[Questions Concerning IRS Employee's Entitlement to Reimbursement for Certain Real Estate Expenses]

B-216251: Feb 25, 1985

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

The Internal Revenue Service requested a decision concerning the entitlement of an employee to reimbursement for certain real estate related expenses which were incurred incident to a permanent change of station but were disallowed by the agency. The agency disallowed reimbursement for a loan origination fee because it exceeded the customary charge for such a fee in the area, and it disallowed a claim for hazard insurance because reimbursement for insurance against loss or damage to property is not reimbursable. The employee claimed that, since his was a conventional loan, the loan origination fee was allowable and, because the lender required him to obtain hazard insurance, such insurance was a cost of his mortgage loan agreement. GAO found that the the upper limit of the customary range of fee charged in the locality could be used as a basis for reimbursement of the loan origination fee; therefore, a portion of the amount claimed for this fee could be reimbursed. However, since Federal Travel Regulations provide that the cost of loss and damage insurance is not reimbursable, the insurance cost claim could not be certified for payment. Accordingly, the employee may be reimbursed in part for his expenses.