Should One Deduction Lead to Another?

Tori Van Fleet, a forensics and firearms expert with the Fort Worth Police Department, has been following an unusual case making its way through U.S. Tax Court -- one that will determine whether it’s acceptable for people to claim transgender surgery as a tax deduction. Van Fleet hopes the answer is "absolutely": Featured in a cover story that appeared in the paper version of Unfair Park last month, he's a male-to-female transgender who has lived as a woman for the past year and plans to have the operation next month.

The case stems from a lawsuit filed against the Internal Revenue Service by a Boston transsexual after the agency denied her tax deduction claim for the $25,000 operation that made her a woman. The IRS argues that such surgeries are cosmetic, not medically necessary, a position that has put the agency at odds with medical experts -- and with folks seeking the surgery and the tax deduction. Van Fleet’s health insurance policy doesn’t cover the $20,000 procedure, so she withdrew the money from a 401K plan from a prior job.

’When did the IRS suddenly become physicians?" asks Marshall Forstein, associate professor of psychiatry at Harvard Medical School. ‘It's absolutely clear that transgender identity is a condition discussed in diagnostic manuals. It seems the IRS is now in the business of practicing medicine without a license.’"

The Boston case, which will continue next month when lawyers submit a new round of briefs, is big news in the transgender community. Not only will it set a precedent for the IRS, it could also affect the way insurance companies handle sex changes (some cover them, others don’t). The Boston transsexual learned the government wouldn’t issue her a $5,000 check after she was audited, and while Van Fleet says she’s not likely to be audited, it’s the principle that bothers her.

“Many of us are having to withdraw money from our 401ks, and we get taxed for it and yet we’re using it for medical reasons,” Van Fleet tells Unfair Park. Van Fleet had been married to a woman for more than a decade, but always felt like he was really a woman -- to the point where he became suicidal. A year ago, he got divorced and decided to become a woman. "If the court does say you can’t use this for IRS decuctions, that means we’re getting taxed on the out-of-pocket money and we can’t even claim a tax deduction -- It’s a double hit.”

To Van Fleet, the IRS’ position, which is taken by most insurance companies, is a result of ignorance and prejudice.

“I think there’s a lot of people out there who have prejudices against transgender people and these types of surgeries -- it’s a way they can keep people from affording them,” she says. "It’s medically necessary, because research is proving that gender dysphoria is caused before birth … People don’t choose this. Who would want to choose this? They either choose to live by dealing with it and be happy, or they’re gonna kill themselves. The sad thing is trying to get people to understand that.” --Megan Feldman

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Robert Wilonsky
Contact: Robert Wilonsky