The Supreme Court announced Friday it would take up a legal battle over extending tax-exempt status to Wisconsin Catholic Charities.

Catholic Charities of the Diocese of Superior told the high court that it operates by its faith and should get a religious exemption from Wisconsin’s unemployment system.

The Wisconsin Supreme Court rejected that argument, saying the group serves and hires people of all faiths so it cannot be exempt.

“Wisconsin is trying to make sure no good deed goes unpunished,” said Eric Rassbach, vice president and senior counsel at Becket, a legal advocacy group that is representing the Wisconsin Catholic Charities. “Penalizing Catholic Charities for serving Catholics and non-Catholics alike is ridiculous and wrong.”

State law allows religious non-profits to be exempt from the state’s unemployment compensation program.

Under the state Supreme Court ruling, Catholic Charities would have to limit its hiring to only Catholics and try to convert the people it serves to obtain the exemption.

It took four justices to vote in favor of reviewing the state supreme court’s decision.

The case is Catholic Charities Bureau Inc. v. State of Wisconsin Labor and Industry Review Commission and State of Wisconsin Department of Workforce Development.

Four states consider an entity’s sincerely held religious beliefs to see if it qualifies for a religious exemption for tax purposes, while four other states — including Wisconsin — decide if an entity’s work is charitable based on whether it is “typical” of a religion, according to the court filing.

• Alex Swoyer can be reached at aswoyer@washingtontimes.com.