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![handle is hein.gao/gaobadjel0001 and id is 1 raw text is:
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/ /7. .- \.\ THE COMPTROLLER GENERAL
DECISION OF THE UNITED 8TATEs
WASHiNGTON. D.C. 20548
FILE: B-201666 DATE: March 6, 1981
Z/.. /t ,re. ,Estate Exp-nses
MATTER OF: Robert R. Rivinoja-'Real Est pe
Sales Tax on Real Estate Brokerage Fee
DIGEST: Employee paid a 7 percent brokerage fee on
sale of residence on relocation and a 5-1/2
percent sales tax on the brokerage fee as
required by South Dakota law. Employee may
be reimbursed the full amount of the commis-
sion and the sales tax paid on the brokerage
fee under paragraph 2-6.2a of the Federal
Travel Regulations as part of the cost of
services rendered by the broker.
The issue presented in this case is whether an
employee may be reimbursed the sales tax levied on the
brokerage commission under South Dakota law on the sale
of a residence incident to his transfer. Expense may be
reimbursed as a part of the broker's fee for services
rendered under paragraph 2-6.2a of the Federal Travel
Regulations (FTR) (FPMR 101-7, May 1973).
The matter is presented here by a letter from
Elizabeth A. Allen, Authorized Certifying Officer,
Internal Revenue Service, Southwest Region, Dallas,
Texas.
Mr. Robert R. Rivinoja, an employee of the Internal
Revenue Service, was transferred from Rapid City, South
Dakota, to Hobbs, New Mexico. Upon transfer he sold his
residence in Rapid City upon which he paid a real estate
commission or brokerage fee of $5,985 representing 7 per-
cent of the sale price and $329.18 representing a sales
tax of 5-1/2 percent on the brokerage fee for a total
of $6,13]4.18. The Internal Revenue Service allowed the
$5,985 brokerage Lee but disallowed the sales tax
thereon of $329.18. The disallowance was based upon
information supplied by the Midwest Region of IRS that
it was not customary, nor the usual practice to charge
sales tax on real estate commissions for that area.
By chapter 10-45-4, South Dakota Compiled Laws
(SDCL 1967), as amended, the State of South Dakota
imposes a 5 percent tax on the gross receipts of any
person engaging in or practicing any business or
profession in which the service rendered is of a](ViewImageLocal?handle=hein.gao/gaobadjel0001&div=1&collection=&method=preview&ext=.png&size=3)