Request for Reimbursement of Tax Service Fee

An employee of the Phoenix District of the Internal Revenue Service (IRS) appealed a Claims Division determination denying his claim for reimbursement of certain real estate expenses he incurred in the purchase of a new home. The employee purchased the home incident to a permanent change of station. A tax service fee was charged to the employee by the lender, and the employee included this fee on his request for reimbursement. The Claims Division held that the fee was a finance charge and therefore could not be reimbursed under Federal Travel Regulations (FTR). An authorized certifying officer of IRS requested that GAO reconsider this decision since a tax service fee may or may not be a finance charge depending on the nature of the service provided. In this case, the fee was for a tax search to be performed periodically throughout the term of the mortgage. The service is designed to apprise the lender of any tax delinquency or lien filed against the property in which it holds a security interest. The service is not specifically excluded as a finance charge under Federal regulations and is similar to a service fee held to be a finance charge in a prior GAO decision. Therefore, it must be considered a finance charge. In determining whether or not a particular payment is a finance charge, the statement of the lending institution cannot simply be accepted. The reviewing official must examine the item in light of regulations and previous GAO decisions. Accordingly, the Claims Division denial of the employee's claim was sustained.