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Is a sex change deductible? Suit challenges IRS denial

The tax agency calls the operation cosmetic.

By ASSOCIATED PRESS
Published July 17, 2007

ADVERTISEMENT [AP Photo] Rhiannon O'Donnabhain poses in her lawyer's office in Boston. For 57 years O'Donnabhain lived as a father, a husband, a sailor and a construction worker. Now O'Donnabhain is suing the IRS over denial of tax deduction for a sex-change operation.

BOSTON - After a tormented existence as a father, a husband, a Coast Guardsman and a construction worker, a 57-year-old suburban Boston man underwent a sex-change operation. Then she wrote off the $25,000 in medical expenses on her taxes.

But the IRS disallowed the deduction - ruling the procedure was cosmetic, not a medical necessity - in a potentially precedent-setting dispute now before the U.S. Tax Court.

Rhiannon O'Donnabhain is suing the IRS in a case that advocates for the transgendered are hoping will force the tax agency to treat sex-change operations the same as appendectomies, heart bypasses and other deductible medical procedures. The case is set to go to trial July 24.

An estimated 1,600 to 2,000 people a year undergo sex-change surgery in the United States, according to the Gay and Lesbian Medical Association.

O'Donnabhain said she could have paid back the approximately $5,000 she received in her tax refund, but decided to challenge the IRS because she believes the ruling against her was rooted in politics and prejudice.

"This goes way beyond money," O'Donnabhain said in an interview. "If I were to give the money back, it would be saying it's okay for you to do this to me. It is not okay for them to do this to me or anyone like me."

The U.S. Tax Court has never issued an opinion in a similar case, said Jennifer Levi, an attorney with Gay & Lesbian Advocates & Defenders, the Boston-based legal organization representing O'Donnabhain. But the IRS has ruled against allowing the deduction in at least one other case.

In a 2005 case, the IRS ruled the costs of a woman's gender reassignment surgery and related treatments were not deductible as medical expenses.

The IRS cited the section of the tax code that says cosmetic surgery or similar procedures are deductible only when they are needed to improve a congenital abnormality, an accident or trauma, or a disfiguring disease.

Levi argues that because gender-identity disorder is a recognized mental disorder that is generally treated with hormones and surgery, the costs are legitimate medical deductions.

"Every mental health textbook and medical dictionary recognizes the legitimacy of both the diagnosis and course of treatment," Levi said.

IRS officials declined to comment, citing the upcoming trial.

Robert Adelson, a Boston tax attorney, said the IRS "might take the position that you were dealt a particular hand, you are the gender you are, and if you want to now change the gender, should the government now subsidize you to do so?"

Others say the IRS has made a mistake. "The IRS ruling is pure bias, since scientists agree that gender transition services are medically necessary and not cosmetic," said Joel Ginsberg, executive director of the Gay and Lesbian Medical Association.

O'Donnabhain (pronounced oh-DON-oh-vin) will not disclose her original name to protect her family's privacy. She said she struggled with uncomfortable feelings while growing up in an Irish Catholic family.

"There was a definite feeling I wanted to be female, but there was no language for it," she said. "It was confessions on Saturdays and Mass on Sundays. We didn't talk about those things."

O'Donnabhain, now 63, claimed the expenses on her 2001 tax return. The IRS denied the deduction in 2003.

[Last modified July 17, 2007, 00:50:02]