Rhiannon O’Donnabhain, who was born a man, sued the Internal Revenue Service in 2007 after the agency rejected a $5,000 deduction for about $25,000 in medical expenses associated with the sex-change surgery, finding it was a cosmetic procedure and not medically necessary.

On Tuesday, the U.S. Tax Court ruled that O’Donnabhain should be allowed to deduct the costs of her treatment for gender-identity disorder, including sex-reassignment surgery and hormone treatments.

“The tax court has spoken for my community and has supported my community by saying that this is a proper medical deduction, much the same as an appendectomy or open heart surgery,” O’Donnabhain said in an interview Wednesday.

“It was a proper medical deduction, and it certainly is not cosmetic surgery as the IRS contended,” she said.

IRS spokeswoman Michelle Eldridge declined to comment on the ruling.

The legal group Gay & Lesbian Advocates & Defenders, which represented O’Donnabhain, said the decision could potentially affect thousands of people a year in the U.S. who undergo similar operations.

Lambda Legal, a national civil rights group for lesbians, gay men, bisexuals and transgender people, called the ruling “a case of the federal government catching up with medical standards.”

“I think it’s an important decision that could help educate and bring along transgender rights in other areas because it ratifies what the medical community has said clearly for years, which is for people with gender identity disorder, this type of surgery is frequently a medical necessity for their lives and for their health and for their well-being,” said Hayley Gorenberg, deputy legal director at Lambda Legal.

The Tax Court voted 11-5 to grant the deduction.

In a dissenting opinion, Judge David Gustafson said he believes sex reassignment surgery falls within the “cosmetic surgery” category of the tax code and the expense is therefore not deductible.

Even if such surgery “is medically indicated … it is an otherwise cosmetic procedure that does not ‘treat’ the mental disease,” Gustafson wrote.

O’Donnabhain said she underwent sex-reassignment surgery at age 57, after a tormented existence as a father, husband, Coast Guardsman and construction worker.

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.

Rhiannon O’Donnabhain (oh-DON’-oh-vin), who was born a man, sued the Internal Revenue Service after the agency rejected a $5,000 deduction for approximately $25,000 in medical expenses associated with the sex-change surgery.

The IRS said the surgery was cosmetic and not medically necessary.

In its decision Tuesday, the tax court said the IRS position was “at best a superficial characterization of the circumstances” that is “thoroughly rebutted by the medical evidence.”

The legal group Gay & Lesbian Advocates & Defenders, which represented O’Donnabhain, said the ruling could potentially affect thousands of people a year in the U.S. who undergo similar operations.

“I think what the court is saying is that surgery and hormone therapy for transgender people to alleviate the stress associated with gender identity disorder is legitimate medical care,” said Jennifer Levi, a GLAD attorney.

IRS spokeswoman Michelle Eldridge declined to comment on the ruling.

In a 2007 interview with The Associated Press, O’Donnabhain said she underwent sex-reassignment surgery at age 57, after a tormented existence as a father, husband, Coast Guardsman and construction worker.

She wrote off the $25,000 in medical expenses on her taxes, but the IRS disallowed the deduction, ruling that the procedure was not a medical necessity.

O’Donnabhain, now 65, said she brought the lawsuit in an attempt to force the IRS to treat sex-change surgeries the same as appendectomies, heart surgeries and other deductible medical procedures.

“It is not OK for them to do this to me or anyone like me,” she said.

O’Donnabhain’s lawyers argued that because gender-identity disorder is a recognized mental disorder that is generally treated with hormones and surgery, the costs are legitimate medical deductions.

The tax court agreed.

“The evidence amply supports the conclusions that petitioner suffered from severe GID, that GID is a well-recognized and serious mental disorder, and that hormone therapy and sex reassignment surgery are considered appropriate and effective treatments for GID by psychiatrists and other mental health professionals who are knowledgeable concerning the condition,” the court said in its ruling.

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.

The tax court said O’Donnabhain could deduct as a medical care expense the costs associated with treating her gender-identity disorder, including sex-reassignment surgery and hormone therapy. But the court said she could not deduct the costs of breast augmentation surgery because it found that she had achieved breast enhancement through hormone treatments.

The goal of “Pulpit Freedom Sunday” was to trigger a legal fight and ultimately overturn regulations that prevent places of worship from supporting or opposing candidates for office. But a conservative legal group that organized the effort says the IRS has yet to notify the churches of any investigation.

Legal experts suggest a number of possibilities: The IRS has nothing to gain from a costly and mainly symbolic battle; it has limited resources; or it could still be deciding how to respond.

On Sept. 28, participating pastors urged worshippers to vote according to conservative views on abortion and gay marriage. Several endorsed Republican presidential candidate John McCain.

Under the IRS code, places of worship can distribute voter guides, run nonpartisan voter-registration drives and hold forums on issues, among other things. But they cannot endorse a candidate, nor can their political activity be biased for or against a candidate.

Churches that violate the rule can lose their tax-exempt status.

The protest was organized by the Phoenix-based Alliance Defense Fund and involved pastors in 22 states.

“The wheels of bureaucracy move slowly,” said Erik Stanley, the group’s senior legal counsel. “We’re prepared if they do come after these churches, and we’re also prepared if they do not.”

IRS spokesman Christopher Miller declined to comment, and the agency would not confirm or deny whether it is conducting an investigation. At the time of the protest, the IRS said it would “monitor the situation and take action as appropriate.”

ADF officials view the regulation as a violation of the pastors’ right to free speech. Some legal scholars counter that the government has every right to treat political and nonpolitical speech differently.

A number of the pastors said they hoped the IRS would respond immediately so the legal challenge could get under way.

Luke Emrich, pastor at New Life Church in West Bend, Wis., had urged about 100 congregants to support an anti-abortion platform by voting for McCain. He said he was disappointed the IRS had not responded.

“It would have been nice to have a direct conversation with the IRS,” he said. “I thought they would at least contact us, talk to us about the issues.”

Historically, the IRS has been shy to investigate political activity in churches. It has stepped up oversight in recent years after receiving a flurry of complaints from the 2004 campaign. The IRS reported issuing written advisories against 42 churches for improper politically activity that year.

It’s possible the IRS ignored the recent protest because it does not have an incentive to pursue the issue, said Robert Tuttle, a professor of law and religion at George Washington University.

“It would be expensive for them to fight, and it would give people all sorts of reasons to say the IRS is evil and irreligious,” Tuttle said. “It’s not like they’re going to recoup a lot of money. Their attitude is probably ‘why bother?’”

Or, it could be too early to say. When similar violations occurred during previous presidential elections, the IRS took two or three years to introduce litigation to strip a church of its tax-exempt status, said John Witte Jr., director of the Center for the Study of Law and Religion at Emory University.

“Even so, if the IRS wanted to pounce on this, I think it would have by now,” Witte said. Perhaps it did not consider an investigation a wise use of resources, he speculated, or maybe the agency is occupied with more pressing cases.

Stanley, the ADF’s attorney, said the organization will continue its protests as long as necessary, holding annual Pulpit Freedom Sundays every year ahead of federal, state or local elections. If the IRS does not take action against future protests, he said, pastors will learn the regulation can be safely ignored.

Polls suggest the campaign does not have wide support. An August survey from the Pew Forum on Religion and Public Life found that two-thirds of adults oppose political endorsements from churches and other places of worship. Another 52 percent wanted religious institutions out of politics altogether.

But those statistics did not dissuade Pastor Paul Blair, who took part in the initiative at Fairview Baptist Church in Edmond, Okla. He said the main point of the protest was to make a stand to protect religious freedom.

“I don’t let the federal government dictate to me what I can and cannot preach,” he said. “I answer to a higher power than the federal government.”

The small group of demonstrators on Wednesday was protesting US tax law, which does not allow same-sex couples to file joint returns. The group said the federal Defense of Marriage law forces gay couples to pay higher taxes than married couples do.

The police officer was apparently called by a driver complaining that the 8 foot by 5 foot flag had obstructed his view of traffic.

Protest organizer Christopher Hall told The Arizona Republic that the protesters were well behaved.

“I was upset more than anything and confused as to what was the problem,” said Hall the president of Central Arizona Rainbow Equality.

Hall said that he checked with city officials before holding the demonstration and the protesters were abiding by a requirement they be at least seven feet from the sidewalk.

Hall said that the the officer asked for their identification and the protesters complied. They were then told they could not fly the flag “anywhere” in the city limits or they would risk arrest.

“This was wrong,” Hall told The Republic. “They’ve actually violated, in my opinion, First Amendment rights.”

Hall said the group has filed a complaint with police, and that he has a meeting with Police Chief Robert Huddleston on Monday.

“The Casa Grande Police Department will continue to work with this and any other citizen group to respect their right to assemble and demonstrate in a safe manner.,” Huddleston said in a statement. “We apologize for any inconvenience or misunderstanding, and look forward to the completion of the investigation.”

Stagg Elliott found out she would be taxed on the portion of Shoffner’s coverage paid for by the employer. She estimated that the coverage represents about $100 worth of monthly income, meaning she has to declare about $1,200 more in income each year than a straight married colleague with an equivalent insurance package.

“It’s still cheaper than COBRA or an individual policy for my wife, but the bottom line is that it’s unequal pay for the same amount of work,” Stagg Elliott said.

For gay and lesbian couples, aggregate costs of living together without government-recognized marriages often becomes all too apparent at tax time.

There are well over 1,000 benefits afforded to Americans on the basis of marital status. Many of these benefits determine your bill at tax time. In the eyes of the federal government, gay and lesbians are entitled to none.

Last week, Mary Ritchie, a Massachusetts State Police trooper, was among more than a dozen plaintiffs suing the federal government on the grounds that the Defense of Marriage Act denies them Federal Benefits that other couples receive. Ritchie told the Associated Press that, while they’ve been a couple, she and her spouse paid over $15,000 more in taxes than they would have had to had they been able to file jointly.

Mt. Prospect, Ill.-based tax practitioner Michael Simon said that gay couples absolutely have to hire a competent tax professional to work around the difficulties inherent in the tax code. A good tax planner, he added, should be able to save couples money in ways that offset these annual penalties.

When Simon prepares returns for same-sex couples wherein the partners have extremely disparate incomes, for example, he suggests the partner with the higher income file as a head of household and claim the other partner as a dependent. According to the IRS, a person can do that if someone in their household makes less than the standard deduction, among several other qualifications they must meet.

“We usually check the box as ‘friend’ or ‘other,’” Simon said. He added that the best advice for anyone, gay or straight, at tax time is to use a professional preparer. “A good tax professional will save you more than the fee they charge.” According to Simon, the inequities gays and lesbians face at tax time, while significant, pale next to other financial challenges they face, such as those associated with buying property together or working around inheritance taxes.

“The people that I’ve worked with are not that disadvantaged by these (income tax) inequalities,” Simon said. “The IRS has definitely narrowed the advantages of filing as (an opposite-sex) married couple.”

Chicago attorney Roger McCaffrey-Boss, who advises gay couples on tax and financial matters, agreed. He said gay and lesbian couples are more significantly affected by taxable events that, in most relationships, happen just a few times.

“If ‘John’ owns a house and wants to add his partner’s name to the title, the government is going to look at that as a gift,” McCaffrey said. “The same goes if he wants to add his name to a bank account.”

Indeed, the largest cost for gay and lesbian couples might just be finding the time needed to explore their best tax options.

Couples wherein one partner is helping raise the other’s children are especially at a disadvantage. Someone cannot qualify for the Earned Income Tax Credit, for example, based on their raising a non-biological, non-adopted child. Similarly, they cannot increase their standard deduction if they are filing as a head of household on that basis.

Even in situations where both partners can technically claim the children, there will have to be negotiation. “Some couples ask, ‘who will take the kids? I’ll take them this year, you can take them the next year,’” McCaffrey said.

Couples in states that have or recognize gay marriages, civil unions or domestic partnerships unfortunately have additional paperwork to grapple with. They can file a joint return for their state, but they’ll also have to prepare an ersatz joint federal return that calculates their income and deductions filing as a couple.  In the end, though, they still have to file two single-payer returns for the feds.

McCaffrey said it was absolutely necessary for both partners in a relationship to communicate about sharing their assets and consider the long-term implications.

“The biggest mistake I see is couples who have a ‘yours vs. mine’ mentality,” he said. “Partner A makes more money, so he has everything in his name. Partner B quits his job and stays home. They break up and Partner B has nothing.”

“You have to speak up, negotiate and say ‘I’m entitled,’” he added.

I get pretty upset when people argue against equality, but there is one particular argument that gets me more than most. It goes something like this: since civil unions and marriage are really the same thing with a different name, why can’t LGBT Americans just settle for the former in order to keep from offending those who consider the latter a religious institution?

The incredibly obvious answer is that civil unions and marriage aren’t equal at all. Setting aside the fact that even if civil unions and civil marriage were completely identical institutions the division would still violate our judicial ideal that separate can never be equal, there are very real federal benefits and rights that come along with marriage that same-sex couples can never receive.

In fact, there are over 1,000 benefits that marriage couples receive from the federal government that same-sex couples can’t access, including the ability to save money by filing joint tax returns and receiving access to government pensions and health insurance. (A married lesbian couple in Massachusetts actually filed a lawsuit last week, arguing that they’ve to paid $15,000 more in taxes than a straight couple would have to, since they are forced to file separately each year.)

One additional inequality that comes along with the federal distinction is the difference in inheritance law for married straight couples and same-sex couples who can’t be married under federal law.

This issue has been given a face and a name after The New York Times reported last month that photographer Annie Leibowitz was forced to use her work as collateral in order to secure a loan and resolve her financial difficulties. Queerty and After Ellen have both reported that some of the financial difficulties faced by Leibowitz were likely due to the fact that when her long-time partner Susan Sontag died in 2004, Leibowitz would have had to pay significant taxes on her inheritance– a tax liability that wouldn’t have been incurred if they were a married, opposite-sex couple.

Annie Leibowitz is just one of many to have been hit by these discriminatory regulations, to be sure, but her relatively public case does underscore an important point. Equality is more than a hypothetical ideal, and inequality is not in name only. There are very real consequences to our continued reliance on a system that treats some people different than others, and those differences can be catastrophic.

I have encountered such responses before. It never ceases to surprise me, though, that people I would consider strong allies did not already know this dual nature of married same-sex couples.

All I can figure is that the idea of a person being both married and not married is so baffling to most people that it never crosses their minds. I am likewise amazed that many do not realize that there are states where gay and lesbian people still cannot adopt, or where people can be fired for their sexual orientation or gender identity.

Once again, I realize that the current communication challenge for the LGBT community is as much about better informing our allies as it is about railing against our adversaries. In states where marriage is legal, there is a danger people will think we have it all already. Even in places with lesser rights, where we can still get partner benefits through our employers and certain protections with legal paperwork, people may not understand what more we still lack.

Until they do, true equality will remain beyond reach.

Many in the LGBT community make the point that we should not refer to “gay marriage” or “same-sex marriage,” because it implies that those marriages are somehow different, in need of a qualifier, when in fact the idea of two loving, committed adults is exactly the same. I agree, and try to follow this guideline in my own writing. Still, there are days when I want my wedding ring to be shaped like an asterisk, so I can tell people it refers to the fine print: “Void where prohibited.”

How can we begin to educate our friends and colleagues, though, without awkwardly bringing up LGBT rights in the middle of an unrelated conversation? It turns out we have the perfect segue this time of year.

As tax forms begin to hit our mailboxes, lunchtime chatter about accountants and TurboTax offers plenty of opportunities to mention the ongoing federal inequities.

Explain the rigmarole of creating a dummy “married” form for the sake of filling out your state form, the hassle of running multiple scenarios in TurboTax to determine who claims your child as the tax deduction, and the fact that same-sex spouses cannot contribute to an IRA for the other if one of you leaves employment to stay home with your child.

If their eyes haven’t glazed over by that point, you can mention the burden of having to pay income tax on the medical benefits provided to one of you through the other’s employer.

Do a back-of-the-envelope calculation: Take a few hundred dollars a year in income tax on health care benefits, increase it by, say, five percent a year to account for increasing health care costs, assume an eight percent interest rate if one had invested that money, and that’s a loss of over $70,000 after 18 years, a significant chunk of a college fund.

Not all people in same-sex couples rely on a spouse or partner for health care benefits, of course, but parents are more likely than others to have one member of the couple out of the workforce for at least a few years. In a time of high unemployment, too, the likelihood of one person needing health benefits from the other rises even if they do not have kids.

As important as it is to challenge those biased against LGBT families, it is equally important to work towards strengthening our allies. It is not enough that they agree with the need for equality, though that is a start. We must help them understand the specifics of how inequality hurts us and the fact that it still does so, even as marriage equality continues to spread.

We must also make sure to convey that LGBT rights don’t begin and end with marriage equality, but extend to employment protections, anti-hate crimes and anti-bullying legislation, adoption rights, transgender rights, and more.

President Obama has stated on the new Whitehouse.gov site that he believes in a broad slate of rights for LGBT people. We need to hold him to this, and ensure that our allies support us as informed citizens who can reach out in their own ways to spread the word and push for change.

How can we do this? We must talk with our colleagues and neighbors at playdates, soccer games, and in the supermarket. We must be on the lookout for ways to begin the conversation, whether by connecting about taxes, parenting, or the new Obama administration.

In a less personal but still useful vein, we can leave comments on mainstream parenting and personal finance blogs, Facebook groups, and other online forums. As important as it is to educate about blatant homophobia, we must also make sure to convey the less obvious inequities that may escape the view of those who don’t live with them on a daily basis.

We have made much progress, but there is more to be done, and we can’t do it alone. Let’s make educating our allies a key goal for 2009.

Dana Rudolph is the founder and publisher of Mombian, a blog and resource directory for LGBT parents.

Chief of Staff Charles J. O’Byrne, a former Jesuit priest who officiated at the wedding and funeral of John F. Kennedy Jr., didn’t pay state and federal taxes from 2001 to 2005. He was on the state payroll for part of that time. He now is paid $178,500 as the Democratic governor’s powerful top aide.

O’Byrne used personal lines of credit, liquidated some assets and received help from friends and relatives to pay off the debt, Paterson spokeswoman Risa Heller said Saturday.

The details about O’Byrne’s tax debt – first reported by the New York Post and Albany Times Union – emerged as Paterson is calling for state spending cuts because of billions of dollars in deficits and cracking down on people and businesses owing back taxes.

“The governor considers this a part of Charles’ past for which he has taken full responsibility and all appropriate steps to remedy the situation,” Heller said. Paterson has known about O’Byrne’s health history and tax delinquencies since he hired him in 2004, she said.

“The governor considers Charles to be an outstanding public servant and has full confidence in him,” Heller said.

O’Byrne said that the problem is in his past.

“During several periods in my life I have suffered from clinical depression,” O’Byrne said in a statement Saturday. “As those who suffer from this disease understand, I became neglectful of certain responsibilities in my personal life. Specifically, I failed to file and pay my state and federal taxes from 2001-2005.”

The more than $200,000 sum included $151,000 to the IRS and $56,000 in state taxes, including various penalties and interest, according to the Post.

The openly gay Manhattan native left the Jesuits to write “Going My Way,” his still-unpublished memoir about sexual confusion and repression in the Roman Catholic Church. He also wrote a 2002 article for Playboy magazine about what he said was pervasive sex and hypocrisy in the church.

It was exactly how I remembered it, with just as much screaming and “I love you”s from the crowd. And DiFranco held up her end of the bargain with political commentary in between guitar tunings.

Midway through the show, she stopped fiddling with the strings and asked, “Now, what is the government for if not to collect money through taxes and spend it on things people need?” It led her directly into a song about hurricane Katrina.

A perfect example, according to DiFranco, of what happens when governments fail to fulfill their basic job requirement.

Tonight, the town hall debate will likely focus on economic issues. And, in true McCain style, the Republican candidate will emphasize how much Obama spent in Illinois, how much he intends to spend as President and how taxes, under his government, will surely rise.

He is trying to scare you. You see, under a McCain administration, governments don’t collect taxes, especially from the rich, and they don’t spend money on the things people need.

According to the Republican candidate, taxation, especially of the rich, cripples jobs, causes corporate flight and endangers economic growth.

This kind of thinking encourages a race to the bottom. We can’t hope to compete with countries that charge virtually no taxes for corporate entities. And a certain number of American companies will choose, every year, to ship their operations overseas to take advantage of that tax haven.

Lowering the corporate tax rate ten percentage points won’t stop that from happening.

A better plan is to use taxation to support an educated, specialized workforce that can compete for the jobs that require training, skills and an advanced understanding of production and marketing.

This plan relies on affordable education, secondary education, health care, housing etc. The list is long. Obama, while raising taxes for the rich, says he will redirect the money that comes in to exactly these kinds of social services.

Anyone who has ever been to the hospital or attended a public school or hoped to go to college knows that each average citizen needs things they can’t pay for on our own.

This election should not be about saving a few dollars in taxes, but about demanding the right kind of spending once the money is in government’s hands.