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ISCR Case 22-02021 — CASE

ISCR Case 22-02021denied

Case Headnote

ISCR Case No. 22-02021

deniedJun 9, 2023· Hon. Darlene Lokey Anderson· hearing

Summary

A 41-year-old male applicant with military training was denied a security clearance under Guideline F (Financial Considerations) due to a consistent failure to file Federal income tax returns. The Statement of Reasons specifically alleged that the applicant did not timely file his Federal income tax returns for tax years 2012 through 2020.

The administrative judge determined that this eight-year pattern of non-filing demonstrated poor judgment and unreliability, raising significant concerns about the applicant's trustworthiness and his ability to protect classified information. The applicant offered no valid excuse for his inaction, stating only a lack of knowledge, which was not deemed sufficient.

Ultimately, the applicant's failure to file taxes for eight consecutive years, coupled with the absence of a compelling explanation, was found to be inconsistent with the requirements for access to classified information, leading to the denial of his security clearance.

Why the Applicant Was Denied

The applicant failed to file Federal income tax returns for eight consecutive years, indicating a pattern of unreliability.
The applicant provided no valid excuse for his failure to file taxes, only stating a lack of knowledge.
The applicant's inaction was deemed inconsistent with the requirements for access to classified information.

Conditions Referenced

Disqualifying

AG ¶ 19(f)raisedFailure 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.

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedDec 12, 2022
Answer filedDec 20, 2022
Hearing held—Applicant requested a decision on the written record without a hearing.
Decision dateJun 9, 2023

Cite For

Denial of Security Clearance Due to Failure to File Taxes Under Guideline F
Impact of Financial Irresponsibility on Security Clearance Eligibility
Importance of Providing Valid Explanations for Financial Conduct in Clearance Cases

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 judge found that the applicant failed to timely file his Federal income tax returns for tax years 2012 through 2020, which raised significant financial concerns under Guideline F. Despite the applicant admitting to the allegations and stating that he was in the process of filing the returns, the judge ruled against the applicant, concluding that granting a security clearance was not consistent with the national interest.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant failed to timely file his Federal income tax returns for tax years 2012 through 2020.	Against Applicant	Tax Filing Failure	Admitted	—	—	Claimed Other

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. 22-02021

)

) Applicant for Security Clearance )

Appearances For Government: Andrea M. Corrales, Department Counsel For Applicant: Pro se June 9, 2023

STATEMENT OF CASE

LOKEY ANDERSON, Darlene D., Administrative Judge: Statement of Case On July 14, 2021, Applicant submitted a security clearance application (e-QIP). (Item 3.) On December 12, 2022, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. (Item 1.) The action was taken under Executive Order 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 for Determining Eligibility for Access to Classified Information, effective within the DoD after June 8, 2017. Applicant answered the SOR on December 20, 2022. He requested that his case be decided by an administrative judge on the written record without a hearing. (Item 2.) On February 3, 2023, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing five Items, was mailed to Applicant and received by him on February 17, 2023. The FORM

notified Applicant that he had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of his receipt of the FORM. Applicant submitted no Response to the Form. Applicant did not object to Government Items 1 through 5 and they are admitted into evidence, referenced hereinafter as Government Exhibits 1 through 5.

FINDINGS OF FACT

Applicant is 41 years old. He has never married and has no children. He has a high school diploma, military training, and an Electrical Technician Certificate he obtained in the military. Applicant is employed by a defense contractor as a Master Tradesperson 3. He is seeking to retain a security clearance in connection with his employment. Applicant served in the U.S. Navy from 2000 to 2004, for which he received an honorable discharge. Applicant’s currently holds a security clearance he was granted in 2007. Guideline F - Financial Considerations The Government alleged that Applicant is ineligible for a clearance because he made financial decisions that indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which raise questions about his reliability, trustworthiness, and ability to protect classified information. The SOR alleges that Applicant failed to timely file his Federal income tax returns for tax years 2012 through 2020. Applicant admits each of the allegations set forth in the SOR. Applicant began working for his current employer in May 2015. He provided no real excuse for failing to file his Federal income tax returns, except that he lacked the knowledge. He explained that while in the military, on the Naval base in Japan, up until 2010, he had access to a volunteer service that prepared his income tax returns. In 2010, they left, and he filed on his own. There were problems and it was returned to him to be corrected and sent back to the IRS. He lost confidence in doing it himself, things snowballed, and he stopped filing his returns. Applicant stated that all of his unfiled income tax returns are in the process of being filed. (Applicant’s Answer to SOR.) Not relevant to this issue, but noted by the Applicant, is the fact that as an American living abroad he is entitled to special benefits such as the Foreign Earned Income Exclusion and Foreign Tax Credit. However, these benefits are only allowed by filing a Federal income tax return, which Applicant has not done. (Government Exhibit 5.)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines (AG). 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. 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.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical and based on the evidence contained in the record. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture. 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 clearance 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 as to 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 security concern for 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. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage. The guideline notes several conditions that could raise security concerns under AG ¶ 19. One is potentially applicable in this case: (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. Applicant failed to timely file his Federal income tax returns for tax years 2012 through 2020. The evidence is sufficient to raise the above disqualifying conditions. The following mitigating conditions under the Financial Considerations guideline are potentially applicable under AG ¶ 20; (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, or a death, divorce, or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and

(g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements. Delinquent income tax returns are inconsistent with being cleared for access to classified information. Applicant failed to file his Federal income tax returns as required by law, for at least 8 years, from 2012 to 2020. Also, there is no evidence in the record regarding whether he filed his 2021 income tax returns. Applicant is aware of the legal requirement to file annual Federal income tax returns in a timely fashion. He stated that his Federal income tax returns in question are in the process of being filed. However, there is no documentary evidence in the record to show that he has taken any steps to ensure that his tax returns are being filed, or whether they will be filed in a timely basis going forward. Applicant’s inaction for so long reflects a pattern of unreliability, untrustworthiness, and poor judgment. Accordingly, Applicant does not meet the requirements to access classified information.

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 the potentially disqualifying and mitigating conditions in light of all relevant facts and circumstances surrounding this case. I conclude Applicant has not mitigated the Financial Considerations security concerns.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a. 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 interest to grant or continue Applicant’s national security eligibility for a security clearance. Eligibility for access to classified information is denied. Darlene Lokey Anderson Administrative Judge