Summary
A 56-year-old defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to a history of unfiled tax returns and unresolved tax debts. The Statement of Reasons detailed multiple allegations, including failing to file Federal income tax returns for 2011, 2012, and 2013, and state income tax returns for the same years. Additionally, he failed to timely file Federal returns for 2011, 2012, 2013, 2014, and 2015, and state returns for 2011, 2012, 2015, and 2016.
A significant concern was a large outstanding Federal tax lien for unpaid taxes from 2011 and 2013. The applicant did not establish a payment plan with the IRS for this lien, nor did he provide evidence of payments made. Furthermore, he failed to provide evidence of timely filing his 2016 Federal and state tax returns after receiving extensions. While he resolved unpaid state taxes for 2011 and 2012 in August 2017, this was insufficient to mitigate the broader financial concerns.
The judge found that the applicant did not provide sufficient evidence to mitigate these financial issues. Specifically, he failed to timely file multiple tax returns, had an unresolved Federal tax lien, and did not demonstrate a payment plan or financial counseling to address his tax problems. Consequently, the security clearance was denied.
Why the Applicant Was Denied
- The applicant failed to timely file Federal and state income tax returns for multiple years.
- He has a large outstanding Federal tax lien that remains unresolved.
- The applicant did not provide evidence of a payment plan or financial counseling to address his tax issues.
Conditions Referenced
- F.1.araisedInability to Satisfy Debts
- F.1.braisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
- F.1.craisedA History of Not Meeting Financial Obligations
- F.1.fraisedFailure 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.2.dappliedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant resolved some state tax debts but did not demonstrate a similar effort for Federal taxes.
Key Rule Quoted
“Failure to file tax returns suggests that an applicant has a problem with complying with well-established government rules and systems.”
Procedural Posture
- SOR issuedOct 20, 2017
- Answer filedNov 9, 2017
- Hearing held—Decided on the written record without a hearing.
- Decision dateAug 13, 2018
Cite For
- Failure to File Tax Returns as a Disqualifying Condition Under Guideline F
- Insufficient Evidence of Financial Responsibility Impacting Security Clearance
- The Importance of Compliance with Tax Obligations in Security Clearance Evaluations