Summary
A Department of Defense contractor, holding a security clearance since 1990 with over 30 years of experience, was denied a security clearance under Guideline F (Financial Considerations) due to significant financial issues. The Statement of Reasons detailed multiple years of unfiled federal and state income taxes, specifically for tax years 2007, 2008, 2009, 2010, 2013, 2014, and 2015.
These unfiled taxes resulted in substantial debts to the IRS, including $130,905 for 2007, $72,311 for 2008, $211,100 for 2009, $85,124 for 2010, $56,384 for 2012, $30,557 for 2014, and $788 for 2015. Additionally, state tax debts of $3,516 and $229 were cited for 2015. Other financial concerns included a $13,808 car loan with a $489 past due amount, and collection accounts for medical debts of $620 and $324, along with another $448 collection account. A $304,000 tax lien was also entered against the applicant in March 2012.
The judge found that the applicant's failure to file taxes for multiple years and the accumulation of over $600,000 in tax debts demonstrated a lack of responsibility and raised questions about her reliability and trustworthiness. Despite efforts to address her debts, the ongoing nature of these financial problems and the failure to timely file taxes were not sufficiently mitigated, leading to the denial of her security clearance.
Why the Applicant Was Denied
- The applicant failed to file federal and state income tax returns for multiple years, indicating a lack of responsibility in managing financial obligations.
- The applicant incurred significant tax debts totaling over $600,000, which were not resolved in a timely manner, raising concerns about her reliability and judgment.
- The applicant's financial issues were ongoing and not sufficiently mitigated by her efforts to seek financial counseling or establish payment plans.
Conditions Referenced
- F.19(a)appliedInability to Satisfy Debts
- F.19(b)appliedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
- F.19(c)appliedA History of Not Meeting Financial Obligations
- F.19(f)appliedFailure 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
- F.20(b)appliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's ControlThe applicant's financial situation was adversely affected by the housing market downturn.
- F.20(c)appliedThe Individual Has Received or Is Receiving Financial Counseling for the ProblemThe applicant attended financial counseling sessions.
- F.20(d)rejectedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant's ongoing tax debts and lack of a formal payment plan undermined her claims of good-faith efforts.
Key Rule Quoted
“An applicant is not required to be debt free, but is required to manage her finances in such a way as to meet her financial obligations.”
Procedural Posture
- SOR issuedDec 2, 2016
- Answer filedJan 9, 2017
- Hearing heldSep 25, 2017Hearing was rescheduled due to applicant's request for a continuance.
- Decision dateNov 28, 2017
Cite For
- Denial of Security Clearance Due to Significant Financial Issues Under Guideline F
- Importance of Timely Tax Filing and Payment in Security Clearance Evaluations
- Impact of Ongoing Financial Distress on Reliability and Trustworthiness Assessments