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ISCR Case 01-12147.h1 — CASE

ISCR Case 01-12147.h1denied

Case Headnote

ISCR Case No. 01-12147.h1

deniedOct 2, 2002· Hon. Joseph Testan· hearing

Summary

A 48-year-old applicant was denied a security clearance due to concerns under Guideline F (Financial Considerations) and Guideline J (Criminal Conduct). The Statement of Reasons alleged that the applicant failed to file federal income tax returns for tax years 1997, 1998, and 1999, violating 26 U.S.C. 7203. Additionally, the applicant failed to file state income tax returns for the same years, violating state law.

The denial was based on the applicant's failure to file these tax returns and a lack of evidence demonstrating that the delinquent returns had since been filed, despite claims in the response to the Statement of Reasons. The judge noted that the applicant's financial difficulties were not recent and that the applicant had not shown credible financial responsibility over the past several years.

Ultimately, the judge concluded that the applicant failed to provide sufficient evidence to demonstrate financial responsibility and compliance with tax obligations, leading to the denial of the security clearance.

Why the Applicant Was Denied

Applicant failed to file Federal and state income tax returns for tax years 1997, 1998, and 1999.
Applicant did not provide evidence of having filed the delinquent tax returns as stated in her response to the SOR.
Financial difficulties were not recent, and the applicant did not demonstrate credible financial responsibility over the past several years.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedA History of Not Meeting Financial Obligations.
E2.A6.1.2.3raisedInability or Unwillingness to Satisfy Debts.
E2.A10.1.2.2raisedA Single Serious Crime or Multiple Lesser Offenses.

Mitigating

E2.A6.1.3.1appliedThe Behavior Was Not Recent.
E2.A6.1.3.3rejectedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person's Control (e.g., Loss of Employment).

Key Rule Quoted

“It is not clearly consistent with the national interest to grant or continue a security clearance for applicant.”

Procedural Posture

SOR issuedJan 25, 2002
Answer filedFeb 22, 2002Applicant elected to have the case determined on a written record.
Hearing held—No hearing; case determined on written record.
Decision dateOct 2, 2002

Cite For

Failure to File Tax Returns as a Disqualifying Factor Under Guideline J
Lack of Evidence to Demonstrate Financial Responsibility Under Guideline F
Impact of Past Financial Difficulties on Security Clearance Eligibility

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 against the applicant on financial considerations due to her failure to file federal and state income tax returns for multiple years and a history of bankruptcy. The applicant's financial difficulties were not recent, but she failed to provide evidence of financial responsibility, leading to a denial of her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1	failed to file Federal income tax returns for tax years 1997, 1998 and 1999 in violation of 26 U.S.C. 7203	Against Applicant	Tax Filing Failure	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
2	failed to file state income tax returns for tax years 1997, 1998 and 1999 in violation of state law	Against Applicant	Tax Filing Failure	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

Standardized Decision Profile

SEAD-4 Guideline J (Criminal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found against the applicant on all allegations related to criminal conduct, specifically regarding the failure to file tax returns as required by law. The applicant's history of not meeting financial obligations and the absence of mitigating evidence led to the denial of the security clearance.

¶	Allegation	Finding	Offense	Criminal disposition	Response	Disqualifying (¶31)	Mitigating applied (¶32)	Mitigation
1.a	Applicant failed to file Federal income tax returns for tax years 1997, 1998 and 1999 in violation of 26 U.S.C. 7203.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	(a) pattern of minor offenses casting doubt on judgment/reliability	—	—
1.b	She also failed to file state income tax returns for tax years 1997, 1998 and 1999 in violation of state law.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	(a) pattern of minor offenses casting doubt on judgment/reliability	—	—

Descriptive standardized rendering of a decided public case (Guideline J). 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: October 2, 2002 In Re: ------------------------ SSN: ----------- Applicant for Security Clearance ISCR Case No. 01-12147 DECISION OF ADMINISTRATIVE JUDGE JOSEPH TESTAN

SYNOPSIS Applicant's failure to offer any evidence that she filed her past-due tax returns precludes a finding that it is now clearly consistent with the national interest to grant her access to classified information. Clearance is denied.

STATEMENT OF CASE

On January 25, 2002, the Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, issued a Statement of Reasons (SOR) to 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 applicant and recommended referral to an Administrative Judge to determine whether clearance should be denied or revoked. Applicant responded to the SOR in writing on February 22, 2002, and elected to have her case determined on a written record in lieu of a hearing. Department Counsel submitted the Government's written case (FORM) on or about May 20, 2002. Applicant did not file a response to the FORM. The case was assigned to me on June 28, 2002.

FINDINGS OF FACT

Applicant is forty-eight years of age. Applicant failed to file Federal income tax returns for tax years 1997, 1998 and 1999 in violation of 26 U.S.C. 7203. She also failed to file state income tax returns for tax years 1997, 1998 and 1999 in violation of state law. In her response to the SOR, applicant stated the following about the tax returns in question: We did not file our Federal or State tax returns for 1997, 1998 or 1999 as we did not believe we had taxes due. We now understand that we must file whether or not taxes are due. We retained a tax advisor in January and are preparing to file our Federal and (State) returns for 1997, 1998 and 1999 concurrently with our 2001 returns. Applicant filed a Chapter 7 bankruptcy petition in 1993. In February 1994, unsecured debts, totaling approximately $89,000.00, were discharged by the bankruptcy court. Applicant states that she filed the Chapter 7 bankruptcy petition approximately two years after she and her husband were laid off from their jobs. On the advice of her bankruptcy attorney, she also filed a Chapter 13 bankruptcy petition for the purpose of reorganizing those debts that were not dischargeable by the bankruptcy court (e.g., mortgage debt). After she determined that she would not be able to make the payments proposed by the bankruptcy trustee, she requested that the Chapter 13 petition be dismissed, and it was in May 1994. Shortly thereafter her house went into foreclosure.

POLICIES

Enclosure 2 of the Directive sets forth Guidelines (divided into Disqualifying Factors and Mitigating Factors) which must be followed by the Administrative Judge. Based on the foregoing Findings of Fact, the following Disqualifying Factors and Mitigating Factors are applicable: Financial Considerations Disqualifying Factors 1. E2.A6.1.2.1: A history of not meeting financial obligations. 2. E2.A6.1.2.3: Inability or unwillingness to satisfy debts. Mitigating Factors 1. E2.A6.1.3.1: The behavior was not recent. 2. E2.A6.1.3.3: The conditions that resulted in the behavior were largely beyond the person's control (e.g., loss of employment). Criminal Conduct Disqualifying Factors 1. E2.A10.1.2.2: A single serious crime or multiple lessor offenses. Mitigating Factors None.

CONCLUSION

In this case, the evidence establishes that applicant failed to file her Federal and state income tax returns for tax years 1997, 1998 and 1999 as required by Federal and state law. The evidence further establishes that in 1993 she filed a Chapter 7 bankruptcy petition, and that as a result, approximately $89,000.00 in unsecured debt was discharged by the bankruptcy court. These facts reflect adversely on applicant's judgment, reliability and trustworthiness. In her response to the SOR, applicant indicated that she was preparing to file her delinquent tax returns when she filed her 2001 tax returns. She has not, however, offered any evidence indicating that she followed through with her stated intention and filed the delinquent returns. Without such evidence, there is no basis upon which to conclude she has reformed and can be relied upon to file future tax returns within the time required by law. Accordingly, Guideline J is found against applicant. With respect to Guideline F, applicant's financial difficulties are not recent, and they were caused, in part, by factors beyond her control. Had she offered credible evidence demonstrating financial responsibility over the past several years, she may have successfully rebutted the Government's prima facie case under Guideline F. Absent such evidence, there is no basis upon which to conclude she has reformed and can now be relied upon to handle her financial affairs in a responsible manner.

FORMAL FINDINGS

PARAGRAPH 1: AGAINST THE APPLICANT PARAGRAPH 2: 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 applicant. ____________________________ Joseph Testan Administrative Judge

FOOTNOTES

01-12147.h1 FOR GOVERNMENT Melvin A. Howry, Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-12147.h1.html[7/2/2021 2:21:06 PM] 01-12147.h1