Catholic Retirement Community Entitled To Colorado Tax Exemption

In Catholic Health Initiatives Colorado v. City of Pueblo, (CO Ct. App., Sept. 6, 2007), a Colorado appellate court held that a continuing care retirement community operated by a Catholic religious organization qualifies for the sales and use tax exemption that is granted to charitable and religious organizations. Disagreeing with the trial court, the Court of Appeals concluded that the operation of the retirement community is a religious activity. While agreeing that an exemption is available, the Court disagreed with the argument made by Catholic Health that government officials cannot constitutionally examine the activities of a religious organization to determine which of its activities are or are not religious. The Court held that “a certain amount of inquiry into a religious organization’s activities is appropriate”. The organization’s motivation in conducting a particular activity is relevant, but other factors must also be examined.