Claim for Reimbursement of Attorney Fees

A claim was submitted by a union for an Internal Revenue Service (IRS) employee for attorney fees incident to the sale of the employee's residence. The issue presented was whether the employee may be reimbursed for attorney fees which are higher than what is customarily charged for similar services in the normal sales transaction because the employee sold his residence by a land sale contract to satisfy the changing real estate environment. The record showed that, when the employee was transferred to a new duty station, he put his house on the market. However, due to high interest rates, the employee was unable to sell his home by traditional means and chose to sell his residence by a land sale contract. By this arrangement, equitable title was conveyed to the purchaser, who agreed to pay the purchase price in installments, with legal title remaining with the seller as security. As a result of using this method for selling his home, the employee incurred excessive attorney fees. However, when the employee submitted a voucher for the attorney fees, he was denied reimbursement on the basis that the amount claimed exceeded the amount customarily charged for legal fees in his locality. The employee then resubmitted his voucher, and it again was rejected. GAO held that attorney fees incurred incident to land sale contracts are eligible for reimbursement. Although regulations bar reimbursement for losses incurred because of a change in the price or value of the residence which is attributable to market conditions, they do not preclude reimbursement of otherwise allowable expenses simply because the amount claimed may have been affected by market conditions. Therefore, since the employee is claiming reimbursement for one set of authorized fees incurred in the actual sale of his residence, the employee may be reimbursed for that portion of his attorney fees which is within the range that is customarily charged for similar services in his locality.