ISCR Case 16-01136.h1

Case Headnote

ISCR Case No. 16-01136.h1

grantedSep 28, 2017· Hon. David M. White· hearing

Summary

A 64-year-old Chief Scientist for a Federal contractor was granted a security clearance despite concerns under Guideline F (Financial Considerations). The applicant's financial difficulties stemmed from health issues, unemployment, and divorce. Allegations included state income tax liens from 2006 and 2011, totaling $38,471, which were resolved by 2007 and 2014, respectively. Federal income tax liens from 2010 and 2011, totaling $54,582, were resolved by 2012 and 2015.

Outstanding federal income tax debts for 2007 and 2009, initially $19,661, were reduced to less than $7,000 by the close of the record. The applicant entered a repayment agreement in July 2015, making regular $660 monthly payments. He also failed to timely file state income tax returns for 2007-2009, which were later resolved through garnishments or his 2014 bankruptcy. Federal income tax returns for 2007-2009 were filed late due to personal turmoil, while no returns were required for 2010-2013 due to no earned income.

In 2014, the applicant filed for Chapter 7 bankruptcy, discharging approximately $455,600 in consumer, tax, and mortgage debts. Since his bankruptcy discharge, he has incurred no new delinquent debt. The judge granted the clearance, citing the applicant's resolution of all delinquent debts, stable financial situation since 2014, and strong character references from colleagues.

Why the Applicant Prevailed

Applicant resolved all formerly delinquent debts, including tax obligations.
He has maintained a stable financial situation since his bankruptcy discharge in 2014.
Strong character references from colleagues supported his reliability and trustworthiness.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or Under Circumstances Unlikely to Recur
AG ¶ 20(b)appliedConditions Resulting in Financial Problems Were Largely Beyond the Person's Control
AG ¶ 20(c)appliedReceived Financial Counseling From a Legitimate Source
AG ¶ 20(d)appliedInitiated and Adhered to a Good-faith Effort to Repay Overdue Creditors
AG ¶ 20(g)appliedMade Arrangements with Tax Authority and Is in Compliance

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.”

Procedural Posture

SOR issuedOct 4, 2016
Answer filedOct 27, 2016
Hearing heldMay 18, 2017Applicant's request to leave the record open until 06/08/2017 was granted.
Decision dateSep 28, 2017

Cite For

Mitigation of Financial Difficulties Under Guideline F
Impact of Personal Circumstances on Financial Obligations
Importance of Character References in Security Clearance Decisions

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

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	SOR ¶¶ 1.a and 1.c alleged state income tax liens that were entered against Applicant in October 2006 and February 2011, totaling $38,471. These tax debts were resolved, and the liens released, in January 2007 and June 2014, respectively. $38,471	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.b	SOR ¶¶ 1.b and 1.d alleged Federal income tax liens that were entered against Applicant in March 2010 and August 2011, totaling $54,582. These tax debts were resolved, and the liens released, in June 2012 and July 2015, respectively. $54,582	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.c	SOR ¶¶ 1.f and 1.g alleged Applicant’s outstanding Federal income tax debts for 2007 and 2009, which formerly totaled $19,661. These are the only two tax years for which he has not fully resolved his formerly delinquent taxes. He entered into a repayment agreement with the IRS on July 24, 2015, pursuant to which he has regularly been paying $660 per month toward the outstanding balance by automatic deductions from his checking account. The total tax debt for these two years was reduced to less than $7,000 by the time the record closed, and Applicant’s budget was sufficient to support his continued payments under the agreement. $19,661	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.d	SOR ¶ 1.i alleged Applicant’s failure to timely file his state income tax returns for tax years 2007 through 2009. He admitted this allegation. All of his unpaid state income taxes were subsequently resolved through garnishments or his 2014 bankruptcy.	For Applicant	Tax Filing Failure	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.e	In 2013 Applicant decided to resolve his outstanding debts through a Chapter 7 bankruptcy proceeding, which was filed in January 2014 and discharged in April 2014 as alleged in SOR ¶ 1.e. The total of discharged debts was approximately $455,600 comprising consumer debts incurred during his long period of unemployment and some tax and mortgage debts. Since his bankruptcy discharge, Applicant has incurred no new delinquent debt. $455,600	For Applicant	Bankruptcy Filing	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.f	SOR ¶¶ 1.h and 1.j alleged Applicant’s failure to timely file his Federal income tax returns for tax years 2007 through 2013. He had reportable earned income during tax years 2007 through 2009, but failed to file those returns on time due to the turmoil caused by his failing health and financial situations, as discussed below. He had no earned income during 2010 through 2013, as reflected by IRS records, and was not required to file returns for those years. He filed his 2007 return in May 2010, his 2008 return in August 2011, and his 2009 return in October 2011. As described above, he entered into a repayment agreement for 2007 and 2009 taxes in July 2015, and has made all payments under that agreement.	For Applicant	Tax Filing Failure	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	—
1.g–1.j	4 sub-charges — specific text not stated in this decision (for the applicant).	For Applicant			—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

SOR ¶¶ 1.a and 1.c alleged state income tax liens that were entered against Applicant in October 2006 and February 2011, totaling $38,471. These tax debts were resolved, and the liens released, in January 2007 and June 2014, respectively.

$38,471

For Applicant

Tax Unpaid

Admitted

—

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.b

SOR ¶¶ 1.b and 1.d alleged Federal income tax liens that were entered against Applicant in March 2010 and August 2011, totaling $54,582. These tax debts were resolved, and the liens released, in June 2012 and July 2015, respectively.

$54,582

For Applicant

Tax Unpaid

Admitted

—

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.c

SOR ¶¶ 1.f and 1.g alleged Applicant’s outstanding Federal income tax debts for 2007 and 2009, which formerly totaled $19,661. These are the only two tax years for which he has not fully resolved his formerly delinquent taxes. He entered into a repayment agreement with the IRS on July 24, 2015, pursuant to which he has regularly been paying $660 per month toward the outstanding balance by automatic deductions from his checking account. The total tax debt for these two years was reduced to less than $7,000 by the time the record closed, and Applicant’s budget was sufficient to support his continued payments under the agreement.

$19,661

For Applicant

Tax Unpaid

Admitted

—

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.d

SOR ¶ 1.i alleged Applicant’s failure to timely file his state income tax returns for tax years 2007 through 2009. He admitted this allegation. All of his unpaid state income taxes were subsequently resolved through garnishments or his 2014 bankruptcy.

For Applicant

Tax Filing Failure

Admitted

—

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.e

In 2013 Applicant decided to resolve his outstanding debts through a Chapter 7 bankruptcy proceeding, which was filed in January 2014 and discharged in April 2014 as alleged in SOR ¶ 1.e. The total of discharged debts was approximately $455,600 comprising consumer debts incurred during his long period of unemployment and some tax and mortgage debts. Since his bankruptcy discharge, Applicant has incurred no new delinquent debt.

$455,600

For Applicant

Bankruptcy Filing

Admitted

—

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.f

SOR ¶¶ 1.h and 1.j alleged Applicant’s failure to timely file his Federal income tax returns for tax years 2007 through 2013. He had reportable earned income during tax years 2007 through 2009, but failed to file those returns on time due to the turmoil caused by his failing health and financial situations, as discussed below. He had no earned income during 2010 through 2013, as reflected by IRS records, and was not required to file returns for those years. He filed his 2007 return in May 2010, his 2008 return in August 2011, and his 2009 return in October 2011. As described above, he entered into a repayment agreement for 2007 and 2009 taxes in July 2015, and has made all payments under that agreement.

For Applicant

Tax Filing Failure

Admitted

—

(a) behavior happened long ago / infrequent / unlikely to recur

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

(g) arrangements made with the tax authority; in compliance

—

1.g–1.j

4 sub-charges — specific text not stated in this decision (for the applicant).

For Applicant

—

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Case Profile

Summary

Why the Applicant Prevailed

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES