Summary
The applicant, a self-employed consultant with a history of financial difficulties, faced security concerns under Guideline F due to failure to file tax returns and pay federal income taxes timely. Despite some improvements in his financial situation, the judge found insufficient evidence of mitigation, leading to a denial of his security clearance.
Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant has a state tax lien in the amount of $7,095 (1.a). Two Federal tax liens in the amounts of $85,485 and $9,739 (1.b). Failed to file both Federal and state income tax returns for tax years 2009 through 2012 (1.c). Filed Chapter 7 bankruptcy in 2014 (1.d).
The judge denied the clearance. The government raised disqualifying conditions F.1.a, F.1.b, F.1.c, F.1.f. The judge applied mitigating conditions F.2.a, F.2.b, F.2.c, F.2.d, F.2.g. The decision turned on the following: Applicant failed to timely file federal and state income tax returns from 2009 to 2012; Applicant has a significant federal tax debt exceeding $400,000 and has not made payments on it; The applicant's actions to resolve his tax obligations were deemed insufficient and lacking in good judgment.
Why the Applicant Was Denied
- Applicant failed to timely file federal and state income tax returns from 2009 to 2012.
- Applicant has a significant federal tax debt exceeding $400,000 and has not made payments on it.
- The applicant's actions to resolve his tax obligations were deemed insufficient and lacking in good judgment.
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.arejectedThe 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 JudgmentThe applicant's financial issues are ongoing and have not been fully resolved.
- F.2.brejectedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person’s ControlWhile some issues were beyond control, the applicant's failure to file taxes was willful.
- F.2.crejectedThe Individual Has Received or Is Receiving Financial Counseling for the Problem From a Legitimate and Credible SourceThe applicant's efforts to resolve tax issues have not shown clear indications of being under control.
- F.2.drejectedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant has not demonstrated a consistent repayment plan for his federal tax debt.
- F.2.grejectedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those ArrangementsThe applicant has not established a plan for repayment of his federal tax debt.
Key Rule Quoted
“Failure to comply with tax laws suggests that an applicant has a problem with complying with well-established government rules and regulations.”
Procedural Posture
- SOR issuedJul 28, 2017
- Answer filedAug 18, 2017
- Hearing heldJun 28, 2018Rescheduled from May 22, 2018.
- Decision dateOct 25, 2018
Cite For
- Failure to Mitigate Financial Obligations Under Guideline F
- Impact of Tax Compliance on Security Clearance Eligibility
- Consideration of the Whole-person Concept in Financial Cases