Summary
A 57-year-old licensed attorney and CEO was denied a security clearance under Guideline F (Financial Considerations) due to significant and unresolved financial issues. The Statement of Reasons detailed multiple years of unfiled state and Federal income tax returns, specifically for 2003-2008, 2011, and 2012.
The applicant also had three state tax liens totaling $37,097, entered in 2013 and 2016, and owed $20,225 in delinquent Federal income taxes from 2005. Additionally, a bank promissory note for $90,818 remained outstanding. Overall, the applicant had significant outstanding tax delinquencies exceeding $800,000.
While the applicant cited financial hardship due to a catastrophic fire and health problems, the judge found insufficient evidence that these issues had been resolved. The denial was based on the applicant's failure to timely file tax returns, the substantial outstanding tax delinquencies, and the lack of demonstrated resolution for his financial problems, which raised concerns about his reliability and trustworthiness.
Why the Applicant Was Denied
- The applicant failed to timely file Federal and state income tax returns for multiple years.
- The applicant has significant outstanding tax delinquencies totaling over $800,000.
- The applicant did not provide sufficient evidence to demonstrate resolution of his financial issues.
Conditions Referenced
- AG ¶ 19(a)appliedInability to Satisfy Debts
- AG ¶ 19(b)appliedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
- AG ¶ 19(f)appliedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns or Failure to Pay Annual Federal, State, or Local Income Tax as Required
- AG ¶ 20(a)rejectedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to RecurThe applicant's ongoing financial issues are recent and unresolved.
- AG ¶ 20(b)rejectedConditions That Resulted in the Financial Problem Were Largely Beyond the Person’s ControlWhile the applicant cited circumstances beyond his control, he failed to resolve his financial issues over a long period.
- AG ¶ 20(d)rejectedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant had not made any payments on his repayment plan at the time of the hearing.
- AG ¶ 20(g)rejectedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those ArrangementsThe applicant's repayment agreement was recent and he had not yet made any payments.
Key Rule Quoted
“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”
Procedural Posture
- SOR issuedMay 23, 2017
- Answer filedSep 21, 2017
- Hearing heldJul 25, 2018
- Decision dateDec 17, 2018
Cite For
- Failure to Mitigate Significant Financial Concerns Under Guideline F
- Impact of Unresolved Tax Debts on Security Clearance Eligibility
- Importance of Demonstrating Resolution of Financial Issues for Clearance Approval