ISCR Case 15-03481.h1

Case Headnote

ISCR Case No. 15-03481.h1

grantedJul 1, 2015· Hon. Robert Robinson Gales· hearing

Summary

The applicant, a 52-year-old field service technician for a defense contractor, faced security concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations) due to a history of financial difficulties and failure to timely file federal income tax returns. The judge found that the applicant had taken significant steps to resolve his financial issues and demonstrated a commitment to timely filing taxes, ultimately granting his security clearance.

Under Guideline E (Personal Conduct) and Guideline F (Financial Considerations), the Statement of Reasons alleged the following: This is a bank credit card account with an unpaid balance of $2,712.99 that was transferred or sold to a collection entity which filed a lawsuit against Applicant in April 2013. Applicant paid the entire balance in June 2013, over two years before the SOR was issued, and the available Government evidence clearly reflects that the account was resolved at that time (1.a). This is a medical account from an unidentified medical provider with a remaining balance of $223 about which Applicant was initially unaware, apparently because the creditor had the wrong mailing address for Applicant. He was able to contact the collection agent to validate the account. He contends he has paid the balance, but the documentation he submitted is merely an extract of a credit report with some notes written upon it, and there is no indication (by receipt or cancelled check) that the balance has, in fact, been paid (1.b). This refers to the failure to “submit” the federal income tax “filings” for the tax years 2009 through 2012. In his e-QIP, Applicant denied filing his federal income tax returns for the tax years 2010 and 2011. He explained that the IRS usually just sends him a letter if he owes additional taxes. During his OPM interview, he admitted he had not filed his federal income tax returns for 2009 and 2012 as well. In September 2015, the IRS issued three notices of intent to seize Applicant’s state tax refunds or other property to be applied to his unpaid income taxes, penalty, and interest for the tax years 2010 ($669.42), 2011 ($765.04), and 2012 ($1,342.55). In October 2015, his anticipated refund for the tax year 2014 was applied to his remaining 2010 and 2011 balances. Applicant finally filed his federal income tax returns for the tax years in issue: a Form 1040EZ for 2009 was filed on or before February 21, 2014; a Form 1040EZ for 2010 was filed on or before February 24, 2014; a Form 1040EZ for 2011 was filed on or before February 20, 2014; and a Form 1040 for 2012 was filed on or before August 16, 2015. Because of a combination of diverted refunds by the IRS and actual payments by Applicant, the estimated remaining tax balances for the tax years were as follows: 2009 (zero); 2010 ($338.80); 2011 (zero); and 2012 ($1,406.04) (1.c).

The judge granted the clearance. The government raised disqualifying conditions AG ¶ 19(a), AG ¶ 19(c), AG ¶ 19(g). The judge applied mitigating conditions AG ¶ 20(c), AG ¶ 20(d). The decision turned on the following: The applicant resolved a significant delinquent debt prior to the SOR issuance; He filed all overdue federal income tax returns, demonstrating responsibility; There was no evidence of ongoing financial difficulties or lack of control over finances.

Why the Applicant Prevailed

The applicant resolved a significant delinquent debt prior to the SOR issuance.
He filed all overdue federal income tax returns, demonstrating responsibility.
There was no evidence of ongoing financial difficulties or lack of control over finances.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
AG ¶ 19(g)raisedFailure to File Annual Federal, State, or Local Income Tax Returns

Mitigating

AG ¶ 20(c)appliedThe Individual 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(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“Eligibility for a security clearance and access to classified information is granted.”

Procedural Posture

SOR issuedAug 18, 2015
Answer filedNov 18, 2015Applicant elected for a written record decision.
Hearing held—No hearing; decision based on written record.
Decision dateMay 31, 2016

Cite For

Mitigation of Financial Issues Under Guideline F
Resolution of Tax Filing Issues as a Factor in Clearance Decisions
Consideration of Personal Conduct in the Context of Financial Responsibility

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

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	specific text not stated in this decision	For Applicant	Unspecified Personal Conduct	—	Unknown	—	—	—

Allegation

Finding

Conduct

Concealed Issue

Response

Disqualifying (¶16)

Mitigating applied (¶17)

Mitigation

2.a

specific text not stated in this decision

For Applicant

Unspecified Personal Conduct

—

Unknown

—

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	This is a bank credit card account with an unpaid balance of $2,712.99 that was transferred or sold to a collection entity which filed a lawsuit against Applicant in April 2013. Applicant paid the entire balance in June 2013, over two years before the SOR was issued, and the available Government evidence clearly reflects that the account was resolved at that time. $2,712	For Applicant	Credit Card Debt	Denied	—	—	—
1.b	This is a medical account from an unidentified medical provider with a remaining balance of $223 about which Applicant was initially unaware, apparently because the creditor had the wrong mailing address for Applicant. He was able to contact the collection agent to validate the account. He contends he has paid the balance, but the documentation he submitted is merely an extract of a credit report with some notes written upon it, and there is no indication (by receipt or cancelled check) that the balance has, in fact, been paid. $223	For Applicant	Medical Debt	Denied	—	—	—
1.c	This refers to the failure to “submit” the federal income tax “filings” for the tax years 2009 through 2012. In his e-QIP, Applicant denied filing his federal income tax returns for the tax years 2010 and 2011. He explained that the IRS usually just sends him a letter if he owes additional taxes. During his OPM interview, he admitted he had not filed his federal income tax returns for 2009 and 2012 as well. In September 2015, the IRS issued three notices of intent to seize Applicant’s state tax refunds or other property to be applied to his unpaid income taxes, penalty, and interest for the tax years 2010 ($669.42), 2011 ($765.04), and 2012 ($1,342.55). In October 2015, his anticipated refund for the tax year 2014 was applied to his remaining 2010 and 2011 balances. Applicant finally filed his federal income tax returns for the tax years in issue: a Form 1040EZ for 2009 was filed on or before February 21, 2014; a Form 1040EZ for 2010 was filed on or before February 24, 2014; a Form 1040EZ for 2011 was filed on or before February 20, 2014; and a Form 1040 for 2012 was filed on or before August 16, 2015. Because of a combination of diverted refunds by the IRS and actual payments by Applicant, the estimated remaining tax balances for the tax years were as follows: 2009 (zero); 2010 ($338.80); 2011 (zero); and 2012 ($1,406.04).	For Applicant	Tax Filing Failure	Denied	(g) unexplained affluence	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

This is a bank credit card account with an unpaid balance of $2,712.99 that was transferred or sold to a collection entity which filed a lawsuit against Applicant in April 2013. Applicant paid the entire balance in June 2013, over two years before the SOR was issued, and the available Government evidence clearly reflects that the account was resolved at that time.

$2,712

For Applicant

Credit Card Debt

Denied

—

1.b

This is a medical account from an unidentified medical provider with a remaining balance of $223 about which Applicant was initially unaware, apparently because the creditor had the wrong mailing address for Applicant. He was able to contact the collection agent to validate the account. He contends he has paid the balance, but the documentation he submitted is merely an extract of a credit report with some notes written upon it, and there is no indication (by receipt or cancelled check) that the balance has, in fact, been paid.

$223

For Applicant

Medical Debt

Denied

—

1.c

This refers to the failure to “submit” the federal income tax “filings” for the tax years 2009 through 2012. In his e-QIP, Applicant denied filing his federal income tax returns for the tax years 2010 and 2011. He explained that the IRS usually just sends him a letter if he owes additional taxes. During his OPM interview, he admitted he had not filed his federal income tax returns for 2009 and 2012 as well. In September 2015, the IRS issued three notices of intent to seize Applicant’s state tax refunds or other property to be applied to his unpaid income taxes, penalty, and interest for the tax years 2010 ($669.42), 2011 ($765.04), and 2012 ($1,342.55). In October 2015, his anticipated refund for the tax year 2014 was applied to his remaining 2010 and 2011 balances. Applicant finally filed his federal income tax returns for the tax years in issue: a Form 1040EZ for 2009 was filed on or before February 21, 2014; a Form 1040EZ for 2010 was filed on or before February 24, 2014; a Form 1040EZ for 2011 was filed on or before February 20, 2014; and a Form 1040 for 2012 was filed on or before August 16, 2015. Because of a combination of diverted refunds by the IRS and actual payments by Applicant, the estimated remaining tax balances for the tax years were as follows: 2009 (zero); 2010 ($338.80); 2011 (zero); and 2012 ($1,406.04).

For Applicant

Tax Filing Failure

Denied

(g) unexplained affluence

—

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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