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ISCR Case 22-00424 — CASE

ISCR Case 22-00424denied

Case Headnote

ISCR Case No. 22-00424

Oct 25, 2023· Hon. Gregg A. Cervi· appeal

Summary

A security clearance applicant, representing herself, was denied under Guideline F (Financial Considerations) due to significant unresolved federal tax debts totaling approximately $200,000. The appeal board upheld the denial, citing the applicant's ongoing financial obligations as a national security concern.

Specifically, the applicant's unresolved tax debts raised concerns about her judgment and reliability (Disqualifying Condition F.1). Although the applicant had resolved some other debts and filed a tax return, her Offer in Compromise for the tax debt was still pending and considered unrealistic given her financial situation.

Despite the application of Mitigating Condition F.3, the appeal board concluded that the applicant's arguments did not demonstrate harmful error in the judge's initial decision. Consequently, the denial of her security clearance was affirmed.

Conditions Referenced

Disqualifying

F.1raisedInability or Unwillingness to Satisfy Debts

Mitigating

F.3appliedThe Individual Has Made Good Faith Efforts to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant resolved some debts and filed her 2013 Federal tax return.

Key Rule Quoted

“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)

Procedural Posture

SOR issuedMay 15, 2022
Answer filed—
Hearing held—
Decision dateOct 25, 2023Appeal decision

Cite For

Impact of Unresolved Tax Debts on Security Clearance Eligibility
Application of the Whole-person Concept in Financial Considerations
Limitations on New Evidence During Appeal Process

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 unresolved tax debts. The applicant argued that the Judge did not adequately consider her overall personal and professional history. The Board affirmed the decision, finding no harmful error in the Judge's analysis.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowPhilip J. Katauskas — denied the clearance (split findings)

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Whole-person analysis — raised by the applicantRejected
Applicant argued that the Judge's decision focused solely on financial considerations and did not adequately consider her overall personal and professional history.

Why the Board ruled this way

The Board found that the Judge's decision was supported by substantial evidence and articulated a satisfactory explanation for the denial of the security clearance, particularly regarding the unresolved federal tax debt.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewNo 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. 22-00424

)

) Applicant for Security Clearance ) _______________________________________) Date: October 25, 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 May 15, 2022, 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 September 7, 2023, Defense Office of Hearings and Appeals Administrative Judge Philip J. Katauskas denied Applicant’s security clearance eligibility. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. The SOR alleged four financial concerns, including that Applicant failed to file her Federal income tax return for tax year 2013, that she was indebted to the Federal Government and her state tax authority for delinquent taxes beginning in 2009 for approximately $35,000 and $37,000, respectively, and that she had one minor delinquent consumer debt. Noting that Applicant had resolved the consumer and state tax debts, and had filed her 2013 Federal tax return, the Judge found favorably for her on those allegations. With respect to the Federal tax debt, however, the

amount actually owed was approximately $200,000 and Applicant had only recently submitted an Offer in Compromise, which was still pending as of the hearing. The Judge noted that, even if the Offer in Compromise is approved, the monthly repayment terms proposed by Applicant “seem unrealistic to meet,” considering her overall financial picture. Decision at 6. Accordingly, the Judge found against Applicant regarding her Federal tax debt and concluded that the security concerns raised thereby were not mitigated. On appeal, Applicant challenges the Judge’s analysis under the Whole-Person Concept, arguing that the adverse decision focused solely on financial considerations, but the totality of her personal and professional history demonstrates that she meets the standards necessary to be granted eligibility for access to classified information. This argument is without merit. Applicant’s ongoing tax debts raise concerns that she may be lacking in qualities expected of those with access to classified information. Indeed, the Directive presumes there is a nexus or rational connection between proven conduct under any of the Guidelines and an applicant’s security suitability. See, e.g., DISCR OSD Case No. 92–1106, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993). The record reflects that Applicant owes approximately $200,000 for tax years beginning with 2009. It is well-settled that an individual who is unwilling to fulfill her legal obligations to the Federal Government – such as paying income taxes as required – does not demonstrate the high degree of good judgment and reliability required of persons granted access to classified information. See, e.g., ISCR Case No. 98-0810, 2000 WL 1247732 at *4 (App. Bd. Jun. 8, 2000) (“It is untenable for an applicant to refuse to accept his or her legal obligation to comply with the federal tax laws and then insist that the federal government must grant him or her the privilege of handling classified information.”). Applicant’s argument amounts to a disagreement with the Judge’s weighing of the evidence, which is not sufficient to demonstrate that he 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 also submits new evidence in the form of a narrative update on the status of her Federal Offer in Compromise and state tax debt and documentation regarding her taxes and other debts. The Appeal Board does not review cases de novo and is prohibited from considering new evidence on appeal. Directive ¶ E3.1.29. 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