purposes” and thus not exempt from making contributions to the state unemployment insurance system.

Wisconsin Supreme Court’s Decision

CCB and the sub-entities sought judicial review. They argued that they are “operated primarily for religious purposes” because the Diocese of Superior’s motivation is primarily religious, i.e., their charitable works are carried out to operationalize Catholic principles. They further contended that a contrary interpretation would run afoul of the First Amendment to the United States Constitution and Article I, Section 18 of the Wisconsin Constitution.

The Wisconsin Supreme Court reinstated the decision of the LIRC. It held that CCB is not “operated primarily for religious purposes” and thus does not qualify for the tax exemption. Specifically, the court held that CCB’ activities are not “typical” religious activities because it serves and employs non-Catholics. It further found that CCB does not “attempt to imbue program participants with the Catholic faith,” and its services to the poor and needy could also be provided by secular organizations.

Issue Before the Supreme Court

The Supreme Court granted certiorari on December 13, 2024. The justices agreed to consider the following question: “Whether a state violates the First Amendment’s religion clauses by denying a religious organization an otherwise-available tax exemption because the organization does not meet the state’s criteria for religious behavior.”

Oral arguments have not yet been scheduled. An opinion is scheduled before the end of the term in June/July 2025.