Tax Talk and Reproductive Technology

Abstract

The tax system both reacts to and helps create attitudes about the value of certain behaviors and choices. This Article makes three principal claims – one empirical, one normative, and one interpretative. The Article demonstrates through data that a representative sample of fertility clinics in the United States do not make publicly available information about the tax consequences of compensated human egg transfers – commonly called egg “donation.” In 2015, the United States Tax Court decided in a case of first impression, Perez v. Commissioner, that a compensated egg transferor must report as income any amount she receives for her eggs. Although the Tax Court missed an opportunity to clarify further complex questions about the tax consequences of transfers of human bodily materials, the basic holding of Perez was clear. Even so, a content-based analysis of public Internet forums and bulletin boards suggests that compensated egg transferors remain unclear about their tax obligations. This confusion is due in large part to the absence of what this Article calls “tax talk” on the part of the fertility clinics themselves.

Women who receive compensation for providing eggs reject the idea they are engaged in any sort of commercial activity, and think of themselves as altruistic actors who do receive money, but only because of their generosity and willingness to endure discomfort and inconvenience. Intended parents benefit from construing egg transferors as “givers,” because that allows the intended parents to relegate compensation to a secondary role in any negotiations with the egg transferor. The absence of tax talk also allows intended parents to minimize the specter of “baby buying.” That cloud hovers over any assisted reproductive technology involving compensation for either gestational services or activity resulting in gamete transfers. The altruism narrative is reinforced by fertility clinics and provides the foundation on which a multi-billion-dollar industry stands. The absence of tax talk depresses the price of eggs and allows most of the industry profits to go to the drug manufacturers, fertility clinics, and the doctors who own the clinics. They all profit handsomely from the reproductive work of others.

The normative solution to the absence of tax talk in the reproductive technology context is for the United States Internal Revenue Service to issue clear guidance to all fertility clinics regarding the tax consequences of egg transfers. Furthermore, the American Society for Reproductive Medicine should move from merely recommending to requiring issuance of appropriate tax forms to compensated egg transferors. This will put taxpayers on notice of their filing obligations and likely increase tax compliance.

From an interpretative perspective, taxing compensated egg transfers recognizes the importance of that activity. Taxation signals that reproductive work deserves to be treated like any other labor. The tax system thereby exercises its power to mark an activity as important and within the mainstream of human experience. The alternative – allowing compensated human egg transfers to escape taxation despite the law – turns compensated reproductive work into a preferred (and economically risky) type of labor activity with unintended consequences for women and others.

Keywords: taxation, reproduction, jurisprudence, eggs, markets, Perez

JEL Classification: K1, K10, K11, K12, K19, K34, K36, K40