ISCR Case 19-01141

Case Headnote

ISCR Case No. 19-01141

grantedMar 12, 2020· Hon. Michael H. Leonard· hearing

Summary

A 65-year-old quality assurance inspector's security clearance, initially challenged under Guideline F (Financial Considerations), was ultimately granted. The Department of Defense had raised concerns regarding a history of financial problems, including five charged-off accounts totaling approximately $34,249, and back taxes owed to the IRS for multiple years, estimated by the applicant to be between $35,000 and $40,000.

Specific allegations included a $26,496 charged-off automobile loan from a vehicle purchased in July 2014 with a 26% APR, which was repossessed and resolved in July 2019. Other resolved debts included a $792 cable TV account and a $128 credit card account, both paid in full in May 2019. Additionally, a $2,082 judgment from 2015 was satisfied in May 2019 with a payment of $4,493, and a $4,751 judgment from 2015 was resolved and satisfied in October 2019.

The applicant demonstrated good-faith efforts to resolve his financial issues. He entered into an installment agreement with the IRS in September 2019, with monthly payments of $538, to address back taxes for tax years 2011, 2012, 2013, 2014, 2015, and 2018. Due to the resolution of all delinquent debts and the establishment of a formal IRS repayment plan, the judge granted the applicant eligibility for access to classified information.

Why the Applicant Prevailed

The applicant resolved all five delinquent debts at issue.
He entered into a formal installment agreement with the IRS to repay back taxes owed.
The applicant demonstrated good-faith efforts to address his financial issues.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to Pay Annual Federal, State, or Local Income Tax as Required

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond the Person's ControlThe applicant's financial problems were due to underemployment and reliance on erroneous tax preparation.
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue CreditorsThe applicant made significant efforts to resolve his debts after the SOR was issued.
AG ¶ 20(g)appliedArrangements with Tax AuthorityThe applicant has a formal installment agreement with the IRS and is compliant with it.

Key Rule Quoted

“A security clearance case is not a debt-collection procedure. It is a procedure designed to evaluate an applicant’s judgment, reliability, and trustworthiness.”
— ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010)

Procedural Posture

SOR issuedApr 24, 2019
Answer filedMay 20, 2019
Hearing heldDec 3, 2019
Decision dateMar 12, 2020

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts in Resolving Debts
Impact of Personal Circumstances on Financial Responsibility

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

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	History of financial problems due to underemployment and reliance on erroneous tax preparation.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.b	The SOR concerns five collection of charged-off accounts for a total of about $34,249; $10,000 in back taxes owed to the IRS for tax year 2014; and $10,000 in back taxes owed to the IRS for tax year 2015. $34,249	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.c	The largest of the delinquent financial accounts is a $26,496 charged-off account stemming from an automobile loan. $26,496	For Applicant	Auto Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.d	Applicant purchased a used vehicle in July 2014 with dealer financing that included interest at an annual percentage rate of 26%.	For Applicant	Auto Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.e	He recalls the vehicle was repossessed several months later.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.f	The account was resolved (paid in full and/or settled in full) in July 2019.	For Applicant	Unspecified Financial	Unknown	—	—	—
1.g	Applicant paid in full a $792 collection account stemming from a cable TV account in May 2019. $792	For Applicant	Utility or Phone Debt	Unknown	—	—	—
1.h	Applicant paid in full a $128 collection account stemming from a credit card account in May 2019. $128	For Applicant	Credit Card Debt	Unknown	—	—	—
1.i	Applicant had a $2,082 judgment entered against him in 2015 stemming from an eviction action on a rental property. $2,082	For Applicant	Judgment Against Applicant	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.j	He paid the judgment creditor $4,493 in May 2019, and the judgment is now satisfied. $4,493	For Applicant	Judgment Against Applicant	Unknown	—	—	—
1.k	Applicant had a $4,751 judgment entered against him in 2015 stemming from a rental property. $4,751	For Applicant	Judgment Against Applicant	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.l	He resolved the debt with the creditor, and the judgment was satisfied in October 2019.	For Applicant	Judgment Against Applicant	Unknown	—	—	—
1.m	Applicant is in the process of resolving his indebtedness to the IRS.	For Applicant	Tax Unpaid	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.n	He began making monthly payments in about July 2019.	For Applicant	Tax Unpaid	Unknown	—	—	—
1.o	His proposal to have monthly installment payments automatically deducted from his checking account was approved by the IRS in September 2019.	For Applicant	Tax Unpaid	Unknown	—	—	—
1.p	The agreed upon monthly payment is $538. $538	For Applicant	Tax Unpaid	Unknown	—	—	—
1.q	The installment agreement covers multiple tax years, 2011, 2012, 2013, 2014, 2015, and 2018.	For Applicant	Tax Unpaid	Unknown	—	—	—
1.r	Applicant estimated he owes back taxes of $35,000 to $40,000 in total.	For Applicant	Tax Unpaid	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

History of financial problems due to underemployment and reliance on erroneous tax preparation.

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.b

The SOR concerns five collection of charged-off accounts for a total of about $34,249; $10,000 in back taxes owed to the IRS for tax year 2014; and $10,000 in back taxes owed to the IRS for tax year 2015.

$34,249

For Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.c

The largest of the delinquent financial accounts is a $26,496 charged-off account stemming from an automobile loan.

$26,496

For Applicant

Auto Loan Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.d

Applicant purchased a used vehicle in July 2014 with dealer financing that included interest at an annual percentage rate of 26%.

For Applicant

Auto Loan Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.e

He recalls the vehicle was repossessed several months later.

For Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.f

The account was resolved (paid in full and/or settled in full) in July 2019.

For Applicant

Unspecified Financial

Unknown

—

1.g

Applicant paid in full a $792 collection account stemming from a cable TV account in May 2019.

$792

For Applicant

Utility or Phone Debt

Unknown

—

1.h

Applicant paid in full a $128 collection account stemming from a credit card account in May 2019.

$128

For Applicant

Credit Card Debt

Unknown

—

1.i

Applicant had a $2,082 judgment entered against him in 2015 stemming from an eviction action on a rental property.

$2,082

For Applicant

Judgment Against Applicant

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.j

He paid the judgment creditor $4,493 in May 2019, and the judgment is now satisfied.

$4,493

For Applicant

Judgment Against Applicant

Unknown

—

1.k

Applicant had a $4,751 judgment entered against him in 2015 stemming from a rental property.

$4,751

For Applicant

Judgment Against Applicant

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.l

He resolved the debt with the creditor, and the judgment was satisfied in October 2019.

For Applicant

Judgment Against Applicant

Unknown

—

1.m

Applicant is in the process of resolving his indebtedness to the IRS.

For Applicant

Tax Unpaid

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.n

He began making monthly payments in about July 2019.

For Applicant

Tax Unpaid

Unknown

—

1.o

His proposal to have monthly installment payments automatically deducted from his checking account was approved by the IRS in September 2019.

For Applicant

Tax Unpaid

Unknown

—

1.p

The agreed upon monthly payment is $538.

$538

For Applicant

Tax Unpaid

Unknown

—

1.q

The installment agreement covers multiple tax years, 2011, 2012, 2013, 2014, 2015, and 2018.

For Applicant

Tax Unpaid

Unknown

—

1.r

Applicant estimated he owes back taxes of $35,000 to $40,000 in total.

For Applicant

Tax Unpaid

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

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Case Profile

Summary

Why the Applicant Prevailed

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

FINDINGS OF FACT

DISCUSSION

FORMAL FINDINGS

CONCLUSION