Supreme Court Unanimously Reverses Denial of Religious Purposes Tax Exemption

In Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission, the Supreme Court reversed the Wisconsin Supreme Court’s upholding of the denial of an “operated primarily for religious purposes” exemption from state unemployment taxes. The exemption also required that the covered nonprofits be controlled, supervised, or principally supported by a church, but that requirement was not at issue in the case.

The Court concluded that the exemption denial, which was based the nonprofit’s failure to “attempt to imbue program participants with the Catholic faith” even though it was undisputed that the nonprofit’s activities were religiously motivated, unconstitutionally discriminated based on denomination. This discrimination arose from the fact that the nonprofit’s religious faith prohibiting it from proselytizing as part of providing charitable services, while other faiths require proselytizing in this situation. The Court also rejected the state’s arguments that invidious discrimination is required for there to be a violation of the Establishment Clause of the First Amendment and that the statute at issue satisfied strict scrutiny.

For examples of the commentary on the opinion, see Mark Chopko at Bloomberg Law and Amy Howe at SCOTUSblog.

Lloyd Mayer