Summary
A 68-year-old president and former sole stockholder of a defense contractor was denied a security clearance under Guideline F (Financial Considerations). The denial stemmed from significant financial difficulties experienced by his company, which led to both Chapter 7 and Chapter 11 bankruptcies.
The company currently owes the IRS over $2,400,000 in taxes, interest, and penalties. The applicant is personally liable for more than $1,100,000 of this tax debt. Despite attempts to negotiate with the IRS, no Offers in Compromise have been accepted.
The judge determined that the applicant's extensive unpaid tax debt and the failure to demonstrate a good-faith effort to resolve these financial obligations warranted the denial of the security clearance. The decision highlighted the applicant's history of not meeting financial obligations, as evidenced by the substantial outstanding tax liabilities.
Why the Applicant Was Denied
- Applicant has a significant personal tax liability exceeding $1,100,000.
- Applicant's company owes over $2,400,000 to the IRS, indicating a history of not meeting financial obligations.
- Applicant's attempts to negotiate with the IRS have not resulted in any accepted Offers in Compromise.
Conditions Referenced
- E2.A6.1.2.1raisedA History of Not Meeting Financial Obligations
- E2.A6.1.2.3raisedInability or Unwillingness to Satisfy Debts
- E2.A6.1.3.1rejectedThe Behavior Was Not RecentThe applicant's financial issues are ongoing and significant.
- E2.A6.1.3.2rejectedIt Was an Isolated IncidentThe applicant has a history of financial difficulties, including multiple bankruptcies.
- E2.A6.1.3.3appliedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person’s ControlThe business downturn was largely beyond the applicant's control, but the failure to pay taxes was a choice.
- E2.A6.1.3.4rejectedThe Person Has Received or Is Receiving Counseling for the Problem and There Are Clear Indications That the Problem Is Being Resolved or Is Under ControlThe applicant did not provide sufficient evidence that his financial problems are being resolved.
- E2.A6.1.3.6rejectedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsPayments made by the applicant are minimal compared to the total debt.
Key Rule Quoted
“An individual who is financially overextended is at risk of having to engage in illegal or unethical acts to generate funds to meet financial obligations.”
Procedural Posture
- SOR issuedJun 14, 2006
- Answer filedSep 26, 2006
- Hearing heldFeb 20, 2007
- Decision dateMar 30, 2007
Cite For
- Denial of Clearance Due to Significant Tax Liabilities Under Guideline F
- Impact of Financial Obligations on Security Clearance Eligibility
- Consideration of Ongoing Financial Issues in Security Clearance Determinations