Victory on Behalf of Transgender Tax Payers

The Transgender Law Center (TLC) congratulates Gay and Lesbian Advocates and Defenders (GLAD) for their landmark victory in U.S. Tax Court. In Rhiannon O'Donnabhain v. Commissioner of Internal Revenue, the Court found that transgender tax payers may deduct the cost of some transition-related surgeries because such procedures are not "cosmetic surgery" as defined by the Internal Revenue Code.

Ms. O'Donnabhain, a Boston native, Coast Guard veteran, and parent began transitioning in the mid 1990s and underwent sex reassignment surgeries in 2001. In April 2002, Ms. O'Donnabhain deducted approximately $25,000 in surgical expenses from her 2001 tax return. She was audited by the I.R.S. six months later. After an initial indication by an Appeals Officer to allow the deduction, the I.R.S. Chief Counsel denied the deduction in 2005. A trial was held in U.S. Tax Court in August 2007. The case had been pending before the court for more than two years before the favorable decision was announced. The decision has broad implications for transgender tax payers in California and throughout the U.S.

In March 2009 the Transgender Law Center represented Diane Garcia, a transgender woman from West Covina, at an I.R.S. audit in Los Angeles. Like Ms. O'Donnabhain, Ms. Garcia had deducted the cost of transition-related surgeries from her taxes. TLC successfully advocated for Ms. Garcia, and the I.R.S. did not appeal. The Transgender Law Center has since provided information and resources to other transgender tax payers in California. When told of the victory in Ms. O'Donnabhain's case, Garcia said:

"I am thrilled that the court did the right thing in this case and recognized that SRS is necessary medical care, not cosmetic surgery. I am happy for Rhiannon, and thankful to GLAD for arguing this case before the U.S. Tax Court. I am also immensely grateful to the Transgender Law Center for their successful advocacy on my behalf."

The court's decision in Rhiannon O'Donnabhain v. Commissioner of Internal Revenue is available here on the GLAD website, www.GLAD.org.