B-168490, JAN. 5, 1970

B-168490, JAN. 5, 1970

CIVIL PAY--RELOCATION EXPENSES--LOAN ORIGINATION FEE--TIME DECISION TO REGIONAL FISCAL MANAGEMENT OFFICER OF INTERNAL REVENUE SERVICE CONCERNING LOAN ORIGINATION FEE EXPENSES INCURRED BY TWO EMPLOYEES INCIDENT TO PURCHASE OF RESIDENCE AT NEW OFFICIAL STATIONS. EMPLOYEES WHO, INCIDENT TO TRANSFERS, INCURRED LOAN ORIGINATION EXPENSES FOR PURCHASE OF HOMES AT THEIR NEW OFFICIAL STATIONS AFTER JULY 1, 1969, THE EFFECTIVE DATE OF THE TRUTH IN LENDING ACT WHEN SUCH FEES WERE NO LONGER REIMBURSABLE UNDER BUREAU OF THE BUDGET CIRCULAR NO. A-56, MAY NOT BE REIMBURSED FOR SUCH EXPENSES NOTWITHSTANDING THAT THEIR CHANGE-OF- STATION ORDERS WERE ISSUED OR THE CHANGE EFFECTED PRIOR TO JULY 1, 1969. B-168065, NOVEMBER 19, 1969.

TO MR. C. H. JENKINS:

WE REFER TO YOUR LETTER OF OCTOBER 21, 1969, ADFF:SB, REQUESTING A DECISION CONCERNING THE PROPRIETY OF APPROVING FOR PAYMENT TRAVEL VOUCHERS TRANSMITTED THEREWITH COVERING AMOUNTS CLAIMED BY MR. EARL HAMPTON AND MR. EUGENE BROWN AS LOAN ORIGINATION FEE EXPENSES INCURRED BY THE TWO EMPLOYEES INCIDENT TO PURCHASING RESIDENCES AT THEIR NEW OFFICIAL STATIONS.

WE UNDERSTAND THAT MR. HAMPTON'S TRANSFER OF STATION WAS DIRECTED IN ORDER DATED MAY 27, 1969; THAT HE EXECUTED A CONTRACT TO PURCHASE A RESIDENCE ON JULY 22, 1969, AND THAT SETTLEMENT WAS MADE ON AUGUST 11, 1969.

MR. BROWN'S CHANGE OF STATION WAS DIRECTED BY ORDERS DATED APRIL 22, 1969. HE SIGNED A CONTRACT TO PURCHASE A RESIDENCE ON JUNE 12, 1969, AND SETTLEMENT WAS MADE ON JULY 18, 1969. YOU POINT OUT THAT IN ACCORDANCE WITH SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A 56, REVISED JUNE 26, 1969, YOU REFUSED TO APPROVE FOR PAYMENT ANY PART OF THE AMOUNTS CLAIMED AS LOAN ORIGINATION FEES, WHICH FEES NO LONGER ARE REIMBURSABLE UNDER THE CITED REGULATIONS. HOWEVER, YOU NOW REQUEST OUR DECISION CONCERNING SUCH MATTER. IN THAT CONNECTION YOUR LETTER SAYS:

"ALSO YOUR OPINION IS REQUESTED ON THE FOLLOWING QUESTIONS SINCE BUREAU OF THE BUDGET CIRCULAR NO. A-56, TRANSMITTAL NO. 5, EFFECTIVE JUNE 26, 1969 WAS RECEIVED IN THIS OFFICE AROUND AUGUST 15, 1969, WE HAVE NOT YET RECEIVED INTERNAL REVENUE SERVICE IMPLEMENTATION, AND WE MADE MINIMUM DISTRIBUTION OF THE REVISED CIRCULAR NO. A-56 TO OUR FIELD OFFICES SEPTEMBER 25, 1969:

"1. DOES THE REVISED REGULATIONS PROHIBIT REIMBURSEMENT OF ORIGINATION FEE ON ALL REAL ESTATE TRANSACTIONS BEGUN PRIOR TO JUNE 26, 1969, WITH SETTLEMENT DATE AFTER JUNE 26?

"2. MAY ORIGINATION FEE BE REIMBURSED FOR REAL ESTATE TRANSACTIONS BEGUN SUBSEQUENT TO JUNE 26, BUT PRIOR TO RECEIPT OF CIRCULAR NO. A-56 IN THIS OFFICE?

"3. MAY WE REIMBURSE ORIGINATION FEE FOR REAL ESTATE TRANSACTIONS BEGUN BETWEEN AUGUST 15 AND SEPTEMBER 25, 1969?"

WE HAVE RECOGNIZED THAT DELETION OF THE "LOAN ORIGINATION FEE" AS A REIMBURSABLE ITEM UNDER BUREAU OF THE BUDGET CIRCULAR NO. A-56 WAS PREDICATED UPON THE TRUTH IN LENDING ACT AND, THEREFORE, WAS NOT INTENDED TO BE EFFECTIVE UNTIL JULY 1, 1969, THE EFFECTIVE DATE OF SUCH ACT. SEE DECISION OF NOVEMBER 19, 1969, B-168065, A COPY OF WHICH IS ENCLOSED. THE OTHER HAND, WE PERCEIVE NO LAWFUL BASIS FOR REIMBURSING AN EMPLOYEE AMOUNTS EXPENDED AS A FEE FOR LOAN ORIGINATION AFTER JULY 1, 1969, REGARDLESS OF THE DATE WHEN THE CHANGE OF STATION ORDERS WERE ISSUED OR THE DATE WHEN CHANGE OF STATION ACTUALLY OCCURRED. MOREOVER, IT IS NOT CONSIDERED TO BE MATERIAL THAT THE EMPLOYEE AND/OR THE EMPLOYING ORGANIZATION MAY NOT HAVE HAD ACTUAL KNOWLEDGE OF THE CHANGE IN THE REGULATIONS WHICH PRECLUDED REIMBURSEMENT FOR LOAN ORIGINATION FEES. SINCE IN THE CASES PRESENTED THE LOAN ORIGINATION FEES WERE NOT INCURRED UNTIL AFTER JULY 1, 1969, THERE IS NO BASIS UPON WHICH WE MIGHT ALLOW REIMBURSEMENT THEREFOR. YOUR QUESTIONS ARE ANSWERED ACCORDINGLY. THE VOUCHERS ARE RETURNED HEREWITH.