Sex change tax deduction doesn’t cut it with IRS

[LostInTime]

Boston Herald dot com
By Denise Lavoie/ Associated Press
Tuesday, July 17, 2007 - Updated: 04:19 AM EST

But the IRS disallowed the deduction, ruling the procedure was cosmetic, not a medical necessity. Rhiannon O'Donnabhain, 63, is suing the IRS in a case transgender advocates hope will force the tax agency to treat sex-change operations the same as appendectomies, heart bypasses and other deductible medical procedures. The case goes 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.

Posted on: July 17, 2007, 07:56:42

Other links for the same story:
http://www.edgeboston.com/index.php?ch=news&sc=glbt&sc2=news&sc3=&id=21780
http://www.theday.com/re.aspx?re=07cd4340-9c15-4405-a838-e40933e18af1
http://www.azstarnet.com/news/192065
http://www.chron.com/disp/story.mpl/nation/4972943.html

[Thundra]

I thought this was settled already?

[LostInTime]

It seems strange because I found this:

http://intraa.tgcrossroads.org/connections/story/?iid=41&aid=1035
The Internal Revenue Service has concluded that a transsexual woman represented by Gay & Lesbian Advocates & Defenders (GLAD) may deduct expenses for sex reassignment surgery as a necessary medical expense. The decision overturned a tax examiner's refusal to allow Rhiannon O'Donnabhain's claimed deduction because he viewed her sex reassignment surgery as "cosmetic".
(2005)

Then this:

IRS disallows a woman's tax deduction for SRS - citing teachings in a Catholic religious journal as a basis for its decision
http://ai.eecs.umich.edu/people/conway/TS/Legal%20Issues/Taxes/IRS%20SRS%20Rulings.html

On October 15, 2005, the IRS stated in Chief Counsel Advice 200603025 that a woman's transsexual sex reassignment surgery would not be allowed as a deductible medical expense.  The statement was posted in the official IRS website on January 10, 2006 [1], and reported in "TaxProf-Blog" on January 23, 2006 [2].

Tax deductions for SRS have been quietly allowed for many decades, and affirmed in appeals when IRS examiners occasionally attempted to deny them.  This latest ruling is being appealed and has no precedential value for other cases. Therefore, most attorneys will advise people now transitioning to simply be aware that if they take the deduction and are ever audited (which of course is pretty rare), they'll have to show that the surgery or other medical treatments were medically necessary in their individual case.

IRS vs. Transgender People
http://newyorklawschool.typepad.com/leonardlink/2006/01/irs_vs_transgen.html

IRS described as "controversial" the question whether GRS is "a treatment for an illness or disease." To date there is no case law, regulation, or revenue ruling deciding this question in the tax context. "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. Only an unequivocal expression of Congressional intent that expenses of this type qualify under section 213 would justify the allowance of the deduction in this case. Otherwise, it would seem we would be moving beyond the generally accepted boundaries that define this type of deduction."

IRS Denies Medical Expense Deduction for Costs of Gender-Reassignment Surgery
http://taxprof.typepad.com/taxprof_blog/2006/01/irs_no_medical_.html


Posted on: July 17, 2007, 14:15:01
Bumping due to renewed interest in the topic by others.

[Thundra]

I certainly smacks of another revisitation of a policy that had already been set years ago.

Coincidence that it is during the buildup to election time ~ NOT!

Good call on this:

I suspect it has a good chance being struck down in the Federal Courts but no doubt the Bush administration is going to make a showcase out of fighting it in the name of "going against special interests."

It would be a field day for the conservaturds.

[Kate Thomas]

It would be a field day for the conservat**ds.

Thundra
This story is being driven by the conservatives they have complained loudly to  any and all who would listen. 


their point

Well, the truth is that it is not OK for American taxpayers to help foot the bill for a sex-change operation. Americans who undergo surgery for life-threatening conditions should be given a tax break to help lighten the load, but treatments based on the latest alternative lifestyle should be filed away.

That would be why on one hand the deduction is quietly allowed,
yet if audited the deduction must be denied,(by offical policy) until the court rules on that policy.

[michelle]

Yes, but these conservative groups want the government to pass special marriage laws to protect their life styles and discriminate against other individual  withinsociety.  They want the tax code to reflect their valules so that they get dependent deduction that aren't allowed to couples that can't get legally married according to their laws.  They want tax breaks for schools that teach their values. 

If conservatives want every one to be treated the same and no one group be protected by special laws,  then they need to have all of the laws that proctect their groups values, and refuse to take tax deductions others aren't allowed to take.   As for hate crimes how would they feel if they were brutalize simply because they were concervative.