Summary
The applicant, a 60-year-old senior engineering analyst, faced security clearance denial due to a history of failing to file federal and state tax returns and significant debt issues. The judge found that the applicant's omissions and misstatements regarding his financial obligations compounded security concerns, leading to a determination that granting a security clearance was not consistent with national interest.
Under Guideline E (Personal Conduct), Guideline F (Financial Considerations), and Guideline J (Criminal Conduct), the Statement of Reasons alleged the following: Applicant is alleged to have falsified his Security Clearance Application ("SF-86"), which he executed in June 1999, by omitting his financial delinquencies in excess of 180 and 90 days, respectively: both his owed federal and state income taxes (3.a). When asked about his tax filings in an ensuing DSS interview in December 2000, Applicant admitted he owed federal and state taxes since 1998 and was even garnished by the State in 1998. But he also claimed to have asked for and received extensions for some tax years and to have "filed my Federal taxes," only to have some of his claimed deductions denied by the IRS. Most of this was untrue, for he failed to file any of his federal or state returns for the years covered in the SOR after these requested extensions had expired (3.b). indebted to the IRS in excess of $49,000.00 for delinquent taxes, interest and penalties for tax years 1994 through 1998 (2.a). indebted to State A's Department of Taxation in excess of $3,100.00 for tax years 1994, 1995, 1997 and 1998 (2.b). indebted to medical providers on debts referred for collection (for $403.60) and taken to judgment ($781.00) (2.c). indebted to a local district's treasurer's office for delinquent personal property taxes and judgments filed against him totaling in excess of $1,265.00 (2.d). failed to file federal income tax returns for the tax years of 1994 through 1997 and for 1999 (2.e). failed to file state returns for the same tax years in violation of Sec. 58.1-348 of State A's Code, a Class 1 misdemeanor (2.f). omitted his financial delinquencies in excess of 180 and 90 days from his SF-86 (2.g). misstatement of the status of his filing his federal tax returns in a subsequent DSS interview (2.h). failed to make payment arrangements to date, to pay any of his back federal or state income taxes (2.i). failed to discharge determined tax liabilities to the IRS and State Department of Taxation for most of the covered years (2.j). accumulated delinquent debts for medical and dental services which he has failed to take care of (2.k). insufficient testing of Applicant's judgment and trustworthiness in meeting his financial responsibilities (2.l). Wilfully failed to file his federal income tax returns for the tax years of 1994 through 1997 and for 1999, in violation of 26 U.S.C. Sec. 7203 (1.a). Failed to file his state returns for the same tax years in violation of Sec. 58.1-348 of State A's Code, a Class 1 misdemeanor (1.b). Indebted to the IRS in excess of $49,000.00 for delinquent taxes, interest and penalties for tax years 1994 through 1998 (1.c). Indebted to State A's Department of Taxation in excess of $3,100.00 for tax years 1994, 1995, 1997 and 1998, for which his wages were garnished at his former place of employment (1.d). Indebted to medical providers on debts referred for collection (for $403.60) and taken to judgment ($781.00) (1.e). Indebted to a local district's treasurer's office for delinquent personal property taxes and judgments filed against him totaling in excess of $1,265.00 (1.f). Falsified his Security Clearance Application ("SF-86"), which he executed in June 1999, by omitting his financial delinquencies in excess of 180 and 90 days, respectively: both his owed federal and state income taxes (1.g). Omitted all of his tax delinquencies from his SF-86 (1.h). Misstated the status of his tax filings in a subsequent DSS interview (1.i). Failed to provide any back federal or state returns (1.j).
The judge denied the clearance. The government raised disqualifying conditions DC 1, DC 2, DC 3. The decision turned on the following: The applicant failed to file federal and state tax returns for multiple years, demonstrating a willful disregard for tax obligations; The applicant accumulated significant debts exceeding $49,000 in federal taxes and over $3,000 in state taxes, with no evidence of payment arrangements; The applicant's omissions and misstatements on his SF-86 regarding financial delinquencies indicated a lack of candor and trustworthiness.
Why the Applicant Was Denied
- The applicant failed to file federal and state tax returns for multiple years, demonstrating a willful disregard for tax obligations.
- The applicant accumulated significant debts exceeding $49,000 in federal taxes and over $3,000 in state taxes, with no evidence of payment arrangements.
- The applicant's omissions and misstatements on his SF-86 regarding financial delinquencies indicated a lack of candor and trustworthiness.
Conditions Referenced
- DC 1appliedA History of Not Meeting Financial Obligations.
- DC 2appliedA Single Serious Crime or Multiple Lesser Offenses.
- DC 2appliedThe Deliberate Omission, Concealment, Falsification or Misrepresentation of Relevant and Material Facts.
- DC 3appliedDeliberately Providing False or Misleading Information Concerning Relevant and Material Matters.
Key Rule Quoted
“A taxpayer's established wilful failure to file federal and state income tax returns constitutes criminal conduct of a misdemeanor nature under both the federal and State statutory schemes, punishable by fine and imprisonment.”
Procedural Posture
- SOR issuedJun 27, 2001
- Answer filedJul 20, 2001
- Hearing heldNov 13, 2001
- Decision dateJan 10, 2002
Cite For
- Failure to File Tax Returns as a Disqualifying Condition Under Guideline J
- Financial Irresponsibility as a Basis for Security Clearance Denial Under Guideline F
- Lack of Candor in Security Clearance Applications Under Guideline E