Matter of: Jeffrey A. Ciocco File: B-256699 Date: August 12, 1994

Matter of: Jeffrey A. Ciocco File: B-256699 Date: August 12, 1994

DIGEST

DECISION

Mr. Jeffrey A. Ciocco, an employee of DOE stationed in Philadelphia, Pennsylvania, was transferred to the DOE facility in Germantown, Maryland, in June 1992. Incident to that transfer he contracted to purchase a new residence under construction from a builder with settlement to occur after the residence was completed and occupancy was approved. That settlement occurred on January 14, 1993, and Mr. Ciocco became the first owner of the residence.

Shortly thereafter, Mr. Ciocco made a voucher claim for the real estate related expenses incurred. Six expense items were disallowed or reduced by the agency. The two expense items which are the subject of this appeal are the reductions in the cost of state revenue stamps claimed from $1,435 to $717.50, and of transfer taxes claimed from $873.24, to $511.62. The agency disallowed the balance of these expenses because "the full payment of these fees is a contract requirement of the builder and not the custom for existing residences . . .."

The Federal Travel Regulation (FTR), in section 302-6.2(d)(1),[2] authorizes reimbursement to a transferred employee of certain miscellaneous real estate expenses if they are customarily paid by the purchaser of a residence at the new station, to the extent that they do not exceed amounts customarily charged in the locality of the residence. Among the expenses specifically listed in that provision as reimbursable are transfer taxes and state revenue stamps.

The agency's action here is based on the customary practice in the locality regarding state revenue stamps and transfer taxes on existing residences that the purchaser and the seller evenly divide the cost. However, the agency recognizes that it is the customary practice of new home builders in Frederick County, Maryland, to contractually require a purchaser of a newly constructed residence to incur the full expense of transfer taxes and state revenue stamps.

The concept of "customarily paid by the purchaser of a residence at the new station," embodies not only geographical custom, but also recognizes variations on types of transactions. For example, we have recognized that the local custom regarding allocation of closing costs between purchaser and seller can vary within the locality according to the type of mortgage financing the purchaser obtains.[3]

As the agency report suggests, each type of purchase arrangement can be subject to a differing custom in the same locality. We believe the proper approach is to consider only the customary practice for the particular type of transaction involved in each case.[4] According to the agency report in the instant case, the customary practice in the Frederick County, Maryland, area for new home builders is to require each purchaser to pay the full cost of state revenue stamps and transfer taxes. Since Mr. Ciocco purchased a newly constructed residence from a builder and by agreement paid the transfer tax and state revenue stamps, we need not consider the customary practice in the sale of existing residences between buyer and seller. Therefore, since these charges are assessed for every real estate transaction in the area, Mr. Ciocco may be reimbursed the full amount of both charges incurred, less the amounts already reimbursed.

OGC Form 500(Rev 3/92) (form omitted)

1. Mr. V. Joseph Startari

2. 41 C.F.R. Sec. 302-6.2(d)(1) (1993).

3. Edward M. Weglarz, B-236362, Nov. 9, 1989.

4. William I. Massengale, B-185863, Aug. 25, 1976.