February 4, 1998
                                                
 
 
                            GSBCA 14327-RELO
 
 
                    In the Matter of IRWIN BERNSTEIN
 
 
        Irwin Bernstein, Boca Raton, FL, Claimant.
 
        J. Patrick O'Toole, Director, Division of Travel Management,
   Social Security  Administration,  Baltimore,  MD,  appearing  for
   Social Security Administration.
 
   GOODMAN, Board Judge.
 
        Claimant,  Mr. Irwin  Bernstein,  is  an Administrative  Law
   Judge  employed by  the Social Security  Administration's (SSA's)
   Office of  Hearings and Appeals  (OHA) in OHA's  Fort Lauderdale,
   Florida, office.  He was authorized by SSA to perform an official
   change of  station from New  York, New York, to  Fort Lauderdale,
   Florida, effective May 27, 1997.   SSA acknowledges that the move
   was for the benefit of the agency and, accordingly, reimbursement
   of   all  relocation  expenses  allowed  by  the  Federal  Travel
   Regulation (FTR) was authorized.
 
        As the result of his  move, Mr. Bernstein sold his residence
   in New York,  a cooperative dwelling.   Prior to the sale  of his
   co-op,  Mr. Bernstein  telephoned Mr.  David  Tarr, a  relocation
   policy  analyst in  the agency's  Division  of Travel  Management
   (DTM).    Mr.  Bernstein  called  with  questions  regarding  the
   reimbursable settlement expenses  connected with the sale  of his
   co-op.
 
        Specifically,  Mr. Bernstein  wanted to  know  if the  "flip
   tax," associated specifically with the  sale of co-ops in the New
   York vicinity,  was a  reimbursable expense.   "Flip tax"  is the
   common  term  used  for  a  resale waiver  fee.    A  cooperative
   apartment association in New York  has the right of first refusal
   to  repurchase  a  shareholder s  interest when  the  shareholder
   wishes to sell, or may waive that right if the shareholder pays a
   set fee.   Payment  of the  fee allows  the  shareholder to  then
   dispose of his  ownership on the open market,  rather than having
   to resell his  ownership interest to the  cooperative, presumably
   at  a price  less than market  value.   See Ethan F.  Roberts, B-
   230741 (Sept.  19, 1988).  In the instant  case, the flip tax was
   referred  to as  a "transfer  fee" in  the by-laws  of claimant s
   cooperative  association,  and  this  fee  was  $500  per  share.
   Claimant owned 30.5  shares, which resulted in a  fee of $15,250.
   This  condition in the  by-laws existed when  claimant originally
   purchased  his unit and his shares, and he has informed the Board
   that he was  aware of same before  entering into his  contract of
   sale for the purchase of his unit.
 
 
        Mr. Tarr erroneously advised Mr. Bernstein that the flip tax
   was  reimbursable.  Subsequently, Mr. Bernstein submitted a claim
   for  reimbursement  of  his settlement  expenses,  including  the
   $15,250 flip tax, to DTM for payment.  When Mr. Bernstein's claim
   was  audited, payment  of the  flip  tax was  denied, based  upon
   previous decisions of  the General Accounting Office  (GAO) which
   the  agency asserted specifically  prohibit reimbursement of this
   expense.
 
        After   receiving   the   letter  denying   the   flip   tax
   reimbursement,  claimant again telephoned Mr. Tarr protesting the
   denial.   Claimant  was not  contesting  DTM's interpretation  or
   application of the regulations; rather, he claimed entitlement to
   the flip tax based on the fact that he was incorrectly advised by
   Mr. Tarr that the expense would be reimbursed.
 
        Mr.  Tarr apologized to claimant for the misinformation that
   had  been  provided,  but apprised  claimant  that  the erroneous
   advice of Government employees  may not serve as the  basis for a
   claim   that   otherwise   is  expressly   barred   by  statutory
   regulation.     Claimant's response to this was that he would not
   have accepted the reassignment to Fort Lauderdale if Mr. Tarr had
   correctly  advised him  that the  flip tax  expense would  not be
   reimbursed.
 
        On  September  16,   1997,  claimant  submitted  to   DTM  a
   supplemental voucher reclaiming the flip tax for which the agency
   had  denied  reimbursement,  together  with  a letter  requesting
   reconsideration of the denial.   In his letter,  claimant asserts
   that he had more than one conversation with Mr. Tarr, who assured
   him that the flip tax would  be reimbursed; that based upon  this
   assurance, he decided to accept the relocation; that he relied to
   his  detriment upon  this  information and  purchased  a home  in
   Florida factoring in the amount of the flip tax which he believed
   would be reimbursed.  Claimant states further:
 
             I had relied  in good faith on  the representation
        made to me,  to my detriment,  which has created  major
        financial problems.  
 
             I ask that  you reconsider and allow me to recover
        the  flip tax.   This  is not  a question of  whether I
        should have known, but in  fact, what I was assured and
        relied upon same.
 
        The  agency's response to the request for reconsideration is
   as follows:
 
             Mr. Bernstein offers no new or compelling argument
        for  the reimbursement of the  "flip tax."  His request
        for reimbursement is  based solely on the  fact that he
        was originally misinformed that he  would be reimbursed
        for this expense.
 
             In his letter,  Mr. Bernstein states that  he "had
        more  than  one  conversation with  Mr.  Tarr"  and was
        repeatedly  assured  that  the   "flip  tax"  would  be
        reimbursed.   He further implies that he would not have
        accepted the reassignment  offered to him had  he known
        that he would not be reimbursed for the "flip tax" upon
        the sale of his co-op.
 
             Mr. Tarr recalls having only one conversation with
        Mr. Bernstein, in which he  advised that the "flip tax"
        would  be  reimbursed.    Mr.  Tarr  does  not  recall,
        however, any indication  on Mr.  Bernstein's part  that
        his  acceptance  of  the  reassignment  hinged  on  the
        reimbursement of this  single expense.  It was also Mr.
        Tarr's  impression  that  Mr.  Bernstein  already   had
        accepted  the reassignment,  and  he believed  that Mr.
        Bernstein was calling prior to the sale of the co-op to
        verify which of his closing costs would be reimbursed.
 
             SSA's  position  is  that the  reimbursement  of a
        "flip  tax" is clearly  and specifically  prohibited by
        statute.   It is also our position that the regulations
        prohibit  the reimbursement of  an expense that  is not
        allowed by  the FTR  based solely of  the fact  that an
        employee was given erroneous advice to the contrary.
 
             We  also feel  that while  a  potential transferee
        certainly   must   consider   all  of   the   financial
        implications of accepting a  change in duty assignment,
        the  decision  as  to  whether  or  not  to   accept  a
        reassignment  should  not  be based  primarily  on  the
        relocation reimbursements and entitlements connected to
        that reassignment.
 
             We regret that erroneous  information was provided
        by a  member of our staff.  However, the misinformation
        did  not lead  Mr. Bernstein  to  incur an  unnecessary
        expense; he would  have had to pay the  "flip tax" upon
        the sale of  his co-op regardless of whether  or not he
        believed it would be reimbursed.
 
             We  can find no statutory authority allowing us to
        reimburse  Mr. Bernstein  for the  disputed "flip  tax"
        expense . . . . 
 
        In his letter  requesting reconsideration, claimant requests
   that  in the  event  the  agency does  not  reverse its  previous
   decision,  the matter  be  forwarded to  this  Board for  review.
   Accordingly,  by  letter  dated September  25,  1997,  the agency
   forwarded  its  denial  and  request  for  review  on  behalf  of
   claimant.
 
                               Discussion
 
        There is no dispute as to the essential facts  in this case.
   The  agency admits that its employee erroneously advised claimant
   that the  flip tax was reimbursable.  The claimant does not argue
   that  the flip  tax  is  in fact  reimbursable  under statute  or
   regulation,  but only  that he  relied  to his  detriment on  the
   erroneous information.  
 
        The agency  questions whether the claimant  actually decided
   to accept the position based upon the assurance that the flip tax
   was reimbursable,  and also  asserts that even  if this  were the
   case, a transferee should not make a decision solely on the basis
   of the  reimbursement of  certain expenses.   We need  not decide
   whether  the agency's  assurances were  the  basis of  claimant's
   decision to accept the assignment,  because even if this were the
   case, it would not afford claimant relief in this matter.
 
        With  regard to reimbursement  of real estate  expenses, the
   FTR  authorizes reimbursement of specific expenses (broker's fees
   and real estate commissions; advertising,  selling, and appraisal
   costs; and legal and related expenses) and miscellaneous expenses
   which are enumerated as follows:
 
        Reimbursable and non-reimbursable expenses.
 
        (d)  Miscellaneous  expenses--(1)  Reimbursable  items.
        The following expenses  are reimbursable in  connection
        with the sale and/or purchase of a residence . . . .
 
             (i) FHA or VA fee for the loan application.
 
             (ii)  Loan   origination  fees   and  similar
             charges such as loan assumption fees and loan
             transfer fees. 
 
             (iii) Cost of preparing credit reports.
 
             (iv) Mortgage and transfer taxes.
 
             (v) State revenue stamps.
 
             (vi) Other fees and charges similar in nature
             to  those  listed   in  paragraphs  (d)(1)(i)
             through   (v)   of   this   section,   unless
             specifically prohibited  in paragraph  (d)(2)
             of this section.
 
             (vii) Charge  for prepayment of a mortgage or
             other security instrument  in connection with
             the sale of  a residence at the  old official
             station  to  the  extent  the  terms  in  the
             mortgage or other security instrument provide
             for this charge. 
 
             (viii) Mortgage title  insurance policy, paid
             for by the employee, on a residence purchased
             by the  employee for  the protection  of, and
             required by, the lender.
 
             (ix) Owner's title insurance policy, provided
             it  is  a prerequisite  to  financing  or the
             transfer of the  property; or if the  cost of
             the   owner's  title   insurance  policy   is
             inseparable from the cost  of other insurance
             which is  a prerequisite to  financing or the
             transfer of the property.
 
             (x) Expenses in  connection with construction
             of  a  residence,  which  are  comparable  to
             expenses that are  reimbursable in connection
             with the purchase of an existing residence.
 
             . . . .
 
        (2)    Nonreimbursable  items.    Except  as  otherwise
        provided  in paragraph  (d)(1)  of  this  section,  the
        following items of expense are not reimbursable:
 
             (i) Owner's  title insurance  policy, "record
             title" insurance  policy, mortgage  insurance
             or  insurance  against   loss  or  damage  of
             property, and optional insurance  paid for by
             the employee in connection with the  purchase
             of a  residence  for the  protection  of  the
             employee;
 
             (ii) Interest on  loans, points, and mortgage
             discounts;
 
             (iii) Property taxes;
 
             (iv) Operating or maintenance costs;
 
             (v)  No   fee,  cost,   charge,  or   expense
             determined to be  part of the  finance charge
             under the Truth in Lending Act, Title I, Pub.
             L.  90-321,  as  amended,  and  Regulation  Z
             issued  by  the  Board  of  Governors of  the
             Federal  Reserve System  (12  CFR Part  226),
             unless specifically  authorized in  paragraph
             (d)(1) of this section; and
 
             (vi) Expenses  that result  from construction
             of a residence.
 
        (e)  Losses  due to prices or market  conditions at the
        old  and   new  posts   of  duty.     Losses  are   not
        reimburseable when they are incurred by an employee:
 
             (1) Due to failure to  sell a residence at the old
        official station  at the price asked, or at its current
        appraised value, or at its original cost;
 
             (2)  Due to failure  to buy a dwelling at  the new
        official station at  a price comparable to  the selling
        price of the residence at the old official station; or 
 
             (3)  Any similar losses.
 
        (f)  Other expenses of sale and purchase of residences.
        Incidental  charges  made   for  required  services  in
        selling and purchasing  residences may be  reimbursable
        if  they  are  customarily  paid  by  the  seller of  a
        residence at the old official station or if customarily
        paid  by  the purchaser  of  a  residence  at  the  new
        official  station, to  the extent  they  do not  exceed
        amounts  customarily charged  in  the locality  of  the
        residence.
 
        (g)   Overall limitations--(1) Sale of the residence at
        the old official station.  The total amount of expenses
        that an  agency may  reimburse in  connection with  the
        sale of the residence at the old official station shall
        not exceed 10 percent of  the actual sales price of the
        residence.
 
   41 CFR 302-6.2(a)-(g) (1997).
 
        Pursuant  to  the  above  regulation,  the   total  expenses
   reimbursed  for the  sale  of  a residence  at  the old  official
   station shall not  exceed ten percent of the  actual sales price.
   As  the sale price  of claimant s cooperative  unit was $150,000,
   reimbursement  is  limited to  a  total  of  $15,000.    Claimant
   previously claimed $27,095 in reimburseable expenses for the sale
   of his  residence and  received reimbursement  of $11,845,  which
   were all  his expenses claimed  except for the $15,250  flip tax.
   Even  if he  were entitled to  reimbursement of the  flip tax, he
   would only be entitled to receive an additional $3,155. 
 
        The  GAO  has   issued  several  decisions   concerning  the
   reimbursement of  the flip tax.   In William D.  Landau, B-226013
   (Oct.   28,   1987),   GAO  ruled   that   real   estate  expense
   reimbursements are strictly governed by FTR 302.6.2(d)(vi), which
   authorizes reimbursement of fees which are "similar in nature to"
   the specific  fees listed in paragraphs (d)(1)(i)  through (v) of
   the section, unless specifically  prohibited in paragraph (d)(2).
   Since none  of the specifically-listed authorized expenses relate
   to the purchase of a  right to sell, a  resale waiver fee is  not
   sufficiently      similar       to      them       to      permit
   reimbursement.[foot #] 1  
 
 
        The GAO held with regard to the flip tax:
 
        Essentially,  it  is  a  cooperative apartment  owner's
        purchase  of  a  right  to  dispose  of  his  apartment
        interest on the open market.   As such, it is  our view
        that it is not sufficiently similar in nature to any of
        the items listed  . . . to permit  reimbursement.  This
        fee  appears  to be  unique  to transactions  involving
        cooperatively- owned residences, and we  are unaware of
        any other  authority in the Federal Travel Regulation[]
        which   would  authorize   payment  of   this  expense.
        Accordingly, the agency action disallowing the claim is
        sustained.
 
        This same conclusion  was reached  in Ethan  F. Roberts,  B-
   230741 (Sept.  19, 1988).   We find  the reasoning  in these  GAO
   decisions reasonable and persuasive.   We agree that the flip tax
   is  not  similar  in  nature  to  the  specific  fees  listed  in
   paragraphs  (d)(1)(i)  through  (v)   of  the  above  regulation.
   Charges listed in those paragraphs arise from  the preparation of
   loan   applications    and  are  otherwise  associated  with  the
   origination of loans or other transaction costs, such as mortgage
   and transfer taxes, and state  revenue stamps.  Additionally, the
   flip tax may not be reimbursed  pursuant to paragraph (f) of  the
   regulation, as it  is not an incidental charge  made for required
   services  in selling the residence customarily paid by the seller
   of a residence.  
 
        We find no authority under the above regulation to reimburse
   claimant for the flip  tax.  Claimant knew  upon purchase of  his
   unit that  regardless of when or  why he eventually sold  it, the
   flip tax would be paid to the cooperative  association.  As such,
   this  cost  was  not  for  services rendered  to  accomplish  the
   transfer, but  was inherent  in the  sale  of the  unit, hence  a
   market  condition.  Presumably, claimant would have included this
   cost in his  selling price and  attempt to recoup  same.  To  the
   extent that the sale price did not include recoupment of the flip
   tax, then  claimant incurred a  loss as  the result  of a  market
   condition,  which is not compensable pursuant to paragraph (e)(3)
   of the regulation.
 
        The   fact  that  claimant  was  erroneously  advised  by  a
   Government  employee that the flip tax  was reimbursable does not
   afford  claimant  relief  in this  matter.    Unfortunately, that
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 1   The decision dealt  with a prior version of the
   relevant regulation, whose language was substantially similar  to
   the current version.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   claimant was  misinformed by  a Government  official provides  no
   legal basis for  the payment  of a  claim for which  there is  no
   authority.  It  is a well settled rule of law that the Government
   cannot be bound by the erroneous advice or  action of its agents.
   Kevin S. Foster, GSBCA 13639-RELO, 97-1 BCA   28,694 (1996); John
   J. Cody, GSBCA 13701-RELO, 97-1 BCA   28,688 (1996). 
 
 
        Claimant is not entitled to reimbursement of the flip tax.
 
                                 _____________________
                                 ALLAN H. GOODMAN
                                 Board Judge