Summary
A 41-year-old DOD contractor was denied a security clearance due to significant financial considerations under Guideline F. The applicant's financial history included filing for Chapter 13 bankruptcy in August 2017, listing approximately $63,500 in liabilities. Additionally, the applicant had multiple tax liens, including a $17,819 state tax lien from 2011, a $1,326 state tax lien from 2012, and a $15,118 federal tax lien also from 2012. A $3,912 judgment was entered against the applicant in 2017.
Further concerns arose from the applicant's failure to timely file federal income tax returns from 2010 to 2015, and a state income tax return for 2013. While some mitigating conditions were considered, the judge found that the applicant's ongoing financial obligations and history of failing to file tax returns raised substantial security concerns.
The denial was based on the applicant's failure to timely file tax returns, the ongoing nature of significant federal tax debt despite the bankruptcy filing, and insufficient evidence of compliance with tax obligations or a clear plan to resolve outstanding debts.
Why the Applicant Was Denied
- The applicant failed to timely file federal income tax returns from 2010 to 2015, raising concerns about reliability and judgment.
- The applicant's financial issues were ongoing, with significant federal tax debt remaining unresolved despite a Chapter 13 bankruptcy filing.
- The applicant did not provide sufficient evidence of compliance with tax obligations or a clear plan to resolve outstanding debts.
Conditions Referenced
- AG ¶ 19(a)raisedInability to Satisfy Debts
- AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
- AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State or Local Income Tax Returns
- AG ¶ 20(b)appliedConditions Largely Beyond the Person's ControlThe applicant's divorce and custody battle contributed to financial issues, but this was given less weight due to ongoing tax filing failures.
- AG ¶ 20(c)appliedReceived Financial CounselingThe applicant completed required financial counseling as part of the bankruptcy process.
- AG ¶ 20(d)appliedGood-faith Effort to Repay CreditorsThe applicant was making regular payments under the Chapter 13 repayment plan.
- AG ¶ 20(g)rejectedArrangements with Tax AuthorityThe applicant did not provide evidence of arrangements with the IRS to resolve federal tax debt.
Key Rule Quoted
“Failure to file tax returns suggests that an applicant has a problem with complying with well-established governmental rules and systems.”
Procedural Posture
- SOR issuedJun 6, 2018
- Answer filedJul 11, 2018Requested decision on the record.
- Hearing held—Decision based on written record.
- Decision dateJan 28, 2019
Cite For
- Denial Based on Ongoing Financial Obligations Under Guideline F
- Impact of Failure to File Tax Returns on Security Clearance Eligibility
- Consideration of Mitigating Factors in Financial Distress Cases