Mass. woman sues IRS over denial of tax deduction for sex-change

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 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.

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 OK for you to do this to me. It is not OK 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.

Cosmetic procedure

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.

In a 1983 case, however, the IRS allowed a father to deduct his transportation costs when he accompanied his college-age son to a clinic where he received a sex-change operation.

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 she could not identify 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.

O'Donnabhain, now 63, served in the Coast Guard, got married, raised three children and worked as a supervisor at various engineering and construction jobs, including Boston's colossal Big Dig highway project.

"I always thought the feelings would go away. If I date, the feelings will go away, if I marry, they'll go away, if I do male stuff, they'll go away. But of course, they never went away," she said. "I finally reached a point where I just couldn't contain this any more. I felt like my life was unraveling."

In 1996, O'Donnabhain began seeing a psychotherapist who eventually diagnosed her with gender-identity disorder. Five years later, her therapist recommended sex-change surgery, finding it was a medically necessary. A psychologist who examined O'Donnabhain concurred.

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

Kenneth Vacovec, a tax attorney from Newton, said O'Donnabhain could have a strong case because of the psychological component of gender identity disorder.

"If you were going to a psychiatrist and you had a bipolar condition, and you were taking medication and getting treatment and it made you function better in society, how is that different from having a sex-change operation that allows you to function better and be more comfortable in society?" Vacovec said.