O'Donnabhain v. Commissioner
Encyclopedia
O'Donnabhain v. Commissioner 134 T.C. No. 4
was a case recently before the United States Tax Court
. The issue for the court is whether a taxpayer who has been diagnosed with gender identity disorder
can deduct sex reassignment surgery
costs as necessary medical expenses under . The IRS argued that such surgery is cosmetic and not medically necessary. On Feb 2, 2010 the U.S. Tax Court ruled that O'Donnabhain should be allowed to deduct the costs of her treatment for gender-identity disorder, including sex-reassignment surgery and hormone treatments.
"In its decision yesterday, the tax court said the IRS position was “at best a superficial characterization of the circumstances” that is “thoroughly rebutted by the medical evidence.”"
woman who underwent sex reassignment surgery in 2001. She grew up in a devout Irish Catholic
family in Boston and previously tried to conform to traditionally masculine roles, enrolling in the United States Coast Guard
during the Vietnam War
, working as a construction worker, marrying and fathering three children. Conflicted by gender identity issues, she divorced in 1992. In 1996, she was diagnosed with gender identity disorder, a condition recognized in the DSM-IV under which a person identifies as belonging to a different gender than the one usually corresponding to the sex they were assigned at birth, and feels significant discomfort or the inability to deal with this condition.
Under the supervision of her doctors and in accordance with the standard treatment regime, O'Donnabhain began taking hormonal therapy and came out to her family and coworkers as transgender. She changed her legal name and presented herself as female in her day-to-day life. In 2001, she completed her transition by undergoing sex reassignment surgery. After six weeks of recovery, she returned to work.
O'Donnabhain claimed a tax deduction for about $25,000 in costs related to her treatment. She initially received a full refund from the IRS, but after an audit, the IRS characterized her surgery as "cosmetic" and not "medically necessary", thus denying the deduction under . The IRS demanded the refund back, and O'Donnabhain sued the IRS in Tax Court. Her case was taken by the Massachusetts-based Gay and Lesbian Advocates and Defenders
(GLAD), the non-profit legal services organization that in 2003 won the Massachusetts Supreme Judicial Court
case granting gay and lesbian couples the right to marry (Goodridge v. Department of Public Health
).
On Feb 2, 2010, O'Donnabhain won in Tax Court in an 11 to 5 decision reversing the IRS decision. On November 2, 2011, the IRS announced that it intends to issue a formal agreement, known as a "notice of acquiescence", with the Tax Court decision.
O'Donnabhain argued that her surgery was "medically necessary and directed toward the cure, mitigation and treatment of Ms. O’Donnabhain’s diagnosed gender identity disorder."
The IRS issued a memorandum stating that:
In the clearest possible statement the US Tax Court declared "In its decision yesterday, the tax court said the IRS position was “at best a superficial characterization of the circumstances” that is “thoroughly rebutted by the medical evidence.”" The IRS case was based on unverified studies by Johns Hopkins' Paul McHugh, who worked for the Catholic Church. McHugh declared even before taking over the Johns Hopkins that it was his intention to close out any department that had anything to do with gender reassignment. He ordered a study of what he could find of the 24 women the unit had treated. Of 2,000 applications made by reassignment only 24 were chosen and they were chosen entirely for looks. Many questions remain about the religious bias of the IRS, as the results of the followup study were published in a Catholic journal the IRS would later use to close out deductions for surgery.
, "it's absolutely clear that transgender identity is a condition discussed in diagnostic manuals. It seems the IRS is now in the business of practicing medicine without a license."
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
was a case recently before the United States Tax Court
United States Tax Court
The United States Tax Court is a federal trial court of record established by Congress under Article I of the U.S. Constitution, section 8 of which provides that the Congress has the power to "constitute Tribunals inferior to the supreme Court"...
. The issue for the court is whether a taxpayer who has been diagnosed with gender identity disorder
Gender identity disorder
Gender identity disorder is the formal diagnosis used by psychologists and physicians to describe persons who experience significant gender dysphoria . It describes the symptoms related to transsexualism, as well as less severe manifestations of gender dysphoria...
can deduct sex reassignment surgery
Sex reassignment surgery
Sex reassignment surgery is a term for the surgical procedures by which a person's physical appearance and function of their existing sexual characteristics are altered to resemble...
costs as necessary medical expenses under . The IRS argued that such surgery is cosmetic and not medically necessary. On Feb 2, 2010 the U.S. Tax Court ruled that O'Donnabhain should be allowed to deduct the costs of her treatment for gender-identity disorder, including sex-reassignment surgery and hormone treatments.
"In its decision yesterday, the tax court said the IRS position was “at best a superficial characterization of the circumstances” that is “thoroughly rebutted by the medical evidence.”"
History
Rhiannon O'Donnabhain is a transgenderTransgender
Transgender is a general term applied to a variety of individuals, behaviors, and groups involving tendencies to vary from culturally conventional gender roles....
woman who underwent sex reassignment surgery in 2001. She grew up in a devout Irish Catholic
Irish Catholic
Irish Catholic is a term used to describe people who are both Roman Catholic and Irish .Note: the term is not used to describe a variant of Catholicism. More particularly, it is not a separate creed or sect in the sense that "Anglo-Catholic", "Old Catholic", "Eastern Orthodox Catholic" might be...
family in Boston and previously tried to conform to traditionally masculine roles, enrolling in the United States Coast Guard
United States Coast Guard
The United States Coast Guard is a branch of the United States Armed Forces and one of the seven U.S. uniformed services. The Coast Guard is a maritime, military, multi-mission service unique among the military branches for having a maritime law enforcement mission and a federal regulatory agency...
during the Vietnam War
Vietnam War
The Vietnam War was a Cold War-era military conflict that occurred in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. This war followed the First Indochina War and was fought between North Vietnam, supported by its communist allies, and the government of...
, working as a construction worker, marrying and fathering three children. Conflicted by gender identity issues, she divorced in 1992. In 1996, she was diagnosed with gender identity disorder, a condition recognized in the DSM-IV under which a person identifies as belonging to a different gender than the one usually corresponding to the sex they were assigned at birth, and feels significant discomfort or the inability to deal with this condition.
Under the supervision of her doctors and in accordance with the standard treatment regime, O'Donnabhain began taking hormonal therapy and came out to her family and coworkers as transgender. She changed her legal name and presented herself as female in her day-to-day life. In 2001, she completed her transition by undergoing sex reassignment surgery. After six weeks of recovery, she returned to work.
O'Donnabhain claimed a tax deduction for about $25,000 in costs related to her treatment. She initially received a full refund from the IRS, but after an audit, the IRS characterized her surgery as "cosmetic" and not "medically necessary", thus denying the deduction under . The IRS demanded the refund back, and O'Donnabhain sued the IRS in Tax Court. Her case was taken by the Massachusetts-based Gay and Lesbian Advocates and Defenders
Gay and Lesbian Advocates and Defenders
Gay & Lesbian Advocates & Defenders is a non-profit legal rights organization in the United States. The organization was founded in 1978, and works toward ending discrimination based on sexual orientation, HIV status, and gender identity and expression.GLAD is based in Boston, Massachusetts, and...
(GLAD), the non-profit legal services organization that in 2003 won the Massachusetts Supreme Judicial Court
Massachusetts Supreme Judicial Court
The Massachusetts Supreme Judicial Court is the highest court in the Commonwealth of Massachusetts. The SJC has the distinction of being the oldest continuously functioning appellate court in the Western Hemisphere.-History:...
case granting gay and lesbian couples the right to marry (Goodridge v. Department of Public Health
Goodridge v. Department of Public Health
Goodridge v. Dept. of Public Health, 798 N.E.2d 941 , was a landmark state appellate court case dealing with same-sex marriage in Massachusetts. The November 18, 2003, decision was the first by a U.S...
).
On Feb 2, 2010, O'Donnabhain won in Tax Court in an 11 to 5 decision reversing the IRS decision. On November 2, 2011, the IRS announced that it intends to issue a formal agreement, known as a "notice of acquiescence", with the Tax Court decision.
Arguments
allows taxpayers to deduct medical expenses, but not cosmetic surgery, which it defines as "any procedure which is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease."O'Donnabhain argued that her surgery was "medically necessary and directed toward the cure, mitigation and treatment of Ms. O’Donnabhain’s diagnosed gender identity disorder."
The IRS issued a memorandum stating that:
Whether gender reassignment surgery is a treatment for an illness or disease is controversial. For instance, Johns Hopkins Hospital has closed its gender reassignment clinic and ceased performing these operations.... In light of the Congressional emphasis on denying a deduction for procedures relating to appearance in all but a few
circumstances and the controversy surrounding whether GRS is a treatment for an illness or disease, the materials submitted do not support a deduction.
In the clearest possible statement the US Tax Court declared "In its decision yesterday, the tax court said the IRS position was “at best a superficial characterization of the circumstances” that is “thoroughly rebutted by the medical evidence.”" The IRS case was based on unverified studies by Johns Hopkins' Paul McHugh, who worked for the Catholic Church. McHugh declared even before taking over the Johns Hopkins that it was his intention to close out any department that had anything to do with gender reassignment. He ordered a study of what he could find of the 24 women the unit had treated. Of 2,000 applications made by reassignment only 24 were chosen and they were chosen entirely for looks. Many questions remain about the religious bias of the IRS, as the results of the followup study were published in a Catholic journal the IRS would later use to close out deductions for surgery.
Reception in the medical community
The IRS's decision to classify O'Donnabhain's sex reassignment surgery as cosmetic "sparked outrage" from experts who specialize in gender identity disorder. According to Marshall Forstein, associate professor of psychiatry at Harvard Medical SchoolHarvard Medical School
Harvard Medical School is the graduate medical school of Harvard University. It is located in the Longwood Medical Area of the Mission Hill neighborhood of Boston, Massachusetts....
, "it's absolutely clear that transgender identity is a condition discussed in diagnostic manuals. It seems the IRS is now in the business of practicing medicine without a license."