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B-169204, JUN. 2, 1970

B-169204 Jun 02, 1970
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IS SUFFICIENT TO ANSWER SATISFACTORILY AN INFORMAL INQUIRY ISSUED BY THE CIVIL DIVISION OF OUR OFFICE ON MARCH 24. THE ITEMS QUESTIONED ARE: (1) AN AMOUNT OF $623.85 INCURRED AS CLOSING COSTS ON THE PURCHASE OF A RESIDENCE AT THE NEW DUTY STATION. THE ITEM INVOLVING CLOSING COSTS WAS QUESTIONED BECAUSE OF THE REQUIREMENTS OF SUBSECTIONS 4.1B AND 4.1E OF BUREAU OF THE BUDGET CIRCULAR NO. IN OTHER WORDS THE ATTACHMENTS TO THE ORIGINAL PAID VOUCHER FAILED TO SHOW THAT TITLE TO THE PROPERTY INVOLVED WAS PURCHASED IN THE NAME OF THE EMPLOYEE AND THAT HE HAD PAID THE CLOSING COSTS. THE $139 AMOUNT WAS REFLECTED ON AN INVOICE ADDRESSED TO PHELPS-HUTTON BROTHERS. ON WHICH IS TYPED A STATEMENT SIGNED BY AN OFFICER OF THE FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF PLANT CITY.

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B-169204, JUN. 2, 1970

TO MR. NEIL NEWMAN:

THIS REFERS TO YOUR LETTER OF FEBRUARY 27, 1970, REQUESTING OUR ADVICE AS TO WHETHER DOCUMENTATION SUPPLIED BY MR. DORMAN M. PHELPS IN SUPPORT OF A VOUCHER FOR EXPENSES INCURRED INCIDENT TO A CHANGE OF STATION IN OCTOBER 1967 FOR WHICH HE HAS BEEN REIMBURSED UNDER THE PROVISIONS OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, IS SUFFICIENT TO ANSWER SATISFACTORILY AN INFORMAL INQUIRY ISSUED BY THE CIVIL DIVISION OF OUR OFFICE ON MARCH 24, 1969.

THE ITEMS QUESTIONED ARE: (1) AN AMOUNT OF $623.85 INCURRED AS CLOSING COSTS ON THE PURCHASE OF A RESIDENCE AT THE NEW DUTY STATION; (2) A SEPARATE AMOUNT OF $139, ALSO FOR COSTS INCIDENT TO PURCHASE OF THE NEW RESIDENCE; AND (3) AN AMOUNT OF $363 PAID FOR TEMPORARY QUARTERS ALLOWANCE FOR THE EMPLOYEE AND HIS WIFE FOR 27 DAYS, FROM OCTOBER 26, 1967, THROUGH NOVEMBER 21, 1967.

THE ITEM INVOLVING CLOSING COSTS WAS QUESTIONED BECAUSE OF THE REQUIREMENTS OF SUBSECTIONS 4.1B AND 4.1E OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED, OCTOBER 12, 1966. IN OTHER WORDS THE ATTACHMENTS TO THE ORIGINAL PAID VOUCHER FAILED TO SHOW THAT TITLE TO THE PROPERTY INVOLVED WAS PURCHASED IN THE NAME OF THE EMPLOYEE AND THAT HE HAD PAID THE CLOSING COSTS. ON THE CONTRARY THE ATTACHMENTS INDICATED THAT THE $623.85 REPRESENTED CLOSING EXPENSES ON A LOAN SETTLEMENT STATEMENT DATED JUNE 27, 1967, SHOWING THE BORROWER AS ONE CHARLES L. HUTTON, PRESIDENT, HUTTON BROTHERS, INC. ALSO, THE $139 AMOUNT WAS REFLECTED ON AN INVOICE ADDRESSED TO PHELPS-HUTTON BROTHERS.

THE EMPLOYEE HAS NOW SUBMITTED A COPY OF THE LOAN SETTLEMENT STATEMENT OF JUNE 27, 1967, ON WHICH IS TYPED A STATEMENT SIGNED BY AN OFFICER OF THE FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF PLANT CITY, FLORIDA, AS FOLLOWS:

"THE HOME LOCATED AT 704 DEBRA LYNNE DRIVE, BRANDON, FLORIDA, WAS A SPECULATIVE HOUSE FOR HUTTON BROTHERS, INC. THE HOUSE WAS NOT COMPLETED UNTIL OCTOBER 31, 1967. THE SALES PRICE OF $21,500.00 INCLUDED THE SIX ITEMS INDICATED ABOVE BY *, WHICH WERE PAID BY MR. DORMAN M. PHELPS. THE $623.85 WAS A PART OF THE $2,150.00 PAID TO THE SELLERS, HUTTON BROTHERS, INC. MR. & MRS. DORMAN M. PHELPS WERE APPROVED TO PURCHASE AND ASSUME HUTTON BROTHERS, INC. LOAN. THE BILL FOR $139.00 WAS ADDITIONAL CLOSING COSTS THAT WERE INCURRED DURING THE ASSUMPTION PROCESS AND PAID BY MR. PHELPS ON NOVEMBER 30, 1967.

(S/

WILLIAM C. BRADBURY, ASSISTANT

VICE PRESIDENT"

THE EMPLOYEE HAS ALSO SUBMITTED A COPY OF A "CONTRACT FOR SALE OF REAL ESTATE" DATED NOVEMBER 11, 1967, WHICH SHOWS MR. PHELPS AND HIS WIFE AS BUYERS OF THE REAL ESTATE DESCRIBED IN THE LOAN SETTLEMENT AND CHARLES L. HUTTON (BORROWER NAMED ON THE LOAN SETTLEMENT) AS SELLER. THE PRICE, AS STATED ABOVE, IS SHOWN AS $21,500 AND THE AMOUNT OF $2,150 IS IDENTIFIED AS "DOWN PAYMENT AND BINDER." NO CLOSING STATEMENT HAS BEEN SUBMITTED, BUT THE SALES CONTRACT PROVIDED FOR CLOSING ON OR BEFORE DECEMBER 1, 1967, AND THE EMPLOYEE STATES HE MOVED INTO THE HOUSE ON NOVEMBER 22, 1967. THIS EVIDENCE ESTABLISHES THAT THE PROPERTY WAS PURCHASED IN THE NAME OF THE EMPLOYEE AND HIS WIFE. HOWEVER, IT ALSO ESTABLISHES THAT THE CLOSING COSTS OF $623.85 WERE INCLUDED IN THE PURCHASE PRICE OF THE RESIDENCE.

OUR OFFICE CONSISTENTLY HAS HELD THAT THERE IS NO BASIS UNDER THE CONTROLLING LAW OR REGULATIONS FOR TREATING ANY PART OF THE SELLING PRICE OF A RESIDENCE AS OTHER THAN THE PRICE OF THE REALTY IRRESPECTIVE OF THE VARIOUS ELEMENTS (SUCH AS CLOSING COSTS) THAT MIGHT BE CONSIDERED IN ESTABLISHING THAT PRICE. IN ADDITION TO THE DECISIONS TO WHICH YOUR LETTER REFERS, SEE B-163816, MAY 3, 1968; B-165841, JANUARY 22, 1969; AND B-168068, NOVEMBER 7, 1969, COPIES ENCLOSED. THEREFORE, THE AMOUNT OF $623.85 SHOWN TO HAVE BEEN INCLUDED IN THE SALE PRICE OF THE PROPERTY WAS ERRONEOUSLY REIMBURSED TO MR. PHELPS AND COLLECTION ACTION FOR THIS AMOUNT IS REQUIRED.

WITH RESPECT TO THE $139 ITEM EXPLAINED AS "ADDITIONAL CLOSING COSTS THAT WERE INCURRED DURING THE ASSUMPTION PROCESS AND PAID BY MR. PHELPS ON NOVEMBER 30, 1967," NO FURTHER IDENTIFICATION OR EXPLANATION APPEARS IN THE RECORD. MR. PHELPS SHOULD BE REQUIRED TO FURNISH A STATEMENT FROM THE FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION, PLANT CITY, FLORIDA, AS TO WHETHER OR NOT SUCH AMOUNT MAY ALSO HAVE BEEN INCLUDED IN THE PURCHASE PRICE, AND IF NOT, THE NATURE OF THE CHARGE. IF NOT INCLUDED IN THE PURCHASE PRICE AND IF THE AMOUNT REPRESENTS A FEE CHARGED BY THE BANK SIMILAR TO A LOAN ORIGINATION FEE IT MAY BE REIMBURSABLE UNDER THE PROVISIONS OF SECTION 4 OF CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966. COMPARE THE PROVISIONS OF SECTION 4.2C OF THE CIRCULAR AS REVISED JUNE 26, 1969.

THE ITEM OF $363 REIMBURSED FOR SUBSISTENCE EXPENSE WHILE OCCUPYING TEMPORARY QUARTERS WAS QUESTIONED DUE TO FAILURE OF THE EMPLOYEE TO SUPPLY DOCUMENTATION OF ACTUAL EXPENSES INCURRED AS REQUIRED BY SUBSECTION 2.5D OF CIRCULAR NO. A-56. THE EMPLOYEE HAS NOW SUPPLIED RECEIPTS FOR MOTEL ACCOMMODATIONS FOR THE PERIOD OCTOBER 24 (DATE OF DEPARTURE FROM HIS OLD DUTY STATION) THROUGH NOVEMBER 21 WHEN TEMPORARY QUARTERS WERE VACATED. HE HAS ALSO PROVIDED ITEMIZED ESTIMATES OF EXPENSES FOR MEALS, LAUNDRY, DRY CLEANING AND GRATUITIES FOR THE PERIOD, SHOWING SUCH EXPENSES FOR EACH OF TWO PERIODS OF 10 DAYS AND ONE PERIOD OF 7 DAYS. WHILE ESTIMATES SUCH AS THOSE PROVIDED ARE NOT IN LITERAL COMPLIANCE WITH THE DOCUMENTATION REQUIREMENTS OF SUBSECTION 2.5D, OUR DECISIONS HAVE HELD THAT SUCH SUBSTANTIATION IS ACCEPTABLE WHERE, AS HERE, LODGING COSTS ARE VERIFIED BY RECEIPTS AND ESTIMATES OF MEAL COSTS, AT LEAST, APPEAR REASONABLE. 165020, SEPTEMBER 9, 1968 AND B-166238, MARCH 27, 1969, COPIES ENCLOSED.

SUBSECTION 2.5D(2) OF CIRCULAR NO. A-56 PROVIDES THAT AN EMPLOYEE MAY BE REIMBURSED FOR EXPENSES OF OCCUPYING TEMPORARY QUARTERS ON AN ACTUAL EXPENSE BASIS OR ON A PER DIEM BASIS FOR EACH 10-DAY PERIOD OF NOT MORE THAN 30 DAYS, WHICHEVER IS THE LESSER OF THE TWO. IN THIS CASE, REIMBURSEMENT ON THE BASIS OF THE FORMULA PRESCRIBED IN SUBSECTION 2.5D(2) IS LESS THAN ACTUAL EXPENSES ESTIMATED FOR EACH 10-DAY PERIOD. THEREFORE, AN AMOUNT COMPUTED ON THIS BASIS OF THE FORMULA WAS PROPERLY ALLOWABLE.

WITH RESPECT TO COMPUTATION OF REIMBURSABLE EXPENSES IN ACCORDANCE WITH SUBSECTION 2.5D(2), WE CALL ATTENTION TO DECISIONS OF THIS OFFICE WHICH HAVE DEFINED THE PERIOD FOR WHICH TEMPORARY QUARTERS SUBSISTENCE ALLOWANCE IS PAYABLE AS BEGINNING WITH THE QUARTER DAY AFTER THE LAST QUARTER DAY FOR WHICH PER DIEM IN LIEU OF SUBSISTENCE UNDER SECTION 6 OF THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS IS PAID AND CONTINUING THROUGH THE FULL DAY ON WHICH THE EMPLOYEE MOVES INTO PERMANENT QUARTERS. SEE B- 161348, MAY 31, 1967, AND B-161878, JULY 21, 1967, COPIES ENCLOSED. THUS, MR. PHELPS' ENTITLEMENT TO REGULAR PER DIEM CONTINUED THROUGH THE SECOND QUARTER AFTER ARRIVAL AT HIS NEW DUTY STATION AT 8 A.M. ON OCTOBER 26. THE TEMPORARY QUARTERS ALLOWANCE THEN BEGAN TO RUN FROM THE SECOND QUARTER OF THAT DAY THROUGH THE FULL DAY OF NOVEMBER 22, WHEN HE MOVED INTO PERMANENT QUARTERS. ALSO, WE CALL ATTENTION TO THE AMOUNT ALLOWABLE UNDER SUBSECTION 2.5D(2) OF CIRCULAR NO. A-56 FOR MEMBERS OF THE EMPLOYEE'S IMMEDIATE FAMILY DURING THE 30 DAY PERIOD. FOR THE FIRST 10-DAY PERIOD, THE AMOUNT AS SET FORTH IN 2.5D(2)(A)(II) IS 50 PERCENT OF THE MAXIMUM PER DIEM RATE ALLOWED UNDER SECTION 2.1 FOR THE LOCALITY IN WHICH TEMPORARY QUARTERS ARE LOCATED, OR $8, RATHER THAN $6, AS USED IN THE ORIGINAL COMPUTATION. FOR THE SECOND 10-DAY PERIOD, THE AMOUNT IS TWO-THIRDS OF THE AMOUNT ALLOWABLE FOR THE FIRST 10 DAYS, OR $5.33, RATHER THAN $4; AND THE THIRD 10-DAY PERIOD THE AMOUNT IS ONE-HALF THAT FOR THE FIRST 10-DAY PERIOD, OR $4, RATHER THAN $3. THUS, MR. PHELPS' ENTITLEMENT TO PER DIEM AND TEMPORARY QUARTERS ALLOWANCE SHOULD BE RECOMPUTED IN ACCORDANCE WITH THE FOREGOING. THE ADDITIONAL AMOUNT FOUND DUE AS A RESULT OF SUCH RECOMPUTATION MAY BE SET OFF AGAINST THE EMPLOYEE'S INDEBTEDNESS FOR EXCESSIVE PAYMENT OF CLOSING COSTS AS DISCUSSED ABOVE.

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