Summary
Applicant, a 50-year-old defense contractor employee, failed to file federal income tax returns from 1992 to 1997 based on incorrect advice, resulting in significant tax liens and other debts. He provided incomplete information on his security clearance application regarding these financial issues. The judge found that the applicant did not mitigate the security concerns related to financial, criminal, and personal conduct, leading to a denial of his security clearance.
Under Guideline E (Personal Conduct), Guideline F (Financial Considerations), and Guideline J (Criminal Conduct), the Statement of Reasons alleged the following: Applicant falsified material facts on his security clearance application when he failed to list material matters related to his finances (3.a). Applicant failed to list two tax liens on his application and stated the amount of the one he did list to be less than 10-percent of the actual obligation (3.b). FEDERAL TAX DEBT on a federal tax lien of approximately $29,108 for tax years 1998 and 2001, and FEDERAL TAX DEBTS on federal tax liens for approximately $25,791 for tax years 1989 to 1992 and 1993 to 1997. As of March 26, 2004, these debts had not been paid (1.a). STATE TAX LIEN of approximately $1,365, filed in or about April 1997. This debt was a state tax lien filed against Applicant, based on an arrearage of child support (1.b). SOR subparagraph 1.c concerned a state tax lien filed against Applicant, based on an arrearage of child support. That matter was previously satisfied and Department Counsel acknowledges that there is "insufficient evidence to support" this allegation (1.c). BANK CARD DEBT of approximately $3,294, listed as a Profit & Loss Writeoff. As of March 26, 2004, this debt had not been paid (1.d). LOAN COMPANY DEBT of approximately $680, charged off. As of March 26, 2004, this debt had not been paid (1.e). MILITARY EXCHANGE DEBT of approximately $1,658, listed as Profit & Loss Writeoff. As of March 26, 2004, this debt had not been paid (1.f). FEDERAL TAX LIEN NOTICE THAT A LIEN WOULD BE ISSUED FOR NONPAYMENT OF TAX LIABILITY for tax year 2002 in the amount of $1,658 (1.g). Applicant failed to file federal income tax returns for tax years 1992 through 1997 (2.a). Applicant was advised by friends that he did not have to file annual taxes with the IRS if he had taxes directly deducted through the workplace (2.b). Applicant's tax problems date back to at least 1989 (2.c). Applicant has filed his annual federal income tax returns regularly since being informed of his obligations by the IRS in May 2001 (2.d). Applicant has resisted financial counseling (2.e). Applicant's explanations for his failure to file taxes were implausible given his background and education (2.f).
The judge denied the clearance. The government raised disqualifying conditions E2.A6.1.2.2, E2.A6.1.2.3, E2.A10.1.2.1, E2.A5.1.2.2, E2.A5.1.2.4. The judge applied mitigating conditions E2.A6.1.3.3, E2.A10.1.3.1. The decision turned on the following: Applicant failed to file federal income tax returns for multiple years, leading to substantial tax liens; He provided incomplete and misleading information on his security clearance application regarding his financial obligations; The applicant did not demonstrate a good-faith effort to resolve his outstanding debts.
Why the Applicant Was Denied
- Applicant failed to file federal income tax returns for multiple years, leading to substantial tax liens.
- He provided incomplete and misleading information on his security clearance application regarding his financial obligations.
- The applicant did not demonstrate a good-faith effort to resolve his outstanding debts.
Conditions Referenced
- E2.A6.1.2.2raisedA History of Not Meeting Financial Obligations
- E2.A6.1.2.3raisedInability or Unwillingness to Satisfy Debts
- E2.A10.1.2.1raisedAllegations or Admission of Criminal Conduct, Regardless of Whether the Person Was Formally Charged
- E2.A5.1.2.2raisedThe Deliberate Omission, Concealment, or Falsification of Relevant and Material Facts
- E2.A5.1.2.4raisedPersonal Conduct or Concealment of Information That Increases an Individual's Vulnerability to Coercion
- E2.A6.1.3.3appliedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person's Control
- E2.A10.1.3.1appliedThe Criminal Behavior Was Not Recent
Key Rule Quoted
“No one has a right to a security clearance and the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials.”
Procedural Posture
- SOR issuedNov 2, 2004
- Answer filedNov 30, 2004Applicant waived his right to a hearing.
- Hearing held—Decision based on the written record.
- Decision dateJun 13, 2006
Cite For
- Failure to Mitigate Financial Obligations Under Guideline F
- Incomplete Disclosure of Financial Issues on Security Clearance Application Under Guideline E
- Criminal Conduct Related to Failure to File Taxes Under Guideline J