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ISCR 01-03738.h1: Guideline F security clearance hearing, denied (2002) · CASE

ISCR Case 01-03738.h1denied

Case headnote

ISCR Case No. 01-03738.h1

deniedJul 31, 2002· Hon. Wilford H. Ross· hearing

Summary

A 46-year-old Production Control Manager, employed by a defense contractor, was denied retention of his Secret-level security clearance under Guideline F (Financial Considerations). The denial stemmed from his significant, unresolved federal tax debt and a history of failing to address financial obligations.

Specifically, the Applicant admitted to owing the IRS approximately $32,000 in past due federal taxes as of January 2000, primarily due to improper deductions taken between 1990 and 1995, and additional taxes for 1985 and 1996. Although tax refunds and liens reduced this debt to about $20,000, the Applicant had not established a current payment plan with the IRS or made payments for three years. While he had resolved a state tax debt of $928.45 from 1995 by February 2002, this did not mitigate the federal tax concerns.

The Administrative Judge denied the clearance because the Applicant failed to demonstrate a history of timely payments or a current plan to resolve his substantial federal tax debt, and did not provide persuasive evidence to mitigate these financial concerns.

Why the applicant was denied

The Applicant has over $20,000 in unresolved Federal tax debt.
The Applicant failed to establish a payment plan with the IRS or make payments for three years.
The Applicant did not provide persuasive evidence to mitigate the financial concerns.

Conditions referenced

Disqualifying

F.1raisedFinancial Considerations - History of Not Meeting Financial Obligations
F.3raisedFinancial Considerations - Inability or Unwillingness to Satisfy Debts

Procedural posture

SOR issuedSep 27, 2001
Answer filedOct 26, 2001
Hearing heldMar 29, 2002
Decision dateJul 31, 2002

Cite for

Financial Irresponsibility Under Guideline F
Lack of Timely Action to Resolve Tax Debts
Failure to Demonstrate Rehabilitation or Payment History

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

From the decision

Facts this decision states, each with the exact sentence it comes from. Descriptive of the record, not an assessment.

Clearance at issue: Secret: “he seeks to retain a Secret-level DoD security clearance previously granted in connection with his employment in the defense sector.”
Held a clearance before: Yes: “he seeks to retain a Secret-level DoD security clearance previously granted in connection with his employment in the defense sector.”
Delinquent debt cited: $32,000 (on a payment plan): “The Applicant has accrued more than $32,000 in delinquent Federal taxes.”

Standardized Decision Profile

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

Posture: Decision on RecordDecided: denied

The Applicant faced significant financial concerns due to over $32,000 in delinquent federal taxes, which was reduced to approximately $20,000. The judge found that the Applicant failed to establish a payment plan or make payments to the IRS, leading to 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

APPEARANCES

DATE: July 31, 2002

In Re:

---------------------------

SSN: ---------------

Applicant for Security Clearance

ISCR Case No. 01-03738

DECISION OF ADMINISTRATIVE JUDGE

WILFORD H. ROSS

SYNOPSIS

The Applicant has accrued more than $32,000 in delinquent Federal taxes. This debt has been reduced to $20,000 due to liens and tax refund offsets. The Applicant does not have a current payment plan with the IRS, nor a track record of making payments to the IRS. Adverse inference is not overcome. Clearance is denied.

STATEMENT OF CASE

On September 27, 2001, the Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 (as amended) and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, issued a Statement of Reasons (SOR) to the Applicant, which detailed reasons why DOHA could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for the Applicant and recommended referral to an Administrative Judge to determine whether a clearance should be denied or revoked.

The Applicant responded to the SOR in writing on October 26, 2001, and requested a hearing. The case was received by the undersigned on March 13, 2002, and a Notice of Hearing was issued on March 13, 2002.

A hearing was held on March 29, 2002, at which the Government presented five documentary exhibits. Testimony was taken from the Applicant, who also submitted two post hearing exhibits. (1) The transcript was received on April 8, 2002.

FINDINGS OF FACT

The Applicant is 46, married and is a high school graduate. He is employed by a defense contractor as a Production Control Manager, and he seeks to retain a Secret-level DoD security clearance previously granted in connection with his employment in the defense sector. The Government opposes the Applicant's request for a continued security clearance, based upon the allegations set forth in the Statement of Reasons (SOR). The following findings of fact are entered as to each paragraph and criterion in the SOR. They are based on the Applicant's Answer to the SOR, the exhibits and the live testimony.

Paragraph 1 (Guideline F - Financial Considerations). The Government alleges in this paragraph that the Applicant is ineligible for clearance because he is financially overextended.

Subparagraph 1.a. The Applicant admits that, in February 2000, he owed his state taxing authority $928.45 for the 1995 tax year. However, documents from the state taxing authority dated February 21, 2002, show that the Applicant has paid this debt and has no current indebtedness for past taxes. (Government Exhibit 5.)

Subparagraph 1.b. The Applicant admits that he owed the United States Internal Revenue Service (IRS) approximately $32,000 in past due taxes as of January 2000. This occurred because the Applicant took deductions he was not entitled to for tax years 1990, 1991, 1992, 1993 and 1995. The Applicant testified that he also owed taxes for other reasons for tax years 1985 and 1996. (Government Exhibit 2; Transcript at 26.) The Applicant did not pay these taxes and the IRS filed liens against the Applicant, beginning in 1997. As a result of liens, and the application of the Applicant's tax refunds for the last few years, the indebtedness has been reduced to approximately $20,000. (Government Exhibit 4.)

In 1998 and 1999, the Applicant attempted to resolve these taxes by making a payment arrangement with the IRS. His request was not approved by the IRS. (Government Exhibit 1; Transcript at 22-23.) The Applicant stopped making payments to the IRS and did not make any further payments. The Applicant also testified that he did not contact the IRS for three years because they rejected his plan. He also admitted that there was no good reason for his failure to contact the IRS or make any payments on this debt from 1999 to the date of the hearing. (Transcript at 29.)

The Applicant sent a letter to the IRS after the hearing, along with an Installment Agreement Request. The Applicant requests that the IRS accept $500 a month for one year, then he will make a balloon payment of the rest of his indebtedness. The Applicant did not submit evidence showing that the IRS had either accepted or rejected his request.

Subparagraph 1.c. The Applicant disputed the accuracy of the statement that he has approximately $2,500 a month of disposable income. He believes the amount is closer to $1,000 a month. (Transcript at 26-28.)

Mitigation. The Applicant's last three Performance Appraisals, Applicant's Exhibit B, show that he is an able and respected worker. The most recent Appraisal described the Applicant's work as "distinguished."

POLICIES

Security clearance decisions are not made in a vacuum. Accordingly, the Department of Defense, in Enclosure 2 of the 1992 Directive, has set forth policy factors which must be given "binding" consideration in making security clearance determinations. These factors should be followed in every case according to the pertinent criterion. However, the factors are neither automatically determinative of the decision in any case, nor can they supersede the Administrative Judge's reliance on his own common sense, as well as his knowledge of the law, human nature and the ways of the world, in making a reasoned decision. Because each security clearance case presents its own unique facts and circumstances, it cannot be assumed that these factors exhaust the realm of human experience, or apply equally in every case. Based on the Findings of Fact set forth above, the factors most applicable to the evaluation of this case are:

Guideline F (Financial considerations)

Conditions that could raise a security concern:

(1) a history of not meeting financial obligations;

(3) inability or unwillingness to satisfy debts;

Conditions that could mitigate security concerns: (None of the stated conditions have application in this case.)

In addition, as set forth in Enclosure 2 of the Directive at pages 16-17, "In evaluating the relevance of an individual's conduct, the [Administrative Judge] should consider the following factors [General Factors]:

a. The nature, extent and seriousness of the conduct

b. The circumstances surrounding the conduct, to include knowledgeable participation

c. The frequency and recency of the conduct

d. The individual's age and maturity at the time of the conduct

e. The voluntariness of participation

f. The presence or absence of rehabilitation and other pertinent behavior changes

g. The motivation for the conduct

h. The potential for pressure, coercion, exploitation or duress

i. The likelihood of continuation or recurrence."

The eligibility criteria established in the DoD Directive identify personal characteristics and conduct which are reasonably related to the ultimate question of whether it is "clearly consistent with the national interest" to grant an Applicant's request for access to classified information.

In the defense industry, the security of classified industrial secrets is entrusted to civilian workers who must be counted upon to safeguard such sensitive information twenty-four hours a day. The Government is therefore appropriately concerned where available information indicates that an Applicant for clearance may have financial problems that demonstrate poor judgement, untrustworthiness or unreliability on the Applicant's part.

The DoD Directive states, "Each adjudication is to be an overall common sense determination based upon consideration and assessment of all available information, both favorable and unfavorable, with particular emphasis placed on the seriousness, recency, frequency, and motivation for the individual's conduct; the extent to which conduct was negligent, willful, voluntary, or undertaken with the knowledge of the circumstances or consequences involved; and, to the extent that it can be estimated, the probability that conduct will or will not continue in the future." The Administrative Judge can only draw those inferences or conclusions that have a reasonable and logical basis in the evidence of record. The Judge cannot draw inferences or conclusions based on evidence which is speculative or conjectural in nature. Finally, as emphasized by President Eisenhower in Executive Order 10865, "Any determination under this order...shall be a determination in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned."

CONCLUSION

It is the Government's responsibility to present substantial evidence to support the finding of a nexus, or rational connection, between the Applicant's conduct and the continued holding of a security clearance. If such a case has been established, the burden then shifts to the Applicant to go forward with evidence in rebuttal, explanation or mitigation which is sufficient to overcome or outweigh the Government's case. The Applicant bears the ultimate burden of persuasion in proving that it is clearly consistent with the national interest to grant him or her a security clearance.

In this case the Government has met its initial burden of proving by substantial evidence that the Applicant has financial problems concerning his inability to pay off his Federal tax debt.

The Applicant, on the other hand, has not introduced persuasive evidence in rebuttal, explanation or mitigation which is sufficient to overcome the Government's case against him, except in part. Subparagraph 1.a. is found for the Applicant because he has paid the indebtedness to the state taxing authority.

The Applicant has known since at least 1997 of his back tax problems with the Federal Government. After his attempt in 1998 to resolve the situation was rejected by the IRS in early 1999, he has gone three years without further contacting them. By his own admission there was no good reason for this failure. The Statement of Reasons was issued to the Applicant in September 2001 and the hearing was in March 2002. In that intervening period he failed to do anything. It was only after the hearing that the Applicant filed another request with the IRS to settle his tax delinquency. The Government does not know if this request was accepted, and the Applicant has no track record for making payments. In addition, it is obvious that the Applicant has had the funds to continue to pay the IRS for three years, but failed to do so. Subparagraphs 1.b. and 1.c. are found against the Applicant, along with Paragraph 1 of the SOR.

On balance, it is concluded that the Applicant has failed to overcome the Government's information opposing his request for a security clearance. Accordingly, the evidence supports a finding against the Applicant as to the conclusionary allegations expressed in Paragraph 1 of the Government's Statement of Reasons.

FORMAL FINDINGS

Formal findings For or Against the Applicant on the allegations in the SOR, as required by Paragraph 25 of Enclosure 3 of the Directive, are:

Paragraph 1: Against the Applicant.

Subparagraph 1.a.: For the Applicant.

Subparagraph 1.b.: Against the Applicant.

Subparagraph 1.c.: Against the Applicant.

DECISION

In light of all the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant or continue a security clearance for the Applicant.

Wilford H. Ross

Administrative Judge

1. Applicant's Exhibit A is an undated letter to the Internal Revenue Service, with attachment. Applicant's Exhibit B consists of the Applicant's last three annual Performance Appraisals.

FOOTNOTES

01-03738.h1 FOR GOVERNMENT Melvin A. Howry, Esquire, Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-03738.h1.html[7/2/2021 2:15:10 PM] 01-03738.h1