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ISCR Case 16-03082.h1 — CASE

ISCR Case 16-03082.h1granted

Case Headnote

ISCR Case No. 16-03082.h1

grantedOct 17, 2017· Hon. Noreen A. Lynch· hearing

Summary

A 40-year-old federal contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons alleged that the applicant failed to file federal and state income tax returns for the tax years 2012 through 2015. Disqualifying conditions AG ¶ 19(c) and AG ¶ 19(f) were raised.

The applicant attributed his financial difficulties and failure to file to extreme stress from caring for his ailing parents, for which he sought medical help for depression. He provided documentary proof that he had subsequently filed all delinquent tax returns and acknowledged his past lapse in judgment.

The judge applied mitigating conditions AG ¶ 20(a), AG ¶ 20(b), AG ¶ 20(c), and AG ¶ 20(g). It was noted that the applicant had no outstanding tax obligations and had timely filed his 2016 tax return. The judge concluded that the applicant's past failures were unlikely to recur, leading to the decision to grant the security clearance.

Why the Applicant Prevailed

The applicant provided documentary proof of filing his late tax returns and acknowledged his lapse in judgment.
He demonstrated that his financial issues were due to extreme stress from family medical situations, which he actively sought help for.
The applicant had no outstanding tax obligations and had filed his 2016 tax return timely.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedBehavior Happened so Long Ago, Was Infrequent, or Occurred Under Circumstances Unlikely to Recur
AG ¶ 20(b)appliedConditions That Resulted in Financial Problems Were Largely Beyond the Person's Control
AG ¶ 20(c)appliedReceived Counseling for the Problem and Indications That It Is Being Resolved
AG ¶ 20(g)appliedMade Arrangements with Tax Authority and Is in Compliance

Key Rule Quoted

“An applicant who fails to timely file or pay his or her taxes, a basic and fundamental financial obligation of all citizens, bears a heavy burden in mitigating the financial considerations security concern.”

Procedural Posture

SOR issuedNov 15, 2016
Answer filedDec 15, 2016
Hearing held—Applicant requested a determination on the administrative record.
Decision dateOct 17, 2017

Cite For

Mitigating Conditions Under Guideline F for Financial Considerations
Impact of Personal Circumstances on Financial Obligations
Importance of Seeking Help for Mental Health Issues in Security 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: granted

The judge found that the applicant's failure to file federal and state income tax returns for the years 2012 through 2015 was mitigated by evidence of extreme personal stress and subsequent counseling. The applicant's timely filing of tax returns for 2016 and the absence of any tax liabilities contributed to the decision to grant the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	failed to file his federal and state income tax returns for tax years 2012 thru 2015	For Applicant	Tax Filing Failure	Admitted	(c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Counseling Claimed Other
1.b	failed to file his federal and state income tax returns for tax years 2012 thru 2015	For Applicant	Tax Filing Failure	Admitted	(c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Counseling 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. 16-03082 ) Applicant for Security Clearance )

For Government: Andrew H. Henderson, Esq., Department Counsel For Applicant: Pro se

10/17/2017 ______________

STATEMENT OF CASE

______________

LYNCH, Noreen A., Administrative Judge:

Applicant presented sufficient evidence to mitigate security concerns raised by his tax-related financial problems. Clearance is granted.

Statement of the Case

On November 15, 2016, the Department of Defense (DoD) Consolidated Adjudications Facility (CAF) sent Applicant a Statement of Reasons (SOR) alleging security concerns under the financial considerations guideline. Specifically, the SOR alleged that Applicant failed to file his federal and state income tax returns for tax years 2012 thru 2015.

On December 15, 2016, Applicant answered the SOR (Answer), admitting that he had failed to file the tax returns for the years in question. He also provided an explanation as to why he did not file and provided documentation. He disclosed the SOR allegation 1.a and 1.bon his December 2, 2015 security clearance application. He requested a determination on the administrative (written) record.

On January 24, 2017, Department Counsel sent Applicant the Government’s written case, known as a file of relevant material (FORM), consisting of eight items. On March 6, 2017, the Defense Office of Hearings and Appeals received Applicant’s FORM Response. On October 1, 2017, I was assigned Applicant’s case.

FINDINGS OF FACT

Applicant, 40, earned a bachelor’s degree in 1999. He was first granted a security clearance in 1999, and has been employed as a federal contractor since he began working for his current employer in 1999. (Item 2) He is single and has no children.

Applicant, in response to relevant questions, reported on his June 2015 security clearance application that he failed to file his 2012 to 2014 federal and state income tax returns for a number of reasons. He was emphatic that this does not justify or excuse his behavior of not timely filing tax returns. He documented that his parents were severely injured in 1969 and his father sustained a traumatic brain injury. In 2010, his father worsened to the point that he lost much of his cognitive skills. At the same time, Applicant, who lived in another state, and traveled extensively for work, attempted to care for his father. He admits that it was a challenge to concentrate and keep up with financial obligations. (Item 4) He also reported that in 2011, his mother had routine surgery, which led to complications. She was in ICU and then in rehabilitation for six months and on a feeding tube for one year. Applicant and his sister went to the family home to care for his mother and father. From 2012 through 2014, Applicant’s father’s conditioned worsened, and he died in 2015. Applicant was constantly stressed by his family situation and wanted to be a good son. He realized in 2012, that he was depressed and sought medical counsel. (Response to FORM) He continues with counseling.

Applicant knows the lapse in judgment concerning the taxes was attributed to the depression and anxiety. The combination of stressful factors led to not sleeping and lack of concentration. He managed to keep his position and has had no incidents at work for 17 years. He admits the behavior is unacceptable and sought help so that these events will not recur. He provided documentation concerning his medical condition and treatment. (Response to FORM) He realizes that he could have asked for an extension to file federal and state returns, but he did not. He also knew that he would be getting refunds due to the number of exemptions. He does not owe the federal or state any money and needed no payment plan. He filed his 2016 income tax return timely in February 2017. (Response to FORM)

In November 2015, Applicant filed his 2012-2014 federal and state income tax returns, which he disclosed on his security clearance application. He filed his 2015 income tax returns in 2016. As noted above, he has filed his 2016 income tax returns already.

Applicant’s 2017 credit bureau report does not show any delinquent accounts. (Item 8) He admits that his 2010 credit report had some collection accounts. (Item 7). Law, Policies, and Regulations

This case is decided under Executive Order (E.O.) 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) implemented on June 8, 2017, through Security Executive Agent Directive 4 (SEAD-4).

“[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). Instead, persons are only eligible for access to classified information “upon a finding that it is clearly consistent with the national interest” to authorize such access. E.O. 10865 § 2.

When evaluating an applicant’s eligibility for a security clearance, an administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations, the guidelines list potentially disqualifying and mitigating conditions. The guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies the guidelines in a commonsense manner, considering all available and reliable information, in arriving at a fair and impartial decision. AG ¶ 2.

Department Counsel must present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.14. See e.g. ISCR Case No. 15-05565 (Aug. 2, 2017) (Board reversed favorable decision where Department Counsel failed to present evidence to substantiate allegations, which applicant had denied). Applicants are responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven . . . and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.” Directive ¶ E3.1.15.

Administrative Judges must remain fair and impartial, and conduct all hearings in a timely and orderly manner. Judges must carefully balance the needs for the expedient resolution of a case with the demands of due process. Therefore, an administrative judge will ensure that an applicant: (a) receives fair notice of the issues, (b) has a reasonable opportunity to address those issues, and (c) is not subjected to unfair surprise. Directive, ¶ E3.1.10; ISCR Case No. 12-01266 at 3 (App. Bd. Apr. 4, 2014).

In evaluating the evidence, a judge applies a “substantial evidence” standard, which is something less than a preponderance of the evidence. Specifically, substantial evidence is defined as “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.” Directive, ¶ E3.1.32.1.

Any doubt raised by the evidence must be resolved in favor of the national security. AG ¶ 2(b). See also SEAD-4, ¶ E.4. Additionally, the Supreme Court has held that responsible officials making “security clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531. 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. 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 an 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.

ANALYSIS

Guideline F, Financial Considerations

Applicant’s failure to timely file his federal and state income tax returns raises the financial considerations security concern, which is explained at AG ¶ 18:

Failure to . . . 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. . . .

In assessing Applicant’s case, I considered all pertinent disqualifying and mitigating conditions, including the following:

AG ¶ 19(c): a history of not meeting financial obligations;

AG ¶ 19(f): failure to file . . . annual Federal, state, or local income tax returns . . . as required;

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;

AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the person’s control . . . and the individual acted responsibly under the circumstances;

AG ¶ 20(c): the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control;

AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts; and AG ¶ 20(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.

An applicant who fails to timely file or pay his or her taxes, a basic and fundamental financial obligation of all citizens, bears a heavy burden in mitigating the financial considerations security concern.1 An administrative judge should closely examine the circumstances giving rise to an applicant’s tax-related issues and his or her response to it. Furthermore, an applicant’s claim of financial reform must be weighed against the overriding concerns about the individual’s lack of judgment and history of not abiding by rules and regulations in failing to timely file or pay their taxes.2

Here, Applicant presented documentary proof that he filed his late tax returns. He also acknowledged that this was a severe lapse of judgment and happened while trying to care take his mother and father and continue with his profession. He volunteered the information on his security clearance application. He owed no taxes and received refunds. Applicant submitted evidence from which I find that his late tax filings were an aberrational event or that is unlikely to recur. He was so depressed and stressed that he found himself in the emergency room. He sought medical help. He stated that he has learned from his past mistakes and the environment is no longer so stressful. As noted above, he has already filed his 2016 income tax return. In short, Applicant’s past failure to timely file his federal and state income tax returns were due to extreme stress from his parents’ medical situations. I do not have questions about his present judgment, reliability, and trustworthiness.

Under the circumstances presented by this case, I find that Applicant established the above-listed mitigating conditions. I also find that he met his heavy burden of proof and persuasion to continue his eligibility for a security clearance. The security concerns raised by his past failure to timely file his federal income tax returns do not remain. Applicant’s admitted failure to have done so for a number of years might be sufficient to raise a concern that he may be unwilling to follow other rules and regulations, if not for the extreme stress that he was dealing with. He did not ignore that stress and sought help. He has handled classified information for 17 years without incident. Overall, the record evidence leaves me with no questions or doubts as to Applicant’s eligibility for continued access to classified information.3

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 (Financial Considerations): FOR APPLICANT

Subparagraphs1.a-1.b: For Applicant

CONCLUSION

In light of the circumstances presented by the record in this case, it is clearly consistent with the interest of national security to continue Applicant’s access to classified information. Applicant’s request for a security clearance is granted.

____________________ Noreen A. Lynch Administrative Judge

FOOTNOTES

1 See generally, ISCR Case No. 14-03358 at 3 (App. Bd. Oct. 9, 2015) (Board explained the heightened security concerns raised by tax-related financial issues).

2 ISCR Case No. 14-05794 (App. Bd. July 7, 2016); ISCR Case No. 14-00221 (App. Bd. June 29, 2016); ISCR Case No. 15-01031 (App. Bd. June 15, 2016); ISCR Case No. 12-09545 (App. Bd. Dec. 21, 2015).

3 In reaching this conclusion, I considered the whole-person factors in AG ¶ 2(d), including that Applicant has held a security clearance for over 17 years and self-reported the information at issue, as well as other potentially adverse information.