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B-174527, JUL 5, 1972, 52 COMP GEN 11

B-174527 Jul 05, 1972
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THAT PROVIDE THE EXPENSES CLAIMED MUST HAVE BEEN PAID BY THE EMPLOYEE AND SUPPORTED BY DOCUMENTATION TO THIS EFFECT. NOW MAY BE ALLOWED ON THE BASIS THAT THE CLOSING COSTS ADDED TO THE PURCHASE PRICE ARE CLEARLY DISCERNIBLE AND SEPARABLE FROM THE PRICE ALLOCABLE TO THE REALTY. THAT DOCUMENTATION OF THE COSTS AND THE PURCHASER'S LIABILITY FOR THEM HAVE BEEN FURNISHED. CONTRARY HOLDINGS ARE OVERRULED. 1972: THIS WILL REFER TO THE CLAIM OF MR. THE CLAIM WAS PREVIOUSLY DENIED ON GROUNDS IT DID NOT MEET THE REQUIREMENTS OF SUBSECTIONS 4.1F AND 4.3A OF OFFICE OF MANAGEMENT AND BUDGET (OMB) CIRCULAR NO. A-56 WHICH PROVIDE AS FOLLOWS: 4.1 CONDITIONS AND REQUIREMENTS UNDER WHICH ALLOWANCES ARE PAYABLE.*** F.

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B-174527, JUL 5, 1972, 52 COMP GEN 11

OFFICERS AND EMPLOYEES - TRANSFERS - RELOCATION EXPENSES - HOUSE PURCHASE - EXPENSES CLAIMED INCLUDED IN SELLING PRICE THE CLAIM OF AN EMPLOYEE FOR THE CLOSING COSTS PAID BY THE SELLER AND INCLUDED IN THE SALES PRICE OF THE RESIDENCE HE PURCHASED IN CONNECTION WITH A TRANSFER OF OFFICIAL STATION WHICH HAD BEEN DENIED ON THE GROUNDS THE REQUIREMENTS OF SUBSECTIONS 4.1F AND 4.3A OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, THAT PROVIDE THE EXPENSES CLAIMED MUST HAVE BEEN PAID BY THE EMPLOYEE AND SUPPORTED BY DOCUMENTATION TO THIS EFFECT, HAD NOT BEEN MET, NOW MAY BE ALLOWED ON THE BASIS THAT THE CLOSING COSTS ADDED TO THE PURCHASE PRICE ARE CLEARLY DISCERNIBLE AND SEPARABLE FROM THE PRICE ALLOCABLE TO THE REALTY; THAT THE SELLER WHO INITIALLY PAID THE COSTS REGARDS THAT THE PURCHASER DID, ALTHOUGH THE DOWN AND CLOSING PAYMENTS FROM THE PURCHASER'S OWN FUNDS EXCEEDED THE CLOSING COSTS; AND THAT DOCUMENTATION OF THE COSTS AND THE PURCHASER'S LIABILITY FOR THEM HAVE BEEN FURNISHED. CONTRARY HOLDINGS ARE OVERRULED.

TO JAMES L. HUMPHREY, UNITED STATES GENERAL ACCOUNTING OFFICE, JULY 5, 1972:

THIS WILL REFER TO THE CLAIM OF MR. HERBERT R. MARTINSON FOR REIMBURSEMENT OF CLOSING COSTS IN THE AMOUNT OF $1,205.50 PAID INCIDENT TO HIS PURCHASE OF A RESIDENCE IN CONNECTION WITH A TRANSFER OF OFFICIAL STATION.

THE CLAIM WAS PREVIOUSLY DENIED ON GROUNDS IT DID NOT MEET THE REQUIREMENTS OF SUBSECTIONS 4.1F AND 4.3A OF OFFICE OF MANAGEMENT AND BUDGET (OMB) CIRCULAR NO. A-56 WHICH PROVIDE AS FOLLOWS:

4.1 CONDITIONS AND REQUIREMENTS UNDER WHICH ALLOWANCES ARE PAYABLE.***

F. THE EXPENSES FOR WHICH REIMBURSEMENT IS CLAIMED WERE PAID BY THE EMPLOYEE.***

4.3 PROCEDURAL AND CONTROL REQUIREMENTS.

A. APPLICATION FOR REIMBURSEMENT AND DOCUMENTATION OF EXPENSES.*** EACH AMOUNT CLAIMED MUST BE SUPPORTED BY DOCUMENTATION SHOWING THAT THE EXPENSE WAS IN FACT INCURRED AND PAID BY THE EMPLOYEE.***

THE RATIONALE FOR DENIAL IN THIS AND OTHER SIMILAR CASES WAS THAT THE CLOSING COSTS INCIDENT TO PURCHASE OF A RESIDENCE COULD NOT BE REGARDED AS HAVING BEEN PAID BY THE PURCHASER EVEN THOUGH INCLUDED IN THE SALES PRICE; ALSO, THAT WE WOULD NOT LOOK BEHIND THE PRICE OF THE REALTY. AS TO SIMILAR CASES SEE B-165841, JANUARY 22, 1969; B-165841, DECEMBER 7, 1970; B-171440, MARCH 3, 1971; B-172339, JULY 20, 1971; B-173870, AUGUST 30, 1971; B-169752, JUNE 2, 1970; AND B-172369, MAY 27, 1971.

IN SUPPORT OF HIS CLAIM MR. MARTINSON PROVIDED THE FOLLOWING INFORMATION CONCERNING THE CIRCUMSTANCES UNDER WHICH HIS RESIDENCE WAS FINANCED:

I REPORTED FOR DUTY IN WASHINGTON ON JULY 26, 1971. ON JANUARY 9, 1971, I ENTERED INTO A CONTRACT FOR THE PURCHASE OF A NEW HOME FROM LEVITT AND SONS, INCORPORATED. THE SALE WAS CLOSED ON JULY 2, 1971. THE SALES PRICE OF THE RESIDENCE WAS $41,255.

ON JANUARY 9, 1971, I PAID LEVITT AND SONS, INCORPORATED $2,000(A DEPOSIT) AND ON JULY 2, 1971, I PAID LEVITT AND SONS, INCORPORATED $39,255 INCLUDING $6,255 FROM PERSONAL RESOURCES AND $33,000 I BORROWED FROM INTERSTATE BUILDERS ASSOCIATION, A COMPANY NOT AFFILIATED WITH LEVITT AND SONS, INCORPORATED.

IN EXPLANATION OF THE MANNER IN WHICH THE CLOSING COSTS ON THE PURCHASE WERE DISBURSED, MR. MARTINSON SUPPLIED A LETTER FROM THE VICE PRESIDENT OF UNIVERSAL FUNDING CORPORATION, A SUBSIDIARY OF LEVITT AND SONS, THE SELLER OF THE PROPERTY, LISTING "*** THE FEES AND CHARGES INCLUDED IN THE SALES PRICE OF THE HOME YOU RECENTLY PURCHASED FROM LEVITT & SONS, INC.***." THE LETTER CLOSED WITH THE STATEMENT THAT:

EACH OF THE FEES AND/OR CHARGES WAS PAID BY LEVITT & SONS, INC. ON YOUR BEHALF AND ARE NOT ITEMS THAT WERE MORTGAGED OR PAID FOR OVER A LONG PERIOD OF TIME. FULL CREDIT IN THE AMOUNT OF $1,205.50 IS GIVEN TO THE PURCHASER.

THE CLOSING COSTS WHICH WERE ADDED TO THE PURCHASE PRICE ARE CLEARLY DISCERNIBLE AND SEPARABLE FROM THE PRICE ALLOCABLE TO THE REALTY. ALTHOUGH THE SELLER MAY HAVE ACTUALLY PERFORMED THE ACT OF INITIALLY PAYING THE COSTS, THE DOWN PAYMENT AND THE AMOUNT PAID AT CLOSING BY THE PURCHASER FROM HIS OWN FUNDS EXCEEDED THE AMOUNT OF THOSE COSTS AND THE SELLER REGARDS THEM AS HAVING BEEN, IN EFFECT, PAID BY THE PURCHASER. ALSO, THE PURCHASER HAS SUPPLIED DOCUMENTATION OF THE AMOUNT OF THE COSTS AND OF HIS LIABILITY FOR THEM. IN THE LIGHT OF THE FACTS IN THIS CASE, WE BELIEVE THE CONDITIONS OF SUBSECTIONS 4.1F AND 4.3A OF OMB CIRCULAR NO. A- 56, SUPRA, MAY BE CONSIDERED AS HAVING BEEN MET.

ACCORDINGLY, OUR DECISIONS CITED ABOVE AND OTHERS IN WHICH THE FACT SITUATIONS ARE SIMILAR ARE HEREBY OVERRULED AND THIS DECISION WILL GOVERN IN FUTURE ANALOGOUS CASES.

THE CLAIM IS RETURNED HEREWITH FOR ALLOWANCE, IF OTHERWISE CORRECT.

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