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ISCR Case 21-00197 — CASE

ISCR Case 21-00197denied

Case Headnote

ISCR Case No. 21-00197

deniedSep 8, 2022· Hon. Pamela C. Benson· hearing

Summary

A 44-year-old defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to a history of unfiled tax returns and delinquent taxes. The Statement of Reasons detailed that the applicant owed $11,386.07 in delinquent Federal income taxes for tax year 2014. Additionally, he failed to file Federal and State A income taxes for tax years 2016, 2017, 2018, and 2019.

The applicant acknowledged these allegations but did not provide any supporting documentation to demonstrate good-faith efforts to resolve his financial obligations. This lack of evidence was a critical factor in the denial.

The decision concluded that the applicant failed to mitigate the security concerns raised by his financial issues, specifically his unfiled tax returns and the unresolved tax delinquency. Consequently, the security clearance was denied.

Why the Applicant Was Denied

The applicant failed to file Federal and state income tax returns for multiple years.
He has an unresolved tax delinquency of $11,386.07 for tax year 2014.
The applicant did not provide supporting documentation to demonstrate good-faith efforts to remedy his financial issues.

Conditions Referenced

Disqualifying

AG ¶ 19(c)appliedHistory of Not Meeting Financial Obligations
AG ¶ 19(f)appliedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedSep 21, 2021
Answer filedDec 1, 2021
Hearing held—Applicant represented himself (pro se) and did not respond to the FORM.
Decision dateSep 8, 2022

Cite For

Failure to Mitigate Financial Concerns Under Guideline F
Importance of Financial Responsibility in National Security Eligibility
Burden of Proof on Applicant to Demonstrate Good-faith Efforts in Financial Matters

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

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The applicant has unresolved financial concerns related to delinquent federal income taxes and failure to file tax returns for multiple years. The judge ruled against the applicant on all allegations under Guideline F, concluding that the applicant did not mitigate the financial considerations security concerns.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes delinquent Federal income taxes for tax year 2014 in the amount of $11,386.07 $11,386	Against Applicant	Tax Unpaid	Admitted	—	—	—
1.b	Applicant failed to file Federal and State A income taxes for tax years 2016, 2017, 2018, and 2019	Against Applicant	Tax Filing Failure	Admitted	—	—	—
1.c	Applicant failed to provide supporting documentation to demonstrate any good-faith efforts to remedy this matter	Against Applicant	Unspecified Financial	Admitted	—	—	—

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

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

HEARING

APPEARANCES

______________ ______________ DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 21-00197 ) Applicant for Security Clearance ) Appearances For Government: Patricia Lynch-Epps, Esq., Department Counsel For Applicant: Pro se 09/08/2022

STATEMENT OF CASE

BENSON, Pamela C., Administrative Judge: Applicant did not mitigate the financial considerations security concern. He failed to file Federal and state income tax returns for multiple years and he has an unresolved tax delinquency. He has failed to provide supporting documentation to demonstrate any good-faith efforts to remedy this matter. National security eligibility for access to classified information is denied. History of the Case Applicant submitted a security clearance application (SCA) on July 28, 2020. (Item 3) On September 21, 2021, the Defense Counterintelligence and Security Agency (DCSA) issued a Statement of Reasons (SOR) alleging security concerns under Guideline F (financial considerations). (Item 1) On December 1, 2021, Applicant provided an answer to the SOR, and requested a decision based upon the administrative record (Answer). (Item 2) A copy of the file of relevant material (FORM), dated January 28, 2022, was provided to Applicant by letter on January 31, 2022. Department Counsel attached as evidence to the FORM Items 1 through 4. Applicant received the FORM on February 11, 2022, and he was afforded a period of 30 days to file objections and submit material in refutation, extenuation, or mitigation. He did not respond to the FORM. On April 12, 2022, the case was assigned to me.

FINDINGS OF FACT

Applicant is 44 years old. He has been married since 1999, and has no children. He received a high school diploma in 1994, and attended some college classes in 2015. He enlisted in the U.S. Marine Corps in December 1994. He completed his active duty service with an honorable discharge in April 2000. He has worked for defense contractors since at least 2010, and he has worked for his current employer, as a non-destructive testing (NDT) quality specialist, since April 2020. He has held a DOD security clearance since approximately 2000. (Item 3; Item 4) The SOR alleges that Applicant owes delinquent Federal income taxes for tax year 2014 in the amount of $11,386.07 (SOR ¶ 1.a), and he failed to file Federal and State A income taxes for tax years 2016, 2017, 2018, and 2019. (SOR ¶¶ 1.band 1.c) He admitted all SOR allegations and stated this situation developed due to him not considering this matter to be a priority and procrastination. In his response to the SOR he stated that he was in the process of remedying this matter. (Items 1-4) Applicant completed an interrogatory on April 15, 2021, concerning the accuracy of a report of his background interview conducted on August 25, 2020, and questions about his Federal and state income taxes. He verified that the report of his interview with an authorized DOD investigation was accurate. He had reported to the investigator that he had not filed any income tax returns for 2016, 2017, 2018, 2019. In the interrogatory, however, he listed that he had filed both a Federal and State A income tax return for 2016, but he had not yet filed his 2020 Federal income tax return. He was asked to provide supporting documentation with the interrogatory. Applicant provided IRS transcripts for tax years 2014, 2017, 2018, and 2019. The IRS tax transcripts showed he had not filed federal income tax returns for tax years 2017, 2018, and 2019. He did not provide any State A income tax documentation. He provided no proof of payments or an established payment plan with any tax authority, or that he had recently filed any of the Federal or State A income tax returns alleged in the SOR. (Item 4)

POLICIES

This case is adjudicated under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG), which became effective on June 8, 2017. When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s eligibility for access to classified information. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, administrative judges apply the guidelines in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching

adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), the entire process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision. The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel.” The applicant has the ultimate burden of persuasion to obtain a favorable security decision. A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information. Section 7 of EO 10865 provides that adverse decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F: Financial Considerations The concern under Guideline F (Financial considerations) is set out in AG ¶ 18: Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds . . . .

This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. The record evidence of Applicant’s delinquent Federal tax debt and unfiled 2016, 2017, 2018, and 2019 Federal and State A income tax returns establishes the following disqualifying conditions under AG ¶ 19: (c) a history of not meeting financial obligations; and (f) failure 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 describes conditions that could mitigate security concerns. The following are potentially applicable in this case: (a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual's current reliability, trustworthiness, or good judgment; (b) the conditions that resulted in the financial problem were largely beyond the person's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (c) the individual has received or is receiving financial counseling for the problem form a legitimate and credible, source such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis or provides evidence or actions to resolve the issue. Applicant bears the burden of production and persuasion in mitigation. He attributed his failure to pay and file Federal and state income tax returns for multiple years due to it not being a priority and procrastination. He has failed to provide supporting documentation to demonstrate his good-faith efforts to remedy this matter. There is insufficient information to determine the amount of additional Federal or state tax debt he

may owe, if any. He failed to take responsible action to resolve his unfiled Federal and State A income tax returns for multiple years and pay his tax delinquency. Access to classified and protected information requires faithful adherence to the rules and regulations governing such activity. A person who fails to address concerns, even after having been placed on notice that his or her access or security clearance is in jeopardy, may lack the willingness to follow rules and regulations when his or her personal interests are at stake. Financial considerations security concerns are not mitigated.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a security clearance by considering the totality of the applicant’s conduct and all relevant circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d): (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent behavioral changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence. Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. I considered Applicant’s lengthy career as a Defense contractor and the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. I conclude Applicant has not met his burden of proof and persuasion. He did not mitigate the financial considerations security concerns or establish his eligibility for a security clearance.

FORMAL FINDINGS

I make the following formal findings on the allegations in the SOR: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a – 1.c: Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national security to grant or continue Applicant’s eligibility for a security clearance. Eligibility for access to classified information is denied. Pamela C. Benson Administrative Judge