Court thwarts Illinois agency’s attempt to tax religious ministry to underprivileged children

CHICAGO – An Illinois court ruled Wednesday that the state can’t tax a religious ministry to underprivileged children. The Illinois Department of Employment Security had attempted to assess unemployment compensation taxes to By The Hand Club For Kids, a ministry of The Moody Church, even though it had qualified as nontaxable since its creation in 2001.

An agency official said that the department changed its position because earlier determinations had been made when “things were run a little bit differently around here.” The agency began to argue in 2015 that the religious ministry, because it provides free services to children in need, is not “operated primarily for religious purposes” despite the fact that it has an overt Christian founding, identity, and mission and engages in unquestionably religious activities, such as chapel services, Bible studies, discipleship, prayer, and worship. The court rejected the state’s arguments and ruled in favor of the ministry, which Alliance Defending Freedom represents.

“Not only is the government wrong on the law when it attempts to tax a non-taxable entity, it is doing no one any favors by improperly burdening the finances of a ministry motivated to serve needy children explicitly because of its Christian mission,” said ADF Legal Counsel Jeremiah Galus. “The court rightly recognized that the free food, free medical care, and free education that By The Hand provides are the direct and obvious result of the ministry’s Christian charter and purpose. A government that seeks to rob such a ministry of precious dollars that are best used to serve under-resourced communities is a government that shoots itself in the foot.”

As the Circuit Court of Cook County wrote in its decision in By The Hand Club For Kids v. Illinois Department of Employment Security, “Plaintiff does indeed provide many services that could, in a different context, be considered secular. But that context is important. Analyzing an activity’s purpose requires looking not only at the activity itself, but why it is being undertaken.”

“The state’s argument didn’t make any sense,” explained ADF Senior Counsel Erik Stanley, director of the ADF Center for Christian Ministries. “Would By The Hand suddenly become religious enough in the state’s eyes if it stopped providing free food and medical care to children? Which is more religious: a ministry that acts or doesn’t act on its beliefs? The ministry clearly provides free help to children because of—not instead of—its Christian purpose and motivations.”

ADF-allied attorneys Sally Wagenmaker, Paul Winters, and Jonathan Hwang of Wagenmaker & Oberly LLC are serving as local counsel for By The Hand Club For Kids in the case.

• Pronunciation guide: Galus (GAL’-us)

Alliance Defending Freedom is an alliance-building, non-profit legal organization that advocates for the right of people to freely live out their faith.

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