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ISCR 16-00517.h2: Guideline F security clearance hearing, denied (2017) · CASE

ISCR Case 16-00517.h2denied

Case headnote

ISCR Case No. 16-00517.h2

deniedOct 16, 2017· Hon. Michael H. Leonard· hearing

Summary

The applicant, a male, was denied a security clearance due to significant financial considerations under Guideline F. The Statement of Reasons cited a past-due mortgage loan, charged-off credit card accounts, and substantial back taxes owed to both state and federal authorities across multiple tax years. These issues raised Disqualifying Condition F.3.

While the applicant demonstrated some efforts to resolve certain debts, including recent attempts to address state tax obligations, these were not sufficient to overcome the concerns. Specifically, the applicant had unresolved federal back taxes and had not made arrangements with the IRS for payment, resulting in collection via garnishment.

The recency of the applicant's efforts regarding state tax debts prevented a demonstration of sustained compliance. Despite the application of Mitigating Condition F.20(g), the severity and ongoing nature of the tax issues led to the denial of eligibility for a security clearance.

Why the applicant was denied

The applicant had unresolved back taxes owed to state and federal authorities.
The applicant did not make arrangements with the IRS to pay the back taxes, which were being collected via garnishment.
The applicant's efforts to address state tax debts were too recent to demonstrate compliance.

Conditions referenced

Disqualifying

F.3raisedInability or Unwillingness to Satisfy Debts

Mitigating

F.20(g)rejectedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those Arrangements.The applicant did not make arrangements with the IRS; instead, the IRS was collecting the back taxes through garnishment.

Key rule quoted

“The addition of AG ¶ 20(g) is not a sea change to Guideline F cases.”

Procedural posture

SOR issuedMay 1, 2016
Answer filed—
Hearing heldOct 1, 2016
Decision dateOct 16, 2017Remand decision following initial decision on June 7, 2017.

Cite for

Application of AG ¶ 20(g) in Financial Cases
Consideration of Compliance with Tax Arrangements
Impact of Recent Tax Issues on Security Clearance Eligibility

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found that the applicant had a history of financial difficulties, including a past-due mortgage loan, charged-off credit card accounts, and back taxes owed to state and federal tax authorities. Although the applicant made some progress in resolving certain debts, the judge concluded that the tax issues were too recent and significant to mitigate the security concerns, resulting in a denial of the security clearance.

The sub-allegation breakdown is part of the Professional plan. See what it includes.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation

Descriptive standardized rendering of a decided public case. The verbatim source decision is shown in full below.

Full decision

The complete, official text, footnotes and signatures included, is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: ) ) --------------------------------- ) ISCR Case No. 16-00517 ) ) Applicant for Security Clearance

Appearances

For Government: Mary Margaret Foreman, Esq., Department Counsel For Applicant: Ryan C. Nerney, Esq.

10/16/2017 ______________

Remand Decision ______________

LEONARD, Michael H., Administrative Judge:

This is a security clearance case in which the Appeal Board remanded for further processing. In my initial June 7, 2017 decision I concluded that Applicant had a history of financial problems or difficulties consisting of a past-due mortgage loan, charged-off credit card accounts, and back taxes owed to state and federal tax authorities for multiple tax years. I further concluded that he made sufficient progress in resolving the debt associated with the past-due mortgage loan and charged-off credit card accounts, but his tax problems were too much, went on too long, and were too recent to justify a favorable clearance decision.

The Appeal Board remanded the case to give the parties an opportunity to address the potential applicability of a mitigating condition now found at AG ¶ 20(g) under Guideline F for financial considerations.1 That particular mitigating condition was not in effect under Guideline F when the SOR was issued in May 2016, when the hearing was conducted in October 2016, when post-hearing matters were submitted in November and December 2016, and when the case was decided on June 7, 2017. Stated differently, my initial decision was based on then current law, policies, and standards applicable to a security clearance case. In remanding the case, the Appeal Board concluded that the failure to address AG ¶ 20(g) was not attributed to error on my part.2

The mitigating condition now found at AG ¶ 20(g) came into effect on June 8, 2017, per Security Executive Agent Directive 4, which implemented the National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position. The new mitigating condition provides as follows: “the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.”

It is my view that the addition of AG ¶ 20(g) is not a sea change to Guideline F cases. Its addition simply codified existing practice within DOHA, because we routinely considered whether an applicant had made an arrangement with the relevant tax authority and was in compliance with that arrangement. In applying AG ¶ 20(g), both the timing and length of compliance are questions of fact to be addressed on a case-by- case basis.

I had a conference call with counsel on September 28, 2017. During the call, I directed the submission of written briefs to address the issue of the potential applicability of the mitigating condition now found at AG ¶ 20(g). The written briefs are made part of the record as Appellate Exhibits I and II.

After reviewing the briefs, I conclude the mitigating condition now found at AG ¶ 20(g) does not apply to the facts of Applicant’s case. In particular, I conclude that Applicant made no arrangement with the IRS to pay the back taxes. Instead, the back taxes were being collected via a tax levy or garnishment of his spouse’s federal salary. In other words, it was the IRS that made an arrangement to collect the back taxes. Likewise, he had only just begun, in October or November 2016, the process of paying the back taxes owed to the state, which is too recent to conclude that he was in compliance with the payment arrangement. Accordingly, for the reasons discussed in my June 7, 2017 decision, which is adopted and incorporated herein, this case is decided against Applicant. Eligibility for access to classified information is denied.

Michael H. Leonard Administrative Judge

FOOTNOTES

1 ISCR Case No. 16-00517 at 3 (App. Bd. Sep. 8, 2017). 2 ISCR Case No. 16-00517 at 3 (App. Bd. Sep. 8, 2017).