Nearly 10 years ago, Rhiannon O’Donnabhain (then Robert Donovan) underwent sex-change and breast augmentation surgeries in order to complete her transformation from male to female for a Gender Identity Disorder (GID). She claimed the costs of the procedures on her tax return as a medical deduction, arguing that the procedures were medically necessary and not for cosmetic reasons. The Service disagreed and the matter went to Tax Court.
On February 2, 2010, the U.S. Tax Court ruled that treatment for gender identity disorder qualifies as a medical expense under the Tax Code, and is therefore deductible. However, the court considered the issues of O’Donnabhain’s transgender surgery and her breast augmentation surgery separately, with two different results. The transgender surgery was found to be part of O’Donnabhain’s treatment; in contrast, her breast augmentation surgery was found to be “cosmetic” and therefore, not deductible. Central to that argument was the fact that the hormone replacement therapy had already resulted in “normal breasts before her surgery.” Cosmetic surgery for non-medical purposes is not a deductible expense – and may even be taxable.
The U.S. Tax Court is not an arm of the IRS. It is a court of record established by Congress under Article I of the U.S. Constitution. The IRS defends its position as the defendant in a controversy brought by a taxpayer. In this matter, O’Donnabhain, was the taxpayer/petitioner and was represented by GLAD, the Gay & Lesbian Advocates & Defenders.
The opinion is a pretty good read (downloads as a pdf) if only for the numerous and lengthy concurring opinions.
I just spoke with an agent at the IRS at 800-829-1040 (2/5/10), and at this point the IRS does not know how this ruling will affect the tax code. She said it is too soon to know. She did say to check back.
As it stands now, in the tax code, SRS is NOT deductible.
At this point it will take a while for the IRS to react. After all their ruling was based on a catholic church fabricated study by Paul McHugh in the catholic rag “First Things”. That is a right wing catholic propaganda magazine. The tax court basically said the IRS interpretation was a shallow interpretation and completely refuted by the medical facts. I think the IRS should be sued for intentional discrimination. McHugh attacks anything he dislikes with the zeal of a religious fanatic. In 2007 he was ordered by Kansas Attorney General Paul Morrison to stop making public statements about physician George Tiller’s work. McHugh disapproved of Tiller’s work providing abortion services. Tiller was later murdered by a fanatic who was influenced by public statements made about Tiller.McHugh is also known for his work defending Catholic priests against sex abuse charges. He was a founder and board member of the False Memory Syndrome Foundation, and he was named to a lay panel assembled by the Roman Catholic Church in 2002 to look into sexual abuse by priests, which led to protests from victims’ rights groups.
The court’s ruling on O’Donnabhain v. Commissioner has created a considerable amount of hope in the Transgender community. There is much speculation on this ruling effect on others and begs the following question. Was O’Donnabhain v. Commissioner filed as an “S” case which are neither appealable nor precedential or a “non S” case which are both?
I would like to hear your take on this. I have also contacted GLAD. I would like to spread the good news but I want to ensure it is accurate news.
It doesn’t appear to be an S case. It is not a summary opinion, nor does the docket number reflect an S designation. I feel comfortable saying that it’s a regular opinion. Let us know what you hear from GLAD.
congratulations on the court victory! great to see something like this.