O'Donnabhain v. Commissioner
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''O'Donnabhain v. Commissioner'' 134 T.C. 34 (2010) is a case decided by the
United States Tax Court The United States Tax Court (in case citations, T.C.) is a federal trial court of record established by Congress under Article I of the U.S. Constitution, section 8 of which provides (in part) that the Congress has the power to "constitute Trib ...
. The issue for the court was whether a taxpayer who has been diagnosed with
gender identity disorder Gender dysphoria (GD) is the distress a person experiences due to a mismatch between their gender identitytheir personal sense of their own genderand their sex assigned at birth. The diagnostic label gender identity disorder (GID) was used until ...
can deduct
sex reassignment surgery Gender-affirming surgery (GAS) is a surgical procedure, or series of procedures, that alters a transgender or transsexual person's physical appearance and sexual characteristics to resemble those associated with their identified gender, and alle ...
costs as necessary medical expenses under . The
IRS The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax ...
argued that such surgery is cosmetic and not medically necessary. On Feb 2, 2010 the 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, the court found the IRS position was "at best a superficial characterization of the circumstances" that is "thoroughly rebutted by the medical evidence".Case backs need for sex-change surgery - The Boston Globe
/ref>


History

Rhiannon O'Donnabhain is a
transgender A transgender (often abbreviated as trans) person is someone whose gender identity or gender expression does not correspond with their sex assigned at birth. Many transgender people experience dysphoria, which they seek to alleviate through tr ...
woman who underwent sex reassignment surgery in 2001. She grew up in a devout
Irish Catholic Irish Catholics are an ethnoreligious group native to Ireland whose members are both Catholic and Irish. They have a large diaspora, which includes over 36 million American citizens and over 14 million British citizens (a quarter of the British ...
family in Boston and previously tried to conform to traditionally masculine roles, enrolling in the
United States Coast Guard The United States Coast Guard (USCG) is the maritime security, search and rescue, and law enforcement service branch of the United States Armed Forces and one of the country's eight uniformed services. The service is a maritime, military, mult ...
during the
Vietnam War The Vietnam War (also known by #Names, other names) was a conflict in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. It was the second of the Indochina Wars and was officially fought between North Vie ...
, 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 The ''Diagnostic and Statistical Manual of Mental Disorders'' (DSM; latest edition: DSM-5-TR, published in March 2022) is a publication by the American Psychiatric Association (APA) for the classification of mental disorders using a common langua ...
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.Woman Suing IRS Over Sex-Change Tax Claims - washingtonpost.com
/ref> 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 GLBTQ Legal Advocates & Defenders (GLAD) is a non-profit legal rights organization in the United States. The organization works to end discrimination based on sexual orientation, HIV status, and gender identity and expression. The organization ...
(GLAD), the non-profit legal services organization that in 2003 won the
Massachusetts Supreme Judicial Court The Massachusetts Supreme Judicial Court (SJC) is the court of last resort, highest court in the Commonwealth (U.S. state), Commonwealth of Massachusetts. Although the claim is disputed by the Supreme Court of Pennsylvania, the SJC claims the di ...
case granting gay and lesbian couples the right to marry (''
Goodridge v. Department of Public Health ''Goodridge v. Dept. of Public Health'', 798 N.E.2d 941 ( Mass. 2003), is a landmark Massachusetts Supreme Judicial Court case in which the Court held that the Massachusetts Constitution requires the state to legally recognize same-sex marriage ...
''). 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.IRS Formally Agrees with Historic Court Ruling for Transgender Taxpayers


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 The Johns Hopkins Hospital (JHH) is the teaching hospital and biomedical research facility of the Johns Hopkins School of Medicine, located in Baltimore, Maryland, U.S. It was founded in 1889 using money from a bequest of over $7 million (1873 mo ...
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 R. McHugh Paul Rodney McHugh (born May 21, 1931) is an American psychiatrist, researcher, and educator. He is currently the University Distinguished Service Professor of Psychiatry at the Johns Hopkins University School of Medicine and the author, co-autho ...
, 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 follow-up 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 School Harvard Medical School (HMS) is the graduate medical school of Harvard University and is located in the Longwood Medical Area of Boston, Massachusetts. Founded in 1782, HMS is one of the oldest medical schools in the United States and is consi ...
, "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 Practicing without a license is the act of working without the licensure offered for that occupation, in a particular jurisdiction.Springhouse Corporation. (2004) ''Nurse's legal handbook.'' Lippincott Williams & Wilkins, Most activities that req ...
."


References


External links

*
Rhiannon O'Donnabhain's bio

GLAD's press release on the trial

GLAD's petition to the court
{{Webarchive, url=https://web.archive.org/web/20081127074816/http://www.glad.org/uploads/docs/cases/odonnabhain-tax-court-petition.pdf , date=2008-11-27 United States transgender rights case law United States taxation and revenue case law United States Tax Court cases 2008 in United States case law 2010 in United States case law 2011 in United States case law 2010 in LGBT history