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ISCR Case 16-01491.h1 — CASE

ISCR Case 16-01491.h1granted

Case Headnote

ISCR Case No. 16-01491.h1

grantedJul 20, 2017· Hon. Candace Le'i Garcia· hearing

Summary

A 27-year-old male applicant was initially denied a security clearance under Guideline F (Financial Considerations) due to concerns regarding his federal tax obligations. Specifically, the Statement of Reasons alleged that he failed to file federal income tax returns for tax years 2012 through 2014 and owed the IRS $4,000 in unpaid federal taxes for 2012. These issues raised disqualifying conditions under Adjudicative Guidelines paragraphs 19(a), 19(c), and 19(f).

However, the applicant successfully mitigated these concerns. He filed all outstanding federal income tax returns for 2012 through 2014 and resolved his 2012 federal tax debt. He further provided documentation demonstrating that he had made arrangements with the IRS to address his tax obligations.

The decision noted that the applicant's overall conduct and circumstances indicated a commitment to financial responsibility, leading to the application of mitigating condition Adjudicative Guideline paragraph 20(g). As a result of these actions, the applicant's security clearance was GRANTED.

Why the Applicant Prevailed

The applicant filed his federal income tax returns for 2012 through 2014 and resolved his 2012 federal tax debt.
He provided documentation showing he made arrangements with the IRS to pay his tax obligations.
The applicant's overall conduct and circumstances indicated a commitment to financial responsibility.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns

Mitigating

AG ¶ 20(g)appliedMade Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed

Key Rule Quoted

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

Procedural Posture

SOR issuedJul 7, 2016
Answer filedAug 4, 2016Applicant elected to proceed without a hearing.
Hearing held—Decided on the written record.
Decision dateJul 20, 2017

Cite For

Mitigation of Financial Considerations Under Guideline F
Demonstrating Compliance with Tax Obligations as a Mitigating Factor
Whole-person Concept in Evaluating 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.

Standardized Decision Profile

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

Posture: Decision on RecordDecided: granted

The judge found that the applicant mitigated financial concerns related to unpaid federal taxes and failure to file tax returns for multiple years. As a result, the applicant was granted eligibility for a security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	failed to file federal income tax returns for tax years 2012 through 2014, as required	For Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	(g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.b	owed the IRS $4,000 in unpaid federal taxes for tax year 2012 $4,000	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	(g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full

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. 16-01491 ) Applicant for Security Clearance )

For Government: Mary Margaret Foreman, Esq., Department Counsel For Applicant: Pro se

07/20/2017 ______________

STATEMENT OF CASE

______________

GARCIA, Candace Le’i, Administrative Judge:

Applicant mitigated the financial considerations security concerns involving his unpaid federal taxes for tax year 2012 and his failure to file federal income tax returns for tax years 2012 through 2014, as required. Applicant’s eligibility for a security clearance is granted.

Statement of the Case

On July 7, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F (financial considerations). The action was taken under Executive Order (Exec. Or.) 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).1

Applicant responded to the SOR on August 4, 2016, and elected to have his case decided on the written record in lieu of a hearing. The Government’s written case was submitted on September 14, 2016. A complete copy of the file of relevant material (FORM) was provided to Applicant, who was afforded an opportunity to file objections and submit material to refute, extenuate, or mitigate the security concerns. He received the Government’s FORM on September 21, 2016 and responded with documents that I have marked collectively as Applicant’s Exhibit (AE) A. The case was assigned to me on June 1, 2017. The Government’s documents identified as Items 1 through 4 and AE A are admitted in evidence without objection.

FINDINGS OF FACT

The SOR alleges that Applicant failed to file his federal income tax returns, as required, for tax years 2012 through 2014, and owed the IRS $4,000 in unpaid federal taxes for tax year 2012. Applicant admitted both SOR allegations in his response to the SOR.2

Applicant is 27 years old. As of January 2015, he was not married, he did not have any children, and he had been living with his parents since March 2013.3

Applicant obtained his high school diploma in June 2008, and received a certificate from a junior college in August 2009. He was unemployed from September 2008 to August 2009. He has worked for his current employer since August 2009. He was granted a DOD security clearance in May 2010.4

In 2012, Applicant changed his federal tax exemptions from single with zero exemptions to tax exempt because he needed money to pay a bill. He intended to have less federal taxes withheld from his paycheck for only a few pay periods, but he then forgot to change his exemptions back to what they had been previously. He realized his error when he filed his 2012 and 2013 federal income taxes in 2014, and learned that he owed $4,000 in back taxes. He then corrected his federal tax exemptions to single with zero exemptions.5 Applicant attributed his failure to timely file his 2012 federal income tax returns to laziness and carelessness. He indicated that he timely filed his 2013 federal income tax returns prior to the April 15, 2014 deadline. He stated that he failed to timely file his 2014 federal income tax returns because the tax preparer he had hired to assist him was out of state until after the April 15, 2015 deadline, and he did not seek other assistance. As of December 2015, he intended to file his 2014 and 2015 federal income tax returns by April 15, 2016.6

Applicant stated that he paid between $600 and $700 in August and September 2014 towards his $4,000 federal tax debt for tax period 2012. From September 2014 to December 2015, he paid the IRS $25 monthly through automatic payroll deduction. In December 2015, he estimated a balance of $1,800, and acknowledged that any refund he might be due for federal tax years 2014 and 2015 would be subject to attachment by the IRS to satisfy his balance.7

Applicant stated in his response to the FORM that he had filed his 2012 through 2014 federal income tax returns and resolved his 2012 federal back taxes. Applicant provided a notice from the IRS dated September 26, 2016, reflecting that Applicant was due an overpayment of $3,693 for tax year 2014. It further reflects that the IRS applied $1,964 of that overpayment to Applicant’s unpaid balance for tax year 2012, and Applicant was due a refund of $1,728. Applicant intends to be more responsible and careful to not let this happen again.8

POLICIES

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 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, these guidelines are applied 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(a), 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 access to classified information 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.

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel, and 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 that an 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 Exec. Or. 10865 provides that 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 Exec. Or. 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F, Financial Considerations

AG ¶ 18 expresses the security concern pertaining to financial considerations:

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. AG ¶ 19 describes conditions that could raise a security concern and may be disqualifying. I considered the following relevant:

(a) inability to satisfy debts;

(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 admitted that he owed $4,000 in federal taxes for tax year 2012 and failed to file his federal income tax returns for tax years 2012 through 2014, as required. AG ¶¶ 19 (a), 19(c), and 19 (f) are established.

I have considered all of the mitigating conditions under AG ¶ 20 and considered the following relevant:

(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.

Applicant provided documentation to corroborate his claim that he filed his federal income tax returns for 2012 through 2014 and paid his 2012 federal taxes. AG ¶ 20(g) applies.

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 the 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 the facts and circumstances surrounding this case. Overall, the record evidence leaves me without questions and doubts about Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude that Applicant mitigated the financial considerations security concerns involving his unpaid federal taxes for tax year 2012 and his failure to file federal income tax returns for tax years 2012 through 2014, as required.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: FOR APPLICANT

Subparagraphs 1.a – 1.b: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted.

_____________________________ Candace Le’i Garcia Administrative Judge

FOOTNOTES

1 I decided this case using the AG implemented by DOD on June 8, 2017. However, I also considered this case under the previous AG implemented on September 1, 2006, and my conclusions are the same using either set of AG. 2 Items 1-2. 3 Item 3. 4 Items 3-4. 5 Items 2-4; AE A. 6 Items 2-4; AE A. 7 Items 2-4; AE A. 8 Items 2-4; AE A.