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ISCR Case ISCR Case No. 23-00254 — CASE

ISCR Case ISCR Case No. 23-00254denied

Case Headnote

ISCR Case No. ISCR Case No. 23-00254

Sep 9, 2024· Hon. Gregg A. Cervi· appeal

Summary

An applicant, representing themselves, was denied a security clearance under Guideline F (Financial Considerations) due to a failure to file tax returns for 2019, 2020, and 2021. The appeal board affirmed this denial, citing the applicant's consistent failure to meet tax obligations as a disqualifying condition.

The board found that the applicant did not demonstrate responsible behavior concerning their tax responsibilities. Despite the applicant's claims of mitigating circumstances, these were deemed insufficient to overcome the security concerns raised by the three consecutive years of unfiled tax returns.

Ultimately, the appeal was denied. The decision underscored the critical importance of compliance with tax obligations for individuals seeking security clearance eligibility.

Conditions Referenced

Disqualifying

AG ¶ 20raisedFailure to File Tax Returns

Key Rule Quoted

“Compliance with legal obligations is essential for maintaining security clearance eligibility.”

Procedural Posture

Decision DateSep 9, 2024

Cite For

Importance of Timely Tax Filing Under Guideline F
Insufficient Mitigating Circumstances Regarding Tax Obligations
Emphasis on Compliance with Legal Obligations for Security Clearance Eligibility

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 the failure to timely file tax returns. The Applicant argued that the Judge misrepresented facts and failed to meet the burden of proof. The Board affirmed the Judge's decision, finding no harmful error in the ruling.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowPamela C. Benson — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
The Judge committed harmful error based on her interpretation of the record and her decision that misrepresented the facts.

Why the Board ruled this way

The Board found that the Judge's decision was supported by substantial evidence and that the Judge properly applied the relevant mitigating conditions. The Applicant's arguments did not demonstrate harmful error.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewProcedural complianceNo de-novo re-decisionNo new evidence on appealDeference to the judge’s credibility calls

Appeal Board panel

Moira Modzelewski — Chair
Gregg A. Cervi
James B. Norman

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. 23-00254

)

) Applicant for Security Clearance ) _______________________________________) DEPARTMENT OF DEFENSE DEFENSE LEGAL SERVICES AGENCY DEFENSE OFFICE OF HEARINGS AND APPEALS APPEAL BOARD POST OFFICE BOX 3656 ARLINGTON, VIRGINIA 22203 (703) 696-4759 Date: September 9, 2024

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT Julie R. Mendez, Esq., Chief Department Counsel FOR APPLICANT Pro se The Department of Defense (DoD) declined to grant Applicant a security clearance. On February 22, 2023, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that decision – security concerns raised under Guideline F (Financial Considerations) of the National Security Adjudicative Guidelines (AG) of Security Executive Agent Directive 4 (effective June 8, 2017) and DoD Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). Applicant initially requested a decision based upon the written record but subsequently requested a hearing, which was held on May 13, 2024. On July 17, 2024, Defense Office of Hearings and Appeals Administrative Judge Pamela C. Benson denied Applicant’s security clearance eligibility. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. For reasons stated below, we affirm the Judge’s decision. Under Guideline F, the SOR alleged that Applicant had failed to timely file federal and state tax returns for tax years 2019, 2020, and 2021. Applicant denied the allegations and submitted documentation indicating that all the returns had been filed in February and March 2023.

On appeal, Applicant alleges that “[t]he Judge has committed harmful error based on her interpretation of the record and her decision that unequivocally misrepresented the facts. . . . The harmful error is based on the Judge’s failure to meet the burden of proof required by the government, falsifying the facts in the record, arbitrary application of the administrative guidelines, and not correctly applying the whole person concept.” Our review of the Judge’s decision confirms that she considered all relevant issues and properly applied the mitigating conditions. Consistent with the following, we affirm. The Judge’s Findings of Fact and Analysis Applicant is a 58-year old, honorably discharged military veteran who failed to file timely federal and state tax returns for 2019, 2020, and 2021. He maintained that this was the result of a busy work schedule and his failure to make this obligation a priority. Decision at 2; Transcript (Tr.) at 28. Although Applicant understood that it was important to file, he felt that he could delay meeting that obligation because he believed he did not owe any additional taxes. Decision at 3; Tr. at 31. After submitting his Security Clearance Application (SCA) in which he acknowledged that he had not filed for 2020 and 2021 but did not admit the 2019 failure to file or the three years of unfiled state tax returns, Applicant was interviewed by an investigator who addressed the tax issues. Applicant advised the investigator that the returns would be filed by November 2022. He filed the returns in February and March of 2023. Applicant also owed federal taxes, interest, and penalties for tax year 2012, although this was not alleged in the SOR. This matter was the subject of a dispute with the IRS, and Applicant stated that he would not pay those taxes at this time but would do so if his second challenge to a U.S. Tax Court ruling is not resolved in his favor. Tr. at 25-36. This was not considered for disqualifying purposes but was appropriately considered in the application of mitigating conditions, in making a credibility determination, and in the Judge’s whole- person analysis. In light of these facts, the Judge concluded that Applicant provided no plausible basis for his failure to file tax returns, and despite Applicant's subsequent tax filings, he had not established that he acted responsibly and in good faith to address and resolve his tax obligations.

DISCUSSION

On appeal, Applicant challenges the Judge’s factual findings as well as her conclusions. When an administrative judge’s factual findings are challenged, the Board must determine whether the findings of fact are supported by such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all the contrary evidence in the same record and whether the judge’s findings reflect a reasonable interpretation of the record evidence as a whole. Directive, E3.1.32.1; ISCR Case No. 02-12199 at 2–3 (App Bd. Aug. 8, 2005). In deciding whether the Judge’s rulings or conclusions are erroneous, we will review the decision to determine whether: it does not examine relevant evidence; it fails to articulate a satisfactory explanation for its conclusions, including a rational connection between the facts found and the choice made; it does not consider relevant factors; it reflects a clear error of judgment; it fails to consider an important aspect of the case; it offers an explanation for the decision that runs contrary to the record evidence;

or it is so implausible that it cannot be ascribed to a mere difference of opinion. ISCR Case No. 97-0435 at 3 (App. Bd. Jul. 14, 1998). Applicant asserts that “the Judge failed to maintain the burden of proof required of the Government.” However, the government's burden is to prove its case by substantial evidence, which was clearly met in this instance. Once the government established a prima facie case against him, Applicant had the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue a security clearance. Thus, the burden was on Applicant to present witnesses and other evidence to rebut, explain, extenuate, or mitigate the security concerns raised by his failure to timely file his tax returns. Directive E3.1.15. Relative to mitigation, Applicant’s arguments broadly allege that the Judge made factual errors in her decision. This challenge largely conflates "facts" with "conclusions." Regardless, however, of whether considered to be facts or conclusions, the allegations of error are without merit because the Judge’s factual findings and conclusions are amply supported by the record. Beginning with admissions in Applicant’s SCA and following through to his SOR answer, his testimony at the hearing, the Government’s exhibits, and his own, it is undisputed that the tax returns at issue were not filed until February 2023 – years after they were due. Thus, the Government’s burden was met. A person who repeatedly fails to fulfill his or her legal obligations does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information. E.g., ISCR Case No. 15-05478 at 4 (App. Bd Oct. 2, 2017). We have noted that “[a] security clearance represents an obligation to the Federal Government for the protection of national secrets. Voluntary compliance with rules and systems is essential for protecting classified information.” Id at 3. Accordingly, failure to honor other obligations to the Government has a direct bearing on an applicant's reliability, trustworthiness, and ability to protect classified information as reflected in the Guideline F concerns that were alleged. Id at 4. Applicant’s failures to comply with Federal and state tax laws suggest that he has a problem with voluntarily abiding by well-established government rules and regulations, which calls into question his suitability for a security clearance. See Id at 3. Applicant’s appeal is premised on the incorrect belief that he mitigated the Government’s concerns because he filed his delinquent tax returns prior to the issuance of the SOR and that his failure to timely file was justified because he believed he was owed refunds. However, the obligation to timely file Federal and state income tax returns is legally independent from whether the person is entitled to a refund or not. ISCR Case No. 97-0176 at 2 (App. Bd. Jan. 22, 1998). A security clearance adjudication is not a proceeding aimed at inducing an applicant to meet his or her duty to file tax returns. Rather, it is a proceeding aimed at evaluating an applicant’s judgment, reliability, and trustworthiness. E.g., ISCR Case No. 07-08049 at 5 (App. Bd. Jul. 22, 2008). Accordingly, even though Applicant eventually filed his tax returns, the Judge was obligated to consider the facts and circumstances surrounding the failure to timely meet tax obligations. Id.

The timing of the resolution of financial problems is an important factor in evaluating an applicant's case for mitigation because an applicant who begins to resolve financial problems only after being placed on notice that his clearance eligibility is in jeopardy may lack the judgment and self-discipline to follow rules and regulations over time or when there is no immediate threat to his own interests. ISCR Case No. 15-05478 at 4. In this case, Applicant's filing of his income tax returns for 2019 – 2021 after submitting his SCA and undergoing his background interview appear to have coincided with his effort to obtain a clearance and undercuts the weight such remedial action might otherwise merit. Tr. at 32, 29. Evidence suggesting that after years of apparent inattention, Applicant was finally energized to file his tax returns when his clearance eligibility might be imperiled raises questions about his willingness to follow the rules governing classified information when his personal interests are not at stake. E.g., ISCR Case No. 15-01070 at 4 (App. Bd. Mar. 9, 2016) (an applicant who waits until his clearance is in jeopardy before resolving debts might be lacking in the judgment expected of those with access to classified information). Overall, Applicant’s brief advocates for an alternative weighing of the evidence. An applicant’s “disagreement with the Judge’s weighing of the evidence, or an ability to argue for a different interpretation 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.” ISCR Case No. 06-17409 at 3 (App. Bd. Oct. 12, 2007). Moreover, there is a rebuttable presumption that the Judge considered all the record evidence unless the Judge specifically states otherwise, and a bare assertion that the Judge did not consider evidence is not sufficient to rebut that presumption. E.g., ISCR Case No. 19-03344 at 3 (App. Bd. Dec. 21, 2020). Applicant has failed to establish any harmful error below. The record supports a conclusion that the Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. The decision 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 in ISCR Case No. 23-00254 is AFFIRMED. Signed: Moira Modzelewski Moira Modzelewski Administrative Judge Chair, Appeal Board Signed: Gregg A. Cervi Gregg A. Cervi Administrative Judge Member, Appeal Board Signed: James B. Norman James B. Norman Administrative Judge Member, Appeal Board