US Tax Court Permits Sex-Change Surgery as a Deductible Expense

February 05, 2010

An American woman has won her case against the Internal Revenue Service – the country’s tax body – after it dismissed her $5,000 tax deduction from the medical procedures linked to her sex-change operation.

Rhiannon O’Donnabhain wrote-off approximately $25,000 in medical costs for her surgery. When she sought the $5,000 deduction when filing her income tax, the IRS audited her. Its reason: her sex-change surgery was not a medical necessity but a cosmetic choice.

The tax court disagreed, saying she was allowed to make the deduction as a medical expense, which the IRA permits for procedures like chemotherapy should private health insurance not cover the cost entirely.

"The evidence amply supports the conclusions that petitioner suffered from severe gender-identity disorder (GID), that GID is a well-recognized and serious mental disorder, and that hormone therapy and sex reassignment surgery are considered appropriate and effective treatments for GID," the court ruling said.

The Gay and Lesbian Advocates Defenders, which took on the case, decried the IRA’s notion of same-sex surgery as cosmetic.

“In an opinion reviewed by the full bench, the United States Tax Court affirmed that medical treatments for GID, including surgery and hormone therapy, are deductible medical expenses,” said GLAD. “Moreover, the court stated that the IRS’s position that such treatment is cosmetic in nature ‘is at best a superficial characterization of the circumstances that is thoroughly rebutted by the medical evidence.’”

“I think what the court is saying is that surgery and hormone therapy for transgender people to alleviate the stress associated with gender identity disorder is legitimate medical care,’’ said Jennifer Levi, a GLAD attorney.
 

"It's incredibly significant," said Karen Loewy, an attorney at GLAD. "This is the first time that a court that has jurisdiction nationally reaches such a conclusion."