B-219546.2, Jan 30, 1989, Office of General Counsel

B-219546.2: Jan 30, 1989

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Both fees are finance charges under the Truth in Lending Act. Since they are fees imposed in connection with the extension of credit. Accounting Section Internal Revenue Service Department of the Treasury: This is in response to your letter of December 9. Both the tax service fee and the broker fee are finance charges under the Truth in Lending Act. Therefore are not reimbursable under the Federal Travel Regulations (FTR) which govern the reimbursement of relocation expenses. /1/ The FTR. Lists those miscellaneous settlement expenses which are reimbursable. The tax service fee was paid to Citicorp Mortgage. Which was 1 percent of the loan. Was paid to BFG Financial Services for services rendered in obtaining the mortgage.

B-219546.2, Jan 30, 1989, Office of General Counsel

CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Broker fees - Reimbursement CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Taxes - Reimbursement - Eligibility DIGEST: An employee may not be reimbursed for a tax service fee or a broker fee as relocation expenses. Both fees are finance charges under the Truth in Lending Act, Regulation Z, since they are fees imposed in connection with the extension of credit. Except as specifically provided, the Federal Travel Regulations preclude reimbursement for finance charges.

Sue Wolohan

Chief, Accounting Section

Internal Revenue Service

Department of the Treasury:

This is in response to your letter of December 9, 1988, reference: RM:F:A, concerning the claim of Mr. Joseph F. Kump, an employee of the Internal Revenue Service. Mr. Kump seeks reimbursement for a tax service fee and a broker fee as relocation expenses in connection with his transfer from Philadelphia, Pennsylvania, to Wilmington, Delaware.

In our opinion, both the tax service fee and the broker fee are finance charges under the Truth in Lending Act, Regulation Z, 12 C.F.R. part 226, and therefore are not reimbursable under the Federal Travel Regulations (FTR) which govern the reimbursement of relocation expenses. /1/

The FTR, para. 2-6.2d(1), lists those miscellaneous settlement expenses which are reimbursable, while para. 2-6.2d(2) specifically precludes reimbursement for finance charges as defined under the Truth in Lending Act, Regulation Z, 12 C.F.R. part 226. The tax service fee was paid to Citicorp Mortgage, Inc., the lender, to establish an account for the payment of real estate taxes by the lender. The broker fee, which was 1 percent of the loan, was paid to BFG Financial Services for services rendered in obtaining the mortgage. This fee was in addition to a 1- percent loan origination fee which has been reimbursed by the agency.

Both of these fees appear to be service charges imposed incident to the extension of credit and as such they constitute finance charges which we have consistently held are not reimbursable under the Federal Travel Regulations. /2/

/1/ FTR, para. 2-6.2d (Supp. 4, Aug. 23, 1982), incorp. by ref., 41 C.F.R. Sec. 101-7.003 (1987).

/2/ John S. Derr, B-215709, Oct 24, 1984; Ronald J. Walton, B-215699, Oct. 2, 1984.