O'Donnabhain received her tax refund, in June of '02 but was audited later that year and was told that "cosmetic surgery" was not tax deductible and ordered to repay the $5000.
After many years of many appeals, with the help of GLAD, O'Donnabhain can now declare victory.
From GLAD's press release:
“This decision treats Rhiannon O’Donnabhain the way she deserves to be treated—like any hard-working American taxpayer with medical expenses,” said Karen Loewy, senior staff attorney with Gay & Lesbian Advocates & Defenders (GLAD), which represented Ms. O’Donnabhain.We may still have a long way to go as a community when it comes to fully accepting and understanding our trans brothers and sisters, but one thing we can do is celebrate every victory as a community. This victory is especially sweet because it's a victory over the IRS. Most importantly, though, is that it's a victory for fairness in the way the federal government treats Trans-Americans.
“From the start, this has been a no-brainer. Every mainstream medical authority from the American Psychiatric Association to the National Institutes of Health recognize the legitimacy of providing medical care for transgender people. Dismissing these medical expenses as illegitimate and not deductible was discrimination, pure and simple.”
In an opinion reviewed by the full bench, the United States Tax Court affirmed that medical treatments for GID, including surgery and hormone therapy, are deductible medical expenses. Moreover, the Court stated that the IRS’s position that such treatment is cosmetic in nature “is at best a superficial characterization of the circumstances that is thoroughly rebutted by the medical evidence.”
“I’m overjoyed, not only for me, but for other transgender people,” said Ms. O’Donnabhain. “We deserve respect, equal treatment for our medical care, and fair treatment by our government.”