Kevin Newsom, President Trump’s recent appointee to the Eleventh Circuit, has managed to disappoint a major LGBT organization with his very first decision In Morrissey v United States Judge Newsom wrote :
Was the money that a homosexual man paid to father children through in vitro fertilization—and in particular, to identify, retain, compensate, and care for the women who served as an egg donor and a gestational surrogate—spent “for the purpose of affecting” his body’s reproductive “function” within the meaning of I.R.C. § 213? And second: In answering the statutory question “no,” and thus in disallowing the taxpayer’s deduction of his IVF-related expenses, did the IRS violate his right to equal protection of the laws either by infringing a “fundamental right” or by engaging in unconstitutional discrimination?
We hold that the costs of the IVF-related procedures at issue were not paid for the purpose of affecting the taxpayer’s own reproductive function—and therefore are not deductible—and that the IRS did not violate the Constitution in disallowing the deduction.
Mary Bonauto, Civil Rights Project Director of GLAD (GLBTQ Legal Advocates & Defenders) wrote me:
We think the court got it wrong. Medically assisted reproduction has become necessary for many couples to have children. When a couple cannot have a child together, the IRS has recognized that medical treatments for reproduction and family building are deductible medical expenses. In family law, many states look beyond genetics to factors like intent and conduct in assessing legal parentage. And in Obergefell, the Supreme Court linked same-sex couples’ right to marry to the ability to exercise associated rights like having and raising children. When same sex and other couples need a gestational carrier or surrogate because they cannot reproduce together, the associated procedures certainly affect the reproductive function, and that affect on reproduction is all that is and should be required under the tax laws.
The Issue
Joseph Morrissey is a law professor at Stetson University in Florida. I suppose that makes him a Florida man, but I resolved to pass on that trope for this decision. He and his male partner decided to have children with Mr. Morrissey serving as the biological father. All told they spent over $100,000 on the process. In 2011, the year at issue, nearly $57,000 was spent. He did not claim the amount as a medical deduction on his original return. Rather he filed an amended return and then sued in District Court when the IRS turned down his refund claim.
I’m thinking that Mr. Morrissey, who teaches Constitutional Law, is in this for the principle of the thing rather than the money. A $9.539 refund is pretty low stakes for this kind of legal work. He might have made it to the 11th Circuit by claiming the deductions on his original return and then going to Tax Court, which based on the Magdalin decision would likely have ruled against him. There is very good chance, though, that his deduction would have just sailed through on an original return. He would have had his nine grand, but not the chance to make history.
The Law
The definition of medical care contained in Code Section 213(d)(1)(A) is amounts paid – “for the diagnosis, cure mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body” That definition comes to us, word for word, from the Revenue Act of 1942 (section designation is different as the Code was reorganized in 1954). In 1942, you could find a more advanced version of contemporary reproductive technology in Aldous Huxley’s Brave New World, but in the real world not so much, unless you count “in vivo” artificial insemination which is reported as early as 1884 in people and 1780 in animals. Regardless, we can be pretty certain little thought went into the topic of whether surrogacy should be included, when the definition was crafted in 1942.
Two Prongs
Matthew Schnall of WilmerHale, whom GLAD referred me to, is also inclined to think the Eleventh Circuit got it wrong.
The statutory language defining deductible medical care is expansive, including payments “for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” (Code Section 213(d)(1).) Consistent with the expansive statutory language, the IRS has taken a broad view of what constitutes “medical care.” The IRS allows deductions for most costs associated with assisted reproductive technology, including in vitro fertilization, egg donation, and temporary storage of eggs or sperm. It also allows deductions for many expenses that are paid to alleviate a medical condition, even where there is no direct effect on the taxpayer’s body, such as installation of support bars and access ramps, purchase of eyeglasses or hearing aids, and use of wheelchairs or Braille books.
There are two prongs to the medical deduction “disease” and “affecting any structure or function of the body”. The really expansive part of the medical deduction – things like home alterations and special schools – falls under the disease prong, According to the American Psychiatric Association’s update to the Diagnostic Statistical Manual, homosexuality stopped being defined as a mental illness over forty years ago. So the disease prong is out and it is not something that gay rights advocates are going to be wanting to restore even if it would save taxes.
That leaves the “structure or function of the body” prong. That allows things to be fixed that are not really broken. So a vasectomy or a tubal ligation qualifies as a medical deduction as would their reversals.
The Birds And The Bees
Sorting out whether Mr. Morrissey’s expenses satisfied the “structure or function of the body”-
Mr. Morrissey contends that all of the IVF-related expenses that he incurred—including the costs attributable to the identification, retention, compensation, and care of the women who served as the egg donor and the surrogate—were made for the purpose of affecting his body’s reproductive function. In particular, Mr. Morrissey asserts that because he and his male partner are physiologically incapable of reproducing together, IVF was his only means of fathering his own biological children. Accordingly, Mr. Morrissey claims, it was medically necessary to involve third parties—a female egg donor and a female surrogate—in order to enable his own body to fulfill its reproductive function.
moved Judge Newsom to do a primer on human reproduction. He allowed that it might seem obvious, but he believed that it was necessary given the competing contentions of the parties.
He notes that the male body’s necessary function within the reproductive process is to produce healthy sperm capable of fertilizing a female’s egg. Historically this was done “in vivo” – in the living. Modern technology allows the possibility of fertilization being “in vitro” – in the glass. In vitro fertilization requires the further step of implanting. As Judge Newsom notes the “female body’s function is much more robust”. There is the need to produce a healthy egg and after successful fertilization to allow the egg to implant in the lining of the uterus, sustain the embryo’s growth to viability and safely deliver the child. Thanks to modern science the egg production and the rest do not have to be done by the same female as was the case here.
Now that these three things – one male and two female – have been able to be separated out and priced by the market, it is interesting to see their relative value. Compensation for a sperm donor is in the neighborhood of a hundred bucks per donation. The procedure is not very bothersome. As a matter of fact, most males are already familiar with what is required. Egg donation, which is a much more difficult procedure can be in the $10,000 area. Surrogates signing up for the nine-month tour might expect to be paid in the $50,000 range. Like just about anything else, tax return preparation for example, that at least seems to be well-compensated surrogacy is being outsourced to the third world. There is a lot of concern about the process and some thought that it is inherently exploitative and should be banned with comparisons to the Handmaid’s Tale being made. Regardless thanks to science, the market has been allowed to speak and it values female to male contribution at about 600 to one.
Whose Body?
The Eleventh Circuit takes the narrow view that in order to qualify under the second prong and expense has to be about Mr. Morrissey’s body.
Mr. Morrissey’s claimed deduction—and thus this appeal—turns on the far more significant sums (more than $55,000) that he paid to identify, retain, compensate, and care for the women who served as the egg donor and gestational surrogate. The question is whether those expenses were undertaken for treatment or care that materially influenced or altered—affected—Mr. Morrissey’s own reproductive function. They weren’t. Mr. Morrissey is capable of producing and providing healthy sperm with or without the involvement of an egg donor or a gestational surrogate. His body could perform those functions before he engaged his female counterparts in the IVF process, and he can do so—just the same—after the completion of that process. Because the costs attributable to the identification, retention, compensation, and care of the egg donor and the surrogate weren’t incurred “for the purpose of affecting any … function of body,” he can’t deduct them as “medical care” expenses under I.R.C. § 213.
Fundamental Right?
Another argument that Mr. Morrissey made was that reproduction is a fundamental right. The court was not buying that when it comes to modern reproductive technology which still remains controversial.
Not surprisingly, the States have tackled IVF- and surrogacy-related issues in very different ways. To take just one example, the States have adopted a range of positions with respect to surrogacy contracts: some States explicitly sanction them, see, e.g., N.H. Rev. Stat. Ann. 168-B:10; some permit them subject to fairly extensive regulation, see, e.g. , La. Stat. Ann. R.S. § 9:2718.1-2720.15; others prohibit them outright, see, e.g., N.D. Cent. Code § 14-18-05; and at least one other criminalizes them, see, e.g., Mich. Comp. Laws Ann. § 722.859.
Were we to confer “fundamental” status on Mr. Morrissey’s asserted right to IVF-and-surrogacy-assisted reproduction, we would “’to a great extent, place the matter outside the arena of public debate and legislative action.’” Doe, 410 F.3d at 1343 (quoting Glucksburg , 521 U.S. at 720). Particularly in view of the ethical issues implicated by IVF, egg donation, and gestational surrogacy, as well as the ongoing political dialogue about those issues—and mindful that “guideposts for responsible decisionmaking” in the fundamental-rights area “are scarce and open-ended”—we decline to take that step.
Discriminatory
The Court found that Mr. Morrissey was not treated differently from similarly situated heterosexual taxpayers which knocked out any discrimination claim.
As a matter of both policy and practice, the IRS has consistently refused deductions sought by heterosexual taxpayers for IVF-related expenses similar to Mr. Morrissey’s. An IRS guidance published in 2002 advised that “medical expenses paid for a surrogate mother and her unborn child would not qualify for deduction under § 213(a).” IRS INFO 2002-0291, 2002 WL 31991849 (Dec. 31, 2002). That guidance comports with the IRS’s disallowance of the surrogacy-related deductions sought by taxpayers in the Longino and Magdalin cases, already discussed. 8 Indeed, the IRS has refused to allow heterosexual men to deduct the costs of pregnancy-related medical care for their non-spouse female partners and their unborn children, even where the taxpayers fathered the children through natural intercourse. .
Somebody Thinks The Court Got It Right
I asked Maryland feminist lawyer Cathy Brennan for her thoughts on the decision.
The court correctly applied the law. Males never have the “function” of becoming pregnant or giving birth. Male bodies are not “specifically fitted” for impregnation. This is a fundamental difference between males and females. Although many females never get pregnant, no male anywhere can ever get pregnant.
Interesting Note
Not long before the decision, Mr. Morrissey’s team pointed out a recent Supreme Court decision that they believed was relevant Marisa N. Pavan et al. v Nathaniel Smith
When a married woman gives birth in Arkansas, state law generally requires the name of the mother’s male spouse to appear on the child’s birth certificate—regardless of his biological relationship to the child. According to the court below, however, Arkansas need not extend that rule to similarly situated same-sex couples: The State need not, in other words, issue birth certificates including the female spouses of women who give birth in the State. Because that differential treatment infringes Obergefell’s commitment to provide same-sex couples “the constellation of benefits that the States have linked to marriage,” ,we reverse the state court’s judgment.
Other Coverage
Kelly Erb covered the original complaint in the case in December 2015 – Lawsuit Alleges IRS Denied Deduction For Fertility Treatment Because Being Gay Is A ‘Choice‘. Jonathan Ringel in Judge Analyzes Tax Deduction for Gay Parenthood in His First Opinion made me aware that this was Judge Newsom’s first opinion, which I thought was an interesting observation. Edward Zuckerman with Court denies tax deduction for gay man’s in vitro baby expenses seemed to approve of the decision. Phillip Rosenstein on Law360 has Gay Man’s IVF Costs Not Tax-Deductible, 11th Circ. Says. Bridget Crawford posted in The Faculty Lounge – Does Denying Gay Man a Medical Expense Deduction for Costs of IVF Violate Equal Protection? 11th Circuit Says No.
The Eleventh Circuit dismissed without substantial analysis Mr. Morrissey’s claim that he was discriminated against on the basis of his sexual orientation. The court reasoned that Mr. Morrissey could not show that other similarly-situated individuals received favorable treatment under the statute; and that the government did not discriminate against him based on a “constitutionally protected basis” (meaning his sexuality). I suspect (no pun intended) that it is this part of the Morrissey decision that will attract considerable attention from scholars who will seek to show how the facially-neutral statute discriminates against those who choose not to reproduce through traditional coitus or in the context of a male-female relationship.
Tax cases are exciting stuff!
Not to be petty, but referring to the expenses as IVF is probably not really accurate. The bulk of the expense is probably for the surrogate.
I also spoke with Professor Tessa Davis whose paper on the subject Reproducing Value: How Tax Law Differentially Values Fertility, Sexuality & Marriage goes deeply into the issue. Professor Davis thought that Morrissey is the first real test of this question and that the court has taken a very narrow construction of the meaning of the word function.