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ISCR Case 08-04649.h1 — CASE

ISCR Case 08-04649.h1denied

Case Headnote

ISCR Case No. 08-04649.h1

deniedJul 1, 2008· Hon. Elizabeth M. Matchinski· hearing

Summary

A 64-year-old analyst was denied a public trust position due to significant financial concerns under Guideline F. The applicant's financial issues included a Chapter 7 bankruptcy filing listing over $126,000 in debts. Specific allegations included $45,982 in delinquent state taxes, $10,920 in past-due medical debt, $117,999 in delinquent consumer credit debt, and a $21,473 delinquent credit card balance.

The judge identified disqualifying conditions related to financial mismanagement and an inability to meet financial obligations. While mitigating conditions were considered, they were not sufficient to overcome the concerns.

The denial was based on the extensive and recent nature of the applicant's financial problems, which indicated poor judgment. The applicant also failed to demonstrate a clear understanding of her tax liabilities and debts, and her history of financial delinquency raised significant trustworthiness concerns.

Why the Applicant Was Denied

The applicant's financial problems were extensive and recent, indicating poor judgment.
She failed to demonstrate a clear understanding of her tax liabilities and debts.
The applicant's history of financial delinquency raised significant trustworthiness concerns.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond the Person's ControlThe applicant experienced unemployment and unexpected medical expenses.
AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsRepayment was initiated through involuntary garnishment and not fully voluntary.

Key Rule Quoted

“Failure or inability 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 information.”

Procedural Posture

SOR issuedAug 21, 2009
Answer filedOct 9, 2009
Hearing heldMar 4, 2010
Decision dateMar 19, 2010

Cite For

Financial Mismanagement Under Guideline F
Impact of Bankruptcy on Trustworthiness Determinations
Consideration of Mitigating Conditions in Financial Cases

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 multiple financial concerns under Guideline F, including significant tax liabilities and medical debts, leading to a denial of the applicant's eligibility for a public trust position. The applicant's financial history, characterized by serious delinquency and poor financial decisions, raised doubts about her reliability and trustworthiness.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owed delinquent state taxes of $45,982 $45,982	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	$10,920 in past due medical debt $10,920	Against Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	$117,999 in delinquent consumer credit debt $117,999	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d–1.q	14 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—
1.r	$21,473 delinquent credit card balance $21,473	Against Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.s–1.z	8 sub-charges — specific text not stated in this decision (5 against, 3 for the applicant). (low confidence)	Mixed			—	—	—

Descriptive standardized rendering of a decided public case (Guideline F). 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

APPEARANCES

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: ) ) ------------------------- ) ADP Case No. 08-04649 SSN: ----------------- ) ) Applicant for Public Trust Position )

For Government: Candace L. Garcia, Esquire, Department Counsel For Applicant: Pro se

September 30, 2010 ______________

STATEMENT OF CASE

______________

MATCHINSKI, Elizabeth M., Administrative Judge:

In January 2010, Applicant filed for a Chapter 7 bankruptcy discharge, listing $126,461.44 in federal and state tax liabilities, $16,582.04 in delinquent medical debt, and $107,634.06 in unsecured consumer credit debt. While unemployment and illness led her to accrue much of the debt, she made some poor financial decisions that continue to cast doubt about her judgment. Eligibility for public trust position is denied.

Statement of the Case

On August 21, 2009, the Defense Office of Hearings and Appeals (DOHA) issued to Applicant a statement of reasons (SOR) detailing the trustworthiness concerns under Guideline F, Financial Considerations, that provided the basis for its preliminary decision to deny her eligibility for a public trust position, and to refer the matter to an administrative judge. The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); Department of Defense Regulation 5200.2-R, Personnel Security Program (January 1987) as amended; and the adjudicative guidelines (AG) effective within the Department of Defense on September 1, 2006.

On October 9, 2009, Applicant answered the SOR allegations and requested a hearing. The case was assigned to me on December 29, 2009, to conduct a hearing and to determine whether it is clearly consistent with the national interest to grant Applicant eligibility for a public trust position. I received the case file on January 11, 2010, and on February 11, 2010, I scheduled a hearing for March 4, 2010.

I convened the hearing as scheduled. Eight Government exhibits (Ex. 1-8) and seven Applicant exhibits (Ex. A-G) were admitted into evidence without objection, and Applicant testified, as reflected in a transcript (Tr.) received on March 19, 2010. At Applicant’s request, I held the record open until March 19, 2010, for her to update the status of her bankruptcy filing. On March 9, 2010, Applicant submitted a signed statement summarizing information about her pending discharge. The document was admitted without objection as Exhibit H.

FINDINGS OF FACT

The SOR alleged under Guideline F, Financial Considerations, that as of May 2009, Applicant owed delinquent state taxes of $45,982 (SOR 1.a, 1.bb), $10,920 in past due medical debt (SOR 1.b-1.i, 1.dd-1.ee), and $117,999 in delinquent consumer credit debt (SOR 1.j-1.aa, 1.cc). Applicant admitted the debts, but indicated that she was repaying the state tax debt in SOR 1.bb at $500 every paycheck. After considering the pleadings, exhibits, and transcript, I make the following factual findings.

Applicant is a 64-year-old analyst, who has worked for her present employer since August 2007. She previously worked for this employer from June 1988 to April 2004, with the exception of a few months between 2001 and 2002. (Ex. 1.)

Applicant left her full-time employment with the company after September 11, 2001, to volunteer at a local elementary school because she wanted to contribute to her community. (Ex. 4.) She had a home on which she was making monthly mortgage payments of $1,597. (Ex. 8.) Around February 2002, she resumed working for her current employer. By October 2003, she had little work to do, and in April 2004, she was laid off. (Tr. 35.) Applicant listed her house for sale, and she relied on savings to remain current in her living expenses and debt payments. (Ex. 4, 5) In November 2004, she decided to return to her native state Y to be near family. (Ex. 4.) In December 2004, she sold her home in state X at a profit of $98,000, and she moved to state Y. (Tr. 61.)

In January 2005, Applicant bought a home in her new locale, spending the $98,000 in equity from her previous residence, and taking out a $158,600 30-year conventional mortgage loan with repayment at $1,189 per month. (Ex. 6, 7; Tr. 61.) Applicant’s only earned income over the next two years was from substitute teaching and a seasonal job in the retail sector. (Ex. 1; Tr. 36.) She was unable to find full-time employment in software development. (Tr. 36.) Applicant relied heavily on consumer credit cards after she had exhausted her retirement assets to cover her living expenses. (Ex. 6, 7, 8, D; Tr. 36, 60.)

Between May and July 2006, Applicant underwent diagnosis and treatment for bleeding, which she believes was caused by poisoning. (Tr. 43-45.) She incurred medical expenses that were not covered by her insurance (Tr. 58.), including $10,920 (SOR 1.b-1.i, 1.dd-1.ee) that went to collection between September 2006 and April 2007. She also stopped paying on several credit card accounts in 2006, when she could no longer afford the payments. Then, in September 2006, state X filed a $11,246 tax lien against Applicant for delinquent taxes, apparently because of the capital gains on the house she had sold in December 2004. (Ex. 6, D; Tr. 53.)

By August 2007, when Applicant regained full-time employment as a “remotely- located employee” with her present employer (Ex. 1, A.), her delinquent credit card balances totaled around $98,000 (SOR 1.j-1.v, 1.z-1.aa, 1.cc). (Ex. 6, 7, 8, D.) She had also not made any payments on the state tax debt. (Ex. 6, 7, 8.) On August 23, 2007, Applicant completed a Questionnaire for Public Trust Positions (SF 85P). She listed only one delinquent debt; the mortgage loan on her home. (Ex. 1.)

As of September 2007, Applicant’s mortgage was past due 150 days in the amount of $5,946, and several consumer credit card accounts and medical debts were in collection. (Ex. 6.) Her house went into foreclosure shortly after she was hired, and funds earmarked for bills went instead to attorneys to stop the foreclosure. (Ex. 2, Tr. 65-66.) During an interview with a government investigator on October 24, 2007, Applicant discussed her financial problems, which she attributed to lack of full-time employment and no medical insurance. She indicated that she was paying $1,700 per month to catch up her mortgage, and $300 per month on the debt in SOR 1.r. Applicant volunteered that she had listed her home for sale at an asking price of $260,000. She anticipated receiving $100,000 from the sale, and expressed her intent to pay all of her debts, if her house sold. (Ex. 4.)

Applicant earned only $20,533 in 2007. (Ex. D.) In March 2008, the project that occupied Applicant’s time was put on hold, and her work hours were reduced to only 24 every two weeks. Around June 2008, Applicant sold her home, receiving only $20,000 out of the sale due to the decline in the real estate market. (Ex. 2, 4, D; Tr. 61.) It is not clear what she did with the funds. While her work hours had increased by July 2008,3 Applicant’s wages were being garnished by the IRS to recover unpaid taxes from when she lived off her 401(k) assets. (Ex. D, H.) After consulting with an attorney (Ex. 3), Applicant notified DOHA in July 2008 that she intended to file for bankruptcy. (Ex. 2.) From mid-November 2008 through late May 2009, $22,507.39 was garnished from her pay by the IRS, so she netted pay of only $5,466.04 (between $340.32 and $344.24 every two weeks) for those six months. (Ex. E.) In May 2009, state X filed a $34,736 tax lien against her. (Ex. 8) In June 2009, Applicant told DOHA that she had been paying federal and state taxes “every two weeks since last year.” (Ex. 3.) She presented no record of any payments in 2008 other than by IRS garnishment.

As of June 2009, Applicant’s take-home pay was $340 every two weeks because of the IRS levy. She had paid her attorney a retainer of $1,866 to file for bankruptcy, but a respiratory illness that summer delayed her filing. (Ex. D; Tr. 67.) On receipt of a settlement offer from one of her creditors (not alleged in SOR), Applicant paid $32.36 to settle a $107.85 balance in June 2009. (Ex. G.) Later that month, Applicant paid a $24.93 radiology debt owed since December 2008. (Ex. F.) In September 2009, Applicant entered into agreements to repay her federal tax debt at $1,000 per month, and her state X tax delinquency at $500 every two weeks. (Tr. 49, 54.)

Applicant earned total wages of $65,912.51 for 2009. (Ex. D.) On January 26, 2010, Applicant filed a Chapter 7 bankruptcy petition, listing $126,461.44 in unsecured priority claims; IRS debts of $41,457.10 for tax year 2003 and $2,787.42 for tax year 2006, an IRS levy of $70,970.92, and the $11,246 state tax lien. Of the $124,216.10 in unsecured nonpriority debt, $107,634.04 was non-medical consumer credit debt. It is unclear whether Applicant included the debt in SOR 1.aa on her petition, although all the others are listed on her schedules. Applicant reported monthly expenses of $4,339, including monthly payments of $1,000 to the IRS and $1,124 to state X for delinquent taxes. She reported average monthly income equal to her expenditure and no savings. (Ex. D.) Applicant listed assets of $4,401.04. On February 22, 2010, she completed online instruction in personal financial management required for a bankruptcy discharge. (Ex. C.) As of March 4, 2010, Applicant had not yet been granted a discharge. On or before March 9, 2010, Applicant learned from her bankruptcy attorney that the trustee had notified the court that she would be granted a discharge on May 3, 2010, with no assets for distribution. (Ex. H.)

Applicant does not have a good handle on how much she owes in back taxes. If her tax debts are not discharged, she plans to have her filings for tax years 2004 through 2007 reviewed by someone with knowledge of tax matters. She intends to continue repaying her tax debts until then. (Tr. 49-57.) She has no discretionary income after paying her living expenses and her tax payments. (Tr. 63-64.) She has no savings and no credit cards. (Tr. 64.)

Applicant demonstrated an excellent work ethic while employed in state X for her present employer. She continued to display the same dependability and willingness to take on new challenges, while working independently from state Y. Her supervisor considers her to be a valued employee. (Ex. A.)

POLICIES

Positions designated as ADP I and ADP II are classified as “sensitive positions.” (See Regulation ¶¶ C3.1.2.1.1.7 and C3.1.2.1.2.3.) “The standard that must be met for . . . assignment to sensitive duties is that, based on all available information, the person’s loyalty, reliability, and trustworthiness are such that . . . assigning the person to sensitive duties is clearly consistent with the interests of national security.” (See Regulation ¶ C6.1.1.1.) The Deputy Under Secretary of Defense (Counterintelligence and Security) Memorandum, dated November 19, 2004, indicates trustworthiness adjudications will apply to cases forwarded to DOHA by the Defense Security Service and Office of Personnel Management. Department of Defense contractor personnel are afforded the right to the procedures contained in the Directive before any final unfavorable access determination may be made. (See Regulation ¶ C8.2.1.)

When evaluating an Applicant’s suitability for a public trust position, the administrative judge must consider the disqualifying and mitigating conditions in the Adjudicative Guidelines (AG). These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial and commonsense decision. According to AG ¶ 2(c), the entire process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” The administrative judge must consider all available reliable information about the person, past and present, favorable and unfavorable. In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record.

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the Applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The Applicant has the ultimate burden of persuasion to obtain a favorable trustworthiness decision.

A person who seeks access to sensitive information enters into a fiduciary relationship with the government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The government reposes a high degree of trust and confidence in individuals to whom it grants access to sensitive information. Decisions include, by necessity, consideration of the possible risk the Applicant may deliberately or inadvertently fail to protect or safeguard sensitive information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of sensitive information. Section 7 of Executive Order (EO) 10865 provides that decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F, Financial Considerations

The trustworthiness concern about finances is set out in AG ¶ 18:

Failure or inability 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 information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

As of March 2010, Applicant was seeking a discharge in bankruptcy of $16,582.04 in delinquent medical debt, and $107,634.06 in unsecured past due consumer credit debt, including some debts not in the SOR. Furthermore, a $21,473 delinquent credit card balance (SOR 1.r) appears to have been omitted from her bankruptcy. Included on her bankruptcy petition was a state X tax lien of $11,246, which was filed against her in September 2006. Applicant may well owe a larger balance, given that a $34,736 state X tax lien was filed against her in May 2009. In addition, she acknowledges owing a sizeable federal tax delinquency that was not alleged in the SOR. She included in her bankruptcy federal tax debt totaling $44,244.52, but also an IRS levy of $70,970.92, that she has been repaying, initially through garnishment of her wages and since September 2009, under an agreement with the IRS. Applicant’s record of serious financial delinquency implicates potentially disqualifying conditions AG ¶ 19(a), “inability or unwillingness to satisfy debts,” and AG ¶ 19(c), “a history of not meeting financial obligations.”

AG ¶ 20(a), “the 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,” cannot reasonably apply in mitigation, even in the event of a Chapter 7 bankruptcy discharge. Her financial problems are too extensive and too recent to favorably consider AG ¶ 20(a).

AG ¶ 20(b), “the conditions that resulted in the financial problem were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation), and the individual acted responsibly under the circumstances,” applies in part. Applicant was unemployed from April 2004 until August 2007, except for some substitute teaching and seasonal retail work. She had unexpected medical expenses during the summer of 2006. That said, one has to question the soundness of her financial judgment. Applicant apparently withdrew her 401(k) assets without regard to the tax implications. She bought a home immediately on relocating to state Y when she did not have a job that would provide the income to cover the mortgage and living expenses. After she was rehired by her employer in August 2007, she had to pay extra on her mortgage to avoid losing her home to foreclosure, so she was not in a position financially to address her delinquent debts. IRS garnishment of her wages left her with little to live on during the first half of 2009, and it explains her nonpayment of other debts during that time. Illness played a limited role in delaying her bankruptcy filing. But ¶ 20(b) does not mitigate the concerns about Applicant’s mishandling of her personal finances. She testified that she “lost her shirt” when she sold her house in 2008, but there is evidence that she may have realized $20,000 from the sale.

Despite her payments on her tax debts on terms accepted by the IRS and state X since September 2009, I cannot fully apply AG ¶ 20(d), “the individual initiated a good- faith effort to repay overdue creditors or otherwise resolve debts.” Repayment of her tax debts commenced initially through involuntary garnishment, and while a Chapter 7 bankruptcy discharge would relieve Applicant of much of her debt burden, she has no assets to distribute to her creditors.

Applicant received credible assurances from her attorney of an expected discharge of her bankruptcy in May 2010. A discharge would implicate AG ¶ 20(c), “the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control,” as to the debts discharged. Assuming Applicant no longer is legally responsible for the nonpriority unsecured consumer credit debt included in her Chapter 7 filing, there is no debt on Applicant’s Schedule F that corresponds in amount to the $21,473 collection debt in SOR 1.r. Furthermore, the evidence before me is inconclusive on whether her tax debts would be discharged. Under 11 U.S.C. § 523, certain tax debts are not discharged.6 With respect to a Chapter 7 discharge under section 727, taxes on or measured by income for a taxable year ending on or before the date of the filing of the bankruptcy petition would not be subject to discharge, if the return for those taxes was last due, including extensions, within three years of the date of the bankruptcy filing. Government taxes on or measured by income, assessed at any time within 240 day before the bankruptcy petition date, are also not dischargeable. Applicant, who had “no idea” of the balances of her federal and state tax delinquencies, had reported on her bankruptcy two IRS debts from 2003 and 2006, and a state A tax lien from 2002. Her credit reports instead show tax liens filed in September 2006 and in May 2009. Applicant’s federal tax return for tax year 2006 would have been due within three years of her bankruptcy filing in January 2010. The May 2009 tax lien, about which Applicant could only speculate, also raises questions about the extent and dischargeability of her tax obligations. Based on the evidence before me, I am unable to apply AG ¶ 20(c), “the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control.” AG ¶ 20(e), “the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue,” is not satisfied by promises to “revisit” her tax liabilities with professional help if her tax debts are not discharged. She provided no evidence that invalidates the tax liens in SOR 1.a or 1.bb. AG ¶ 20(e) applies in limited part, in that the debts in SOR 1.w, 1.x, and 1.yare updated collection balances of the debts in SOR 1.k, 1.l, and 1.o and not additional debts.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a public trust position by considering the totality of the conduct and all the relevant circumstances in light of the nine adjudicative process factors listed at AG ¶ 2(a). Applicant’s finances were adversely affected by lengthy unemployment, and at times by illness. But Applicant also mismanaged consumer credit extended to her. Even if a significant stress burden is alleviated through a Chapter 7 bankruptcy liquidation, I remain concerned about her financial situation. As of March 2010, Applicant had no discretionary income and no savings. More troubling, she displayed little knowledge about the current balances of her tax debts. She was still trying to “get a grip” on her tax situation after paying over $2,000 per month toward her taxes for several months. (Tr. 54.) Applicant needs an income to meet her financial obligations, including the payments on any tax debts that survive her bankruptcy. That said, the issue before me is whether it is clearly consistent with the national interest for her to hold a position of trust. While she has demonstrated reliability and trustworthiness in her work performance, it is not enough to overcome the doubts about whether she can be counted on to make sound financial decisions going forward.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: AGAINST APPLICANT

Subparagraph 1.a: Against Applicant Subparagraph 1.b: Against Applicant Subparagraph 1.c: Against Applicant Subparagraph 1.d: Against Applicant Subparagraph 1.e: Against Applicant Subparagraph 1.f: Against Applicant Subparagraph 1.g: Against Applicant Subparagraph 1.h: Against Applicant Subparagraph 1.i: Against Applicant Subparagraph 1.j: Against Applicant Subparagraph 1.k: Against Applicant Subparagraph 1.l: Against Applicant Subparagraph 1.m: Against Applicant Subparagraph 1.n: Against Applicant Subparagraph 1.o: Against Applicant Subparagraph 1.p: Against Applicant Subparagraph 1.q: Against Applicant Subparagraph 1.r: Against Applicant Subparagraph 1.s: Against Applicant Subparagraph 1.t: Against Applicant Subparagraph 1.u: Against Applicant Subparagraph 1.v: Against Applicant For Applicant8 Subparagraph 1.w: Subparagraph 1.x: For Applicant Subparagraph 1.y: For Applicant Subparagraph 1.z: Against Applicant Subparagraph 1.aa: Against Applicant Subparagraph 1.bb: Against Applicant Subparagraph 1.cc: Against Applicant Subparagraph 1.dd: Against Applicant Subparagraph 1.ee: Against Applicant

CONCLUSION

In light of the record in this case, it is not clearly consistent with the national interest to grant Applicant eligibility for a public trust position. Eligibility for access to sensitive information is denied.

Elizabeth M. Matchinski Administrative Judge

FOOTNOTES

Based on a review of her credit reports (Ex. 6, 7, 8) and bankruptcy petition (Ex. D), it appears that three debts were duplicated in the SOR (SOR 1.ksame debt as SOR 1.y, SOR 1.lsame debt as SOR 1.w, and SOR 1.o same as SOR 1.x).

Applicant testified that she “lost a bundle” on the sale of her home. (Tr. 61.) Yet, in June 2009, she told DOHA that she had received $20,000 from the sale. (Ex. 4.)

Applicant’s wages for 2008 totaled $57,728. (Ex. D.) Applicant informed DOHA in July 2008 that her tax delinquency with state X was being repaid through automatic deduction. (Ex. 2.) She provided a statement of her earnings and deductions for the period November 2008 through May 2009 (Ex. E) showing that the IRS (not state X) had garnished $22,507.39 from her wages for back federal income taxes. (Tr. 32, 37-38, Ex. H.) The balances of her tax debts to the IRS and state X were not available for review. She listed the initial balances on her bankruptcy petition (Ex. D.), and she did not recognize the $41,457 federal tax debt included in her bankruptcy when asked about it at her hearing. W hen asked about her total debt to the IRS, Applicant responded, “I have no idea.” (Tr. 48.) As for the state X tax lien of $34,736 in SOR 1.a, Applicant testified the balance must be due to interest and penalties. (Tr. 54.) In ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006) the Appeal Board listed five circumstances in which conduct not alleged in an SOR may be considered:

(a) to assess an applicant’s credibility; (b) to evaluate an applicant’s evidence of extenuation, mitigation, or changed circumstances; (c) to consider whether an applicant has demonstrated successful rehabilitation; (d) to decide whether a particular provision of the Adjudicative Guidelines is applicable; or (e) to provide evidence for whole person analysis under Directive Section 6.3.

(citing ISCR Case No. 02-07218 at 3 (App. Bd. Mar. 15, 2004); ISCR Case No. 00-0633 at 3 (App. Bd. Oct. 24, 2003)). I have considered the non-SOR misconduct for the five above purposes, and not for any other purpose. See 11 U.S.C. § 523(a), which provides, in part, as follows:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt-

(1) for a tax or a customs duty- (A) of the kind and for the periods specified in section 507(a)(3) or 507(a)(8) of this title, whether or not a claim for such tax was filed or allowed; (B) with respect to which a return, or equivalent report or notice, if required- (i) was not filed or given; or (ii) was filed or given after the date on which such return, report, or notice was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition; or (C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax;

(14) incurred to pay a tax to the United States that would be nondischargeable pursuant to paragraph (1);

(14A) incurred to pay a tax to a governmental unit, other than the United States, that would be nondischargeable under paragraph (1).

As set forth in 11 U.S.C. §507(a)(8), some tax debts with priority are not dischargeable:

The following expenses and claims have priority in the following order:

(8) Eighth, allowed unsecured claims of governmental units, only to the extent that such claims are for-

(A) a tax on or measured by income or gross receipts for a taxable year ending on or before the date of the filing of the petition-

(i) for which a return, if required, is last due, including extensions, after three years before the date of the filing of the petition; (ii) assessed within 240 days before the date of the filing of the petition, exclusive of- (I) any time during which an offer of compromise with respect to that tax was pending or in effect during the 240-day period, plus 30 days; and (II) any time during which a stay of proceedings against collections was in effect in a prior case under this title during that 240-day period, plus 90 days. (iii) other than a tax of a kind specified in section 523(a)(1)(B) or 523(a)(1)(C) of this title, not assessed before, but assessable, under applicable law or by agreement, after the commencement of the case. The factors under AG ¶ 2(a) are:

(1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent behavioral changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence. Favorable findings are warranted as to those balances that are updated collection balances of debts otherwise listed in the SOR.