Deductibility of Surrogacy Expenses by Same-Sex Couples: Florida District Court Weighs In

In a prior blog, I talked about some of the major issues present in a District of Florida case filed in November 2015 in which Joseph F. Morrissey, a professor at Stetson Law School, initiated action against the United States over the IRS’s denial of tax deductions for assisted reproductive technology (ART) expenses claimed on his 2011 tax return.  You can access my prior blogs at (discussing the Morrissey case) and (discussing pre-Windsor arguments). 

On December 22, 2016, the issues in the Morrissey case were finally decided.  See Morrissey v. United States, No. 8:15-cv-2736-T-26AEP, 2016 BL 447323 (M.D. Fla. Dec. 22, 2016).  Unfortunately for the taxpayer, and many same-sex male couples in Florida seeking to deduct similar expenses, the District Court ruled in favor of the IRS and granted its motion for summary judgment against Morrissey. 

Under the facts of the case, Mr. Morrissey, a gay male, alleged that the IRS improperly denied him a deduction for medical expenses he incurred in paying fertility specialists to help conceive a child through use of in vitro fertilization (requiring the use of an egg donor and female surrogate).  Plaintiff alleges that heterosexual couples have routinely been allowed to deduct these types of medical family planning expenses, even where the expenses are for elective procedures that are not medically necessary.  Plaintiff also alleges that the IRS’s assertion that plaintiff’s homosexuality was a choice and that he could conceive a child through a sexual relationship with a woman, thus rendering the expenses unnecessary, was without merit as he was in a committed monogamous relationship with his partner and recently had become engaged to him.  In addition, he alleges that any so-called “choice” to raise a family with his same-sex partner is protected from discrimination by the Constitution under Obergefell and that, in any event, the Supreme Court has recognized in Obergefell that homosexuality is an immutable sexual orientation, and not a choice.  In addition, he alleges that he is effectively infertile and that this fact, along with the holding in Obergefell, requires I.R.C. §213 to be construed in such a way as to authorize his deductions for surrogacy expenses.  (Note, it is interesting that the District of Florida court mentioned in its decision that Mr. Morrissey’s partner was his “chosen” life partner, a reference that raises the hint of animus, such as used by the original IRS individual denying the deduction, whereby individuals with issues against same-sex couples imply that sexual orientation is a choice and not an immutable characteristic.  For purposes of this blog, I assume the “chosen” designation was not intentionally derogatory against Mr. Morrissey). 

In relevant part, I.R.C. Section 213(a) allows taxpayers a deduction for “the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent ….” I.R.C. Section 213(d)(1) further defines medical care as 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” (emphasis added).

The District of Florida court first concluded that Morrissey’s “effective infertility” argument was without merit because the surrogacy expenses only affected the function or structure of the bodies of third parties, and not the body of the taxpayer.  An argument that plaintiff’s own lack of “reproductive function” was enough to meet the function or structure test was insufficient.    The court further concluded that no constitutional violations existed because, in denying plaintiff’s deduction, the IRS applied the statute consistently with its approach in other cases.  Specifically, in Longino, T.C. Memo 2013-80 (2013), a heterosexual male was denied the deduction (note, with respect to his fiancée who was not his legal spouse) and the IRS had published guidance in IRS INFO 2002-0291 stating that it would deny the deduction associated with third-party gestational surrogacy without regard to marital status, sexual orientation or even condition of infertility (note, who knew that IRS Info Letters held the rule of law?).   

Key Takeaways:  The District of Florida case certainly doesn’t decide the issue for all same-sex male taxpayers seeking to deduct surrogacy or ART expenses.  In the absence of precedent, other district courts, and especially other circuit courts (other than (1) the 1st circuit and the district courts under it as Magdalin was affirmed by the 1st circuit, and (2) the 11th Circuit which affirmed the Longino case.  Note that the 1st circuit has appellate jurisdiction over district courts in Maine, Massachusetts, New Hampshire, Rhode Island and Puerto Rico and the 11th circuit has jurisdiction over district courts in Alabama, Florida and Georgia), can certainly decide the issue another way.  It is troubling that there was no discussion of an argument that surrogacy costs are actually costs incurred in the medical care of a taxpayer’s dependent, namely, the child conceived through surrogacy.  If the father cannot deduct the surrogacy expenses because they are not expenses for medical care of himself, then why can’t they be deducted as expenses for the medical care of his child?   The medical care certainly relates to a function of the child’s body.  Without the surrogacy, the child would not exist.   No fundamental right or equal protection argument is necessary here.  It is incontrovertible that the child is the dependent of the taxpayer, especially coupled with a scenario where the surrogate expressly gives up all parental rights to the child, a fundamental characteristic of almost all surrogacy relationships. 

Even turning back to the arguments made by the plaintiff in Morrissey, the Florida District Court decision seems to gloss over some of the more salient arguments made by the plaintiff about recent decisions in Obergefell and Windsor.  The Florida District Court appeared to bolster its conclusions on the fact that there was no equal protection violation while ignoring the fundamental right argument.  It is one thing for the language of a statute to be strictly read in accordance with its terms and something entirely different when the statute’s express terms violate fundamental rights (or even evolving equal protection analysis, assuming a more sophisticated argument is made than the one in Morrissey).  Distinguishing actual fertility from effective fertility or dysfertility is incongruous with the reality of same-sex male couples who are physically incapable of having children and who turn to surrogacy, but who are treated differently and unequally from heterosexual couples who get to take deductions for the exact same situation.