B-164491, AUG. 20, 1968

B-164491, AUG. 20, 1968

TO MRS. NEDRA A. BLACKWELL:

YOUR LETTER OF MAY 24, 1968, WITH ENCLOSURES, REFERENCE 360, REQUESTS OUR ADVANCE DECISION WHETHER YOU MAY PROPERLY CERTIFY FOR PAYMENT THE VOUCHER OF MR. THERON R. MCCOLLOUGH, AN EMPLOYEE OF THE BUREAU OF RECLAMATION, TO REIMBURSE HIM CERTAIN EXPENSES HE INCURRED IN CONNECTION WITH THE PURCHASE OF A LOT AND CONSTRUCTION OF A RESIDENCE AT HIS NEW OFFICIAL STATION INCIDENT TO HIS TRANSFER FROM EPHRATA, WASHINGTON, TO COULEE DAM, WASHINGTON, UNDER TRAVEL ORDER DATED JUNE 20, 1967.

YOU REPORT THAT MR. MCCOLLOUGH HAS BEEN PAID THE SUM OF $1,441.66 ON A PREVIOUS VOUCHER FOR EXPENSES ASSOCIATED WITH THE SALE OF HIS RESIDENCE AT HIS OLD DUTY STATION. WITH RESPECT TO THE ITEMS APPEARING ON THE PRESENT VOUCHER YOU SUBMIT THE FOLLOWING INFORMATION AND QUESTIONS: "1. TITLE POLICY - MR. MCCOLLOUGH WAS REIMBURSED $108.16 ($103.50 PLUS SALES TAX OF $4.66) FOR THE TITLE POLICY ON THE SALE OF HIS HOME AT EPHRATA, WASHINGTON. ON THE PURCHASE OF HIS HOME IN ELECTRIC CITY, HE IS CLAIMING $108.16 FOR THE TITLE INSURANCE. A LETTER FROM THE NATIONAL BANK OF COMMERCE VERIFIES THAT THIS INSURANCE POLICY IS REQUIRED. BUREAU OF BUDGET CIRCULAR A-56, 4.2.C., LIMITS REIMBURSEMENT OF CERTAIN ITEMS TO EITHER THE SALE OF THE RESIDENCE AT THE OLD OFFICIAL STATION OR PURCHASE OF A DWELLING AT THE NEW OFFICIAL STATION, BUT THE SAME TYPE OF COSTS CANNOT BE PAID AT BOTH LOCATIONS. DOES THIS PERTAIN TO TITLE INSURANCE? "2. SALES TAX - A CLAIM HAS BEEN MADE FOR $981.82 FOR STATE SALES TAX ON THE HOUSE CONSTRUCTED AT ELECTRIC CITY. HAD A HOUSE BEEN PURCHASED, THIS TAX WOULD NOT HAVE BEEN IMPOSED. HOWEVER, MR. MCCOLLOUGH STATES THAT BECAUSE OF THE UNAVAILABILITY OF HOMES IT WAS NECESSARY TO HAVE HIS HOUSE BUILT. IS IT PERMISSIBLE TO REIMBURSE HIM FOR THIS EXPENSE? "3. RECORDING FEES: REIMBURSEMENT HAS BEEN MADE FOR $2.00 FOR THE RECORDING FEE IN CONNECTION WITH THE SALE OF HIS HOME IN EPHRATA. CLAIM IS NOW BEING MADE FOR $10 FOR THE RECORDING FEE IN THE PURCHASE OF HIS HOME IN ELECTRIC CITY. SINCE THIS ITEM CANNOT BE CLAIMED AT BOTH LOCATIONS, WOULD IT BE PERMISSIBLE TO REIMBURSE HIM $8.00 ON THIS VOUCHER WHICH, TOGETHER WITH THE $2.00 PREVIOUSLY PAID, WOULD PAY HIM THE COST OF THE HIGHER RECORDING FEE.'

IN OUR DECISION OF JUNE 27, 1967, B-161459, 46 COMP. GEN. 884 (COPY ENCLOSED), WE HELD THAT THE COST AN EMPLOYEE INCURS FOR TITLE INSURANCE IN CONNECTION WITH THE SALE OF A RESIDENCE MAY BE REIMBURSED UNDER SECTION 4 OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 IF IT HAS BEEN SHOWN THAT THE SELLER OF REAL ESTATE CUSTOMARILY FURNISHES THE BUYER TITLE INSURANCE IN THE AREA INVOLVED. ASSUMING THAT SUCH REQUIREMENT WAS MET IN THIS CASE, REIMBURSEMENT OF THE COST OF THE TITLE INSURANCE PURCHASED BY MR. MCCOLLOUGH IN CONNECTION WITH THE SALE OF HIS FORMER RESIDENCE WAS PROPER. SEE ALSO, B-161620, JULY 25, 1967 AND B-164604, JULY 29, 1968, COPIES HEREWITH.

IN CONNECTION WITH THE FINANCING OF HIS RESIDENCE AT HIS NEW DUTY STATION MR. MCCOLLOUGH WAS REQUIRED TO PURCHASE A TITLE INSURANCE POLICY FOR THE BENEFIT OF THE MORTGAGEE. IN OUR DECISION OF JANUARY 17, 1968, B-163000 (COPY ENCLOSED), WE HELD AS FOLLOWS:

"* * * WE DO NOT CONSIDER THAT REIMBURSEMENT OF THE COST OF OWNER'S TITLE INSURANCE PURCHASED BY AN EMPLOYEE IN CONNECTION WITH THE SALE OF HIS RESIDENCE AT HIS OLD DUTY STATION PRECLUDES REIMBURSEMENT OF THE COST OF MORTGAGEE'S TITLE INSURANCE IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT THE NEW DUTY STATION UNDER THE PROVISIONS OF SECTIONS 4.2C AND D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 WHICH PROHIBIT PAYMENT OF THE SAME TYPES OF COSTS AT BOTH THE OLD AND THE NEW DUTY STATIONS. * * *"

IN ACCORDANCE WITH THAT DECISION MR. MCCOLLOUGH MAY BE REIMBURSED THE COST OF THE MORTGAGEE TITLE POLICY IF IT IS ESTABLISHED THAT THE PURCHASER CUSTOMARILY PAYS FOR SUCH INSURANCE IN THE AREA OF THE NEW DUTY STATION IN CONNECTION WITH TRANSACTIONS OF THE TYPE HERE INVOLVED -- I.E., PURCHASE OF A LOT AND CONSTRUCTION OF A RESIDENCE THEREON.

SECTION 4.2D OF CIRCULAR NO. A-56 AUTHORIZES REIMBURSEMENT OF MORTGAGE, TRANSFER OR EXCISE TAXES LEVIED UPON REAL ESTATE TRANSACTIONS. HOWEVER, YOU REPORT THAT THE SALES TAX PAID BY MR. MCCOLLOUGH WOULD NOT HAVE BEEN IMPOSED HAD THE EMPLOYEE PURCHASED, RATHER THAN CONSTRUCTED, A RESIDENCE.

IN OUR DECISION OF JULY 2, 1968, B-164452 (COPY ENCLOSED), WE POINTED OUT THAT 5 U.S.C. 5724A (A) AUTHORIZES REIMBURSEMENT FOR COSTS INVOLVED IN THE PURCHASE OF A RESIDENCE. ACCORDINGLY, WE HELD THEREIN THAT THE EMPLOYEE COULD NOT BE REIMBURSED FOR A CONSTRUCTION LOAN FEE WHICH WAS INCURRED BECAUSE HE HAD A RESIDENCE CONSTRUCTED AT HIS NEW OFFICIAL STATION.

IF, AS YOU REPORT, THE EMPLOYEE WOULD NOT HAVE INCURRED THE SALES TAX BUT FOR THE FACT THAT HE HAD A RESIDENCE CONSTRUCTED, REIMBURSEMENT FOR SUCH TAX MAY NOT BE ALLOWED UNDER THE DECISION CITED ABOVE.

WE NOTE THAT MR. MCCOLLOUGH IS CLAIMING REIMBURSEMENT OF A CONSTRUCTION LOAN FEE OF $291 WHICH REPRESENTS 1-1/2 PERCENT OF THE FACE AMOUNT OF THE LOAN. FOR THE REASONS SET FORTH ABOVE WITH RESPECT TO THE SALES TAX THE EMPLOYEE MAY NOT BE REIMBURSED FOR SUCH LOAN FEE.

QUESTION 3, ABOVE, PERTAINING TO THE RECORDING FEES, IS ANSWERED IN THE AFFIRMATIVE. SEE B-163690, MARCH 29, 1968, COPY ENCLOSED.

THE VOUCHER WHICH IS RETURNED HEREWITH MAY BE CERTIFIED FOR PAYMENT ONLY IN ACCORDANCE WITH THE FOREGOING.