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ISCR Case 20-01654 — CASE

ISCR Case 20-01654denied

Case Headnote

ISCR Case No. 20-01654

Jul 26, 2023· Hon. Gregg A. Cervi· appeal

Summary

This security clearance application was denied under Guideline F (Financial Considerations) due to significant tax delinquencies. The applicant, representing himself, failed to file tax returns for tax years 2013 through 2017 and owed approximately $36,000 in taxes.

While some payments were made after the Statement of Reasons (SOR) was issued, the appeal board found these corrective actions insufficient. The applicant's arguments regarding mental health and alleged inaccuracies in tax amounts were not persuasive.

Ultimately, the board determined that the applicant's repeated failures to address his tax responsibilities were not adequately mitigated, leading to the denial of his security clearance. The decision underscored the importance of timely tax compliance in security clearance evaluations.

Conditions Referenced

Disqualifying

AG ¶ 19raisedFinancial Considerations

Mitigating

AG ¶ 20(g)rejectedThe Individual Initiated Good-faith Efforts to Resolve Financial ProblemsThe applicant's corrective actions were not timely and did not mitigate the longstanding issues.

Key Rule Quoted

“"Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security."”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedAug 26, 2021
Answer filed—
Hearing held—
Decision dateJul 26, 2023Appeal decision

Cite For

Insufficient Corrective Actions Regarding Tax Delinquencies Under Guideline F
Importance of Timely Tax Compliance in Security Clearance Evaluations
Rejection of Mental Health Arguments as Mitigating Factors in Financial Considerations

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

Appeal at a glance· Full written decision

Affirmed

The appeal involved a denial of security clearance based on financial considerations, specifically tax delinquencies. The applicant argued that the Judge's decision was arbitrary and that his mental health issues impacted his financial responsibilities. The Board affirmed the Judge's decision, finding no harmful error in the proceedings.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowRoger C. Wesley — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant argued that the Judge's decision was arbitrary and capricious.
Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant contended that the Judge ignored evidence regarding his mental health and its impact on his tax delinquencies.
Procedural error — raised by the applicantRejected
Applicant claimed that the Judge cut off his testimony regarding his legal residence for tax filing purposes.
Erroneous finding of fact — raised by the applicantRejected
Applicant asserted that the amounts owed to state taxing authorities were inaccurate.
Mitigation wrongly applied / not applied — raised by the applicantRejected
Applicant argued that his corrective actions regarding tax issues warranted a favorable decision.

Why the Board ruled this way

The Board found that the Administrative Judge's decision was supported by substantial evidence and that the Judge did not commit harmful error in the evaluation of the evidence presented.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewProcedural complianceNo de-novo re-decisionNo new evidence on appeal

Appeal Board panel

James F. Duffy — Chair
Gregg A. Cervi
Allison Marie

Descriptive structured reading of this decided, public Appeal Board decision — what the case says, not a prediction or advice.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

APPEAL

APPEARANCES

_______________________________________ ) In the matter of: )

)

----- )

ISCR Case No. 20-01654

)

) Applicant for Security Clearance ) _______________________________________)

Date: July 26, 2023

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Pro se The Department of Defense (DoD) declined to grant Applicant a security clearance. On August 26, 2021, DoD issued a Statement of Reasons (SOR) advising Applicant of the basis of that decision⸺security concerns raised under Guideline F (Financial Considerations) of the National Security Adjudicative Guidelines (AG) in Appendix A of Security Executive Agent Directive 4 (effective June 8, 2017) and DoD Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). On May 31, 2023, Defense Office of Hearings and Appeals Administrative Judge Roger C. Wesley denied Applicant’s security clearance eligibility. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. The SOR, as amended, alleged that Applicant failed to timely file his Federal and state tax returns for tax years 2013 through 2017, and that he carried delinquent Federal and state tax balances totaling approximately $36,000. The Judge found that, although Applicant had filed his delinquent returns, he had done so at various times in 2022, “well past the issuance of the SOR.” Decision at 4. The Judge similarly found that Applicant had repaid some of his delinquent tax balances, but some of the payments post-date the issuance of the SOR. Decision at 4-5. In finding

adversely on all allegations, the Judge concluded that Applicant’s efforts were “not enough at this time to overcome his repeated failures or inability to address his tax-filing and tax-paying responsibilities in a timely way over the course of many years.” Decision at 9. On appeal, Applicant first reiterates information regarding his mental health and anxiety attacks, and how those impacted his tax delinquencies. Appeal Brief at 2. These matters were discussed at length during the hearing (see Tr. at 26-31, 39-41, 44-45, 84-88) and addressed in the Judge’s decision (see Decision at 3), and Applicant has not established that the Judge committed any harmful error in his findings of fact about, or analysis of, this information. Applicant also argues that the Judge cut off his testimony regarding his legal residence for tax filing purposes. Appeal Brief at 6. Our review of the transcript reflects that Applicant thoroughly addressed his residency in response to questions posed directly by the Judge. Tr. at 80 83. Although the Judge interrupted Applicant several times, it appears to have been in an effort to clarify and confirm Applicant’s answers. At the conclusion of the hearing, Applicant was afforded an opportunity to add additional information based on the Judge’s questions and, through counsel, he declined. Tr. at 89. There is no basis in the record to support that Applicant was denied an opportunity to present his case or to conclude that he was denied due process. See, e.g., ISCR Case No. 09-06224 at 3 (App. Bd. Jan. 20, 2011). Applicant next asserts that the amounts alleged as being owed to the various state taxing authorities were inaccurate. Appeal Brief at 3. The amounts alleged in the SOR were drawn from Applicant’s own documentation, which included his Federal and state tax returns as drafted by his tax preparer in January 2022. See AE F at 74, 86, 106-109, 175, 177. This argument is therefore without merit. Applicant’s remaining argument on appeal appears to stem from his assertion that he has filed his delinquent tax returns and paid all balances owed. An applicant’s correction of past tax problems, however, does not compel a judge to issue a favorable decision. See, e.g., ISCR Case No. 17-01807 at 4 (App. Bd. Mar. 7, 2018). Rather, a judge must examine the record and consider an applicant’s security clearance worthiness in light of such longstanding behavior that evinces irresponsibility. A judge must consider the timing of any corrective action, both when evaluating mitigating condition AG ¶ 20(g), which applies specifically to taxes, as well as other overlapping mitigating conditions. Id. (timing should also be considered “in determining whether an applicant acted responsibly under the circumstances, whether an applicant’s past financial deficiencies are unlikely to recur, or whether an applicant initiated good-faith efforts to resolve financial problems”). In his October 2017 security clearance application, Applicant disclosed that he had not filed his Federal and state income taxes since tax year 2013. Government Exhibit (GE) 1 at 82-84. He reiterated those tax deficiencies during his January 2019 clearance interview, explaining that the failures were due to not understanding the different tax brackets and filing statuses, and because he moved several times during that period and lost receipts for deductions and write-offs. GE 2 at 4. The SOR was issued in this matter in August 2021 and Applicant acknowledged receipt of the same in December 2021; however, he did not file his 2014 and 2015 Federal returns until mid 2022, and his 2013 return remained unfiled until October 2022, five years after beginning this

security clearance process. Moreover, it is unclear from the record that Applicant’s 2016 and 2017 Federal returns have been filed at all, as the returns created by the tax preparer in early 2022 for Applicant’s submission reflect a filing status of Married Filing Jointly, while his Tax Account Transcripts reflect that substitute returns were prepared by the Internal Revenue Service with a filing status of Married Filing Separately. See Applicant Exhibit (AE) F at 117, 185; AE J at 251, 254. In spite of Applicant’s protestations that he began addressing his tax problems prior to receipt of the SOR, it is incontrovertible that his tax problems were longstanding, and that he took little to no action to address the problems until after his clearance reinvestigation began. Applicant appears to simply disagree with the weight that the Judge placed on his corrective actions; however, a party’s disagreement with the Judge’s weighing of the evidence is not sufficient to demonstrate that the Judge weighed the evidence or reached conclusions in a manner that is arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 06-17409 at 3 (App. Bd. Oct. 12, 2007). Applicant has not established that the Judge committed harmful error. Our review of the record reflects that the Judge examined the relevant evidence and articulated a satisfactory explanation for the decision, which is sustainable on this record. “The general standard is that a clearance may be granted only when ‘clearly consistent with the interests of the national security.’” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). “Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” AG ¶ 2(b).

ORDER

The decision is AFFIRMED. Signed: James F. Duffy James F. Duffy Administrative Judge Chair, Appeal Board Signed: Gregg A. Cervi Gregg A. Cervi Administrative Judge Member, Appeal Board Signed: Allison Marie Allison Marie Administrative Judge Member, Appeal Board