Sex Change Surgery a Tax Write-Off, Court Says

Sex change surgery would seem a deeply personal matter, not one to share with your tax accountant. But, in a landmark case, the U.S. Tax Court has determined patients can deduct the cost of gender reassignment procedures.

A woman who battled the IRS over a tax deduction for the costs of her sex-change operation says she feels like she won a victory for all transgender people after the U.S. Tax Court ruled Tuesday that she should be allowed to write off the medical procedures.

The decision, which comes nearly 18 months after Rhiannon O’Donnabhain first initiated the suit, could have broad implications for transgender people. The plaintiff, who was born a man, filed the lawsuit against the IRS after the agency rejected a $5,000 deduction for approximately $25,000 in medical expenses connected with the gender reassignment surgery.

O’Donnabhain became a woman after 20 years of marriage that produced three children. The former Coast Guard reservist was diagnosed with gender identity disorder in 1996 after seeing a therapist. She continued with intensive counseling, as well as hormone treatments, in the years leading up to her sex-change operation in 2001. In filing her claim, O’Donnabhain argued her medical costs were no different than someone undergoing heart surgery or an appendectomy.

The IRS, however, disagreed, stating that the surgery was a cosmetic procedure and not medically necessary.

Members of the medical community took O’Donnabhain’s side, and the U.S. Tax Court ruled that O’Donnabhain should be allowed to deduct the costs of her treatment for gender-identity disorder, which included both hormone treatments and sex-reassignment surgery. The legal group Gay & Lesbian Advocates & Defenders (GLAD), who represented O’Donnabhain, said the ruling could potentially affect thousands of people in the U.S. who undergo similar procedures each year.