Summary
A 46-year-old applicant with a bachelor's degree was denied a public trust position due to significant financial considerations under Guideline F. The primary concern stemmed from unpaid federal and state income taxes from 2008 to 2012, totaling substantial amounts. Specifically, the applicant owed federal taxes for 2009 ($80,468), 2010 ($85,621), 2011 ($31,410), and 2012 ($18,286). State tax debts were also outstanding for 2008 ($645), 2009 ($2,499), 2010 ($8,610), and 2011 ($1,461). Additionally, the applicant failed to file personal income tax returns timely for 2009 through 2012.
Although the applicant's debts were discharged in bankruptcy in February 2012, significant tax obligations remained. While some payments were made towards these debts since 2013, they were not fully resolved, and no approved installment agreement was established with the IRS. The applicant attributed some issues to an accountant's failure to file taxes timely and made efforts to resolve the debts, including hiring new accountants and attempting offers in compromise. A state tax lien was released in October 2017 following wage garnishment payments.
Ultimately, the judge found that the applicant knowingly failed to pay taxes to invest in a business, demonstrating poor judgment. Despite a high income, there was insufficient evidence of a good-faith effort to resolve the tax debts. This financial mismanagement raised doubts about the applicant's reliability and trustworthiness, leading to the denial of the security clearance.
Why the Applicant Was Denied
- The applicant knowingly failed to pay federal and state income taxes to invest in her business, demonstrating poor judgment.
- Despite having a high income, the applicant did not establish a good-faith effort to resolve her tax debts.
- The applicant's financial mismanagement raised doubts about her reliability and trustworthiness.
Conditions Referenced
- F.19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
- F.19(c)raisedA History of Not Meeting Financial Obligations
- F.19(f)raisedFailure 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(a)rejectedThe 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
- F.20(b)rejectedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person’s Control
- F.20(c)rejectedThe Individual Has Received or Is Receiving Financial Counseling for the Problem From a Legitimate and Credible Source
- F.20(d)rejectedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
- F.20(g)appliedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those Arrangements
Key Rule Quoted
“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.”
Procedural Posture
- SOR issuedJul 26, 2017
- Answer filedAug 19, 2017
- Hearing heldMar 20, 2018
- Decision dateMay 16, 2018
Cite For
- Financial Mismanagement Leading to Trustworthiness Concerns Under Guideline F
- Insufficient Evidence of Good-faith Efforts to Resolve Tax Debts
- Impact of High Income on Financial Responsibility Assessments