ISCR Case No. 25-01452

______________ ______________ DEFENSE LEGAL SERVICES AGENCY DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: Applicant for Security Clearance ) ) ) ) ) ISCR Case No. 25-01452 Appearances For Government: George A. Hawkins, Esq., Department Counsel For Applicant: Pro Se 09/16/2026 Decision HOGAN, Erin C., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is granted. Statement of the Case Applicant submitted a security clearance application (SCA) on November 13, 2024. (Government Exhibit (GE) 1) On December 19, 2025, the Defense Counterintelligence and Security Agency (DCSA) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DCSA acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense (DOD) Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) implemented by the DOD on June 8, 2017. On March 3, 2026, Applicant timely answered the SOR and requested a hearing before an administrative judge. Department Counsel forwarded the case to the DOHA Hearing Office on April 8, 2026. The case was assigned to me on May 1, 2026. On May 14, 2026, a notice of hearing was issued scheduling the hearing on June 23, 2026, via video-teleconference. The hearing was held on that date. The Government offered five exhibits which were admitted in evidence as GE 1-5 without objection. Applicant offered two exhibits which were marked as Applicant Exhibits (AE) A-B and admitted without

objection. AE B consisted of five sub-exhibits 1-5. The record was held open until July 1, 2026, to allow Applicant to submit additional exhibits. He timely submitted a 16-page exhibit which was marked and admitted without objection as AE C. The transcript (Tr.) was received on July 8, 2026. Some details in the decision were excluded to protect Applicant’s right to privacy. Specific information is available in the cited exhibits. Findings of Fact Applicant, age 54, has been an employee of a government contractor since May 2020 and is seeking a security clearance. He was previously granted a security clearance, but it lapsed. He served on active duty in the United States Army from August 1990 to July 1997, separating with an honorable discharge. He served in the Army National Guard from February 1998 to February 1999. He separated with an honorable discharge. He has a college degree and is currently taking courses for a master’s degree. He is married and has a 25-year-old daughter. (Tr. 23-28, GE 1) The SOR alleged delinquent federal and state income tax issues from 2018 to 2022, a Chapter 7 bankruptcy in 1997, and a Chapter 11 bankruptcy filed in December 2009. The SOR allegations include: SOR ¶ 1.a: Applicant failed to timely file federal income tax returns for tax years (TY) 2018, 2019, 2020, 2021 and 2022 (Answer to SOR; GE 1 at 35); SOR ¶ 1.b: Withdrawn by the Government; SOR ¶ 1.c: Applicant failed to file his state income tax returns for TY 2018, 2019, 2020, 2021, and 2022. (Answer to SOR; GE 2 at 12); SOR ¶ 1.d: Applicant owes the federal government for delinquent taxes in the amount of $6.86 for TY 2016. (GE 2 at 7-8); SOR ¶ 1.e: Applicant owes the federal government for delinquent taxes in the amount of $12,246.32 for TY 2018. (GE 2 at 39-40); SOR ¶ 1.f: Applicant owes the federal government for delinquent taxes in the amount of $20,296.37 for TY 2019. (GE 2 at 9-10); SOR ¶ 1.g: Applicant owes the federal government for delinquent taxes in the amount of $23,930.49 for TY 2020. (GE 2 at 50-51); SOR ¶ 1.h: Applicant owes the federal government for delinquent taxes in the amount of $15,602.22 for TY 2021. (GE 2 at 48-49); SOR ¶ 1.i: Applicant owes the federal government for delinquent taxes in the amount of $18,311.60 for TY 2022. (GE 2 at 54-55); 2

SOR ¶ 1.j: Applicant filed for Chapter 7 bankruptcy in July 1997. The bankruptcy was discharged in October 1997. (GE 3); and SOR ¶ 1.k: Applicant filed for Chapter 11 bankruptcy in December 2009. The bankruptcy was terminated in January 2011. (GE 4) Federal Income T ax Issues In his Answer to the SOR, Applicant admitted that he failed to timely file his Federal income tax returns for TY 2018 to 2022. He is an alcoholic who has been sober since 2017. Once he stopped drinking alcohol, he faced significant personal and medical hardship to include suffering a stroke, assuming financial responsibility for his disabled mother, paying his father’s funeral expenses, and paying his daughter’s college tuition. He said it took some time for him to gain control of his finances. He also sought therapy for post-traumatic stress disorder (PTSD). He credits his participation in Alcoholics Anonymous and working the Twelve Steps with helping him face his problems and make amends. (Tr. 37-38; AE B -1 at 1) Applicant wrote that it was never his intent to conceal income or evade taxes. The underlying issue was insufficient tax withholding. Both his and his wife’s withholding status were modified, and he hired a tax professional. He now conducts a quarterly review of his household income so he can assess where he will finish the year. He now makes quarterly tax payments when necessary to ensure compliance. (AE B – 1 at 2) Applicant indicates that all federal income taxes have been filed. The IRS approved an installment agreement which remains current and in good standing. He agreed to pay the IRS $1,885 a month. (AE B-1 at 2; AE B-1 at 7-9) He claims his income tax returns for TY 2023, 2024, and 2025 resulted in refunds that were applied towards the balance of the amount owed. (Tr. 35; GE 2 at 18-28; AE B-1 at 37) After the hearing, Applicant provided a statement from the IRS showing that the total amount owed as of June 23, 2026, was approximately $73,033. In addition, the IRS provided a copy of Applicant’s payment activity. From July 2021 to May 2024, he timely made $300 payments towards his delinquent tax debt. In September 2024, the monthly payments increased to $1,885 a month. He has made timely payments each month from September 2024 to May 2026. He plans to pay off his federal tax debts in three years. (Tr. 39; AE C at 5-11) The status of the federal income debts are as follows: SOR ¶ 1.d: For TY 2016, the amount of delinquent taxes owed was $6.86. This was paid off through his installment plan with the IRS. (GE 2 at 7-8; AE B-1 at 3, 35; AE C at 5); SOR ¶ 1.e: For TY 2018, the amount of delinquent taxes owed was originally $12,246.32. The amount was paid off through his installment plan with the IRS. (GE 2 at 39-40; AE B-1 at 9, 35-36; AE C at 5, 10, 11); 3

SOR ¶ 1.f: For TY 2019, the original amount of delinquent taxes owed was $12,246. As of June 2026, the balance was $13,450. Applicant is making payments on his installment plan with the IRS. His payments have been applied to his 2019 federal tax debt during the months of April – May 2026 (AE C at 5, 11); SOR ¶ 1.g: For TY 2020, the original amount of delinquent taxes owed was $23,930. As of June 2026, the balance is $25,235. (AE C at 5); SOR ¶ 1.h: For TY 2021, the original amount of delinquent taxes owed was $15,602. As of June 2026, the balance is $14,502. (AE C at 5); SOR ¶ 1.i: For TY 2022, the original amount of delinquent taxes owed was $18,311. As of June 2026, the balance is $19,844. (AE C at 5). On February 24, 2026, the IRS sent Applicant a Tax Compliance Report. It alerted Applicant to a potential compliance issue. It indicated that his federal income tax return for 2024 was filed on a timely basis. It also listed that the returns for TY 2021 – 2023 were filed, but after the due date. Regarding his federal tax debt, the report stated: IRS tax records show you’re either paying your federal tax debt on time through an installment agreement or it is pending resolution through ongoing administrative or judicial proceedings. Interest and penalties (up to the maximum allowed by law) continue to accrue until the tax is paid in full. (AE B-1 at 8-9) The Tax Compliance Report indicated all of his overdue returns for TY 2018-2022 were filed and were included in his installment agreement. The IRS also indicated that their tax records showed no late payments of federal income, employment, or excise taxes for the most recent four tax years. (AE B-1 at 9) State Tax Issues Applicant denied that he failed to file his state income tax returns for TY 2018, 2019, 2020, 2021 and 2022. He testified that he filed his state income tax returns at the same time he filed his federal income tax returns in April 2024. He is not sure why they were not received. In his answer to the SOR, he claims that his federal and state income tax returns were prepared at the same time. Since the returns were late, electronic filing was not available, so he submitted paper returns by mail. In January 2025, he discovered the state had no record of his TY 2018 - 2022 state income tax returns. After learning that his state income tax returns were missing for TY 2018 – 2022, he did an extensive search for his certified mail receipts which he used to mail the state tax returns to the state department of taxation. He submitted copies of his original state income tax returns for TY 2018 – 2022. (Tr. 30-32; AE B-1 at 2-3; 10-34) On June 8, 2026, Applicant resubmitted his state income tax returns for TY 2018 – 2022 to the s tate department of taxation. He wrote checks for the years in which he owed state income taxes to include TY 2019: $188; TY 2020: $756; and TY 2021: $346. 4

The state sent Applicant a summary of his annual tax filing history. They cashed the checks related to the taxes owed for TY 2019, 2020 and 2021. They also indicated that he received refunds in TY 2024 and 2025. They indicated that the Applicant’s income tax refunds for TY 2024 and 2025 were applied to a debt owed to another agency. (AE B-2; AE B-3) Aside from the tax debts, the SOR alleged that Applicant filed two bankruptcies in the past. In July 1997, he filed a Chapter 7 bankruptcy. His debts were discharged in October 1997. He filed for bankruptcy because he transitioned from the active Army during a force drawdown. He initially could not find stable employment, had no health insurance, and lived in temporary housing. The bankruptcy allowed him to rebuild while pursuing a college education. (GE 3; AE B-1 at 3) Applicant filed for Chapter 11 bankruptcy during the 2008 housing market collapse. He and his wife had a primary residence and a rental property. When the property values collapsed the rental income was insufficient and they filed for Chapter 11 bankruptcy to avoid foreclosure. Its purpose was a business reorganization to prevent foreclosure and to restructure debt. No debts were discharged. The rental property was sold to satisfy the mortgage and the mortgage on their primary residence was modified and brought current. Applicant stated that the bankruptcy was not the result of irresponsible spending but was the result of extraordinary market conditions beyond his control. (GE 4; AE B-1 at 3-4) Applicant’s annual income is approximately $240,000. His wife’s annual income is approximately $103,000. After expenses, he and his wife have approximately $5,000 left over each month. He has approximately $110,000 in his 401(k)-retirement account and his wife has approximately $110,000 in her 401(k)-retirement account. He has taken some online financial counseling classes. His current credit score is 705. He and his wife have no other delinquent debts aside from the tax debts. They do ha

ve several personal loans and credit cards, and they are making timely payments on these debts. (Tr. 29, 39- 43; AE B-4) In addition to his full-time job, Applicant has written and self-published 13 books on alcohol and drug recovery using a pen name. He estimates he earns approximately $5,000 a month in royalties. This amount may vary. Applicant testified that he earns enough income in his full-time job to be able to make the payments on his installment plan with the IRS. (Tr. 37- 39; AE C at 13-16) Applicant’s overall performance rating for the 2025 rating period was that he “meets expectations.” His supervisor notes that he has effectively led his team in accomplishing a variety of demanding objectives during 2025 and is on track to sustain and expand this performance in 2026. (AE B-5) Policies “[N]o one has a ‘right’ to a security clearance.” (Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)). As Commander in Chief, the President has the authority to 5

“control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” (Egan at 527). The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” (EO 10865 § 2) Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” (EO 10865 § 7). Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. (Egan, 484 U.S. at 531). “Substantial evidence” is “more than a scintilla but less than a preponderance.” (See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994)). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. (ISCR Case No. 15-01253 at 3 (App. Bd. Apr. 20, 2016)). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. (Directive ¶ E3.1.15). An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. (ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005)) An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” (ISCR Case No. 01- 20700 at 3 (App. Bd. Dec. 19, 2002)). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” (Egan, 484 U.S. at 531; AG ¶ 2(b)) 6

Analysis Guideline F: Financial Considerations The concern under this guideline is set out in AG ¶ 19: Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. (ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012)). AG ¶ 19 notes several disqualifying conditions that could raise security concerns. The disqualifying conditions that are relevant to Applicant’s case are: (a) inability to satisfy debts; (c) a history of not meeting financial obligations; and (f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state or local income tax as required. AG ¶ 19(a) and ¶ 19(c) apply with regard to Applicant’s past bankruptcies. He filed for Chapter 7 bankruptcy in 1997 and Chapter 11 bankruptcy in 2009. It showed that Applicant was unable to satisfy debts and has a history of not meeting financial obligations in the past. AG ¶ 19(f) applies to Applicant’s failure to timely file federal and state income tax returns for TY 2018 – 2022. (SOR ¶¶ 1.a and 1.c) AG ¶ 19(f) also applies to the delinquent federal taxes Applicant owed for TY 2016, and 2018 – 2022. (SOR ¶¶ 1.d – 1.i) AG ¶ 20 describes conditions that could mitigate security concerns. The following are potentially applicable in this case: 7

(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual’s current reliability, trustworthiness, or good judgment; (b) the conditions that resulted in the financial problem were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce, or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (c) the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service , and there are clear indications that the problem is being resolved or under control; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and (g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements. AG ¶¶ 20(a) and 20(b) apply to Applicant’s past bankruptcies. His Chapter 7 bankruptcy occurred over 29 years ago when he was much younger and newly separated from the military. His Chapter 11 bankruptcy occurred over 16 ½ years ago. He filed the second bankruptcy in order to save his primary residence during the mortgage crisis in 2008. Circumstances beyond his control were a factor in both bankruptcies. It is noted that his debts were not discharged in the second bankruptcy. He was able to modify the terms of his mortgage on his primary residence, and his rental property was sold to pay costs. Since that time, he and his wife have earned a good income and aside from the tax issues are financially secure. AG ¶¶ 20(d) and 20(g) apply to the Applicant’s federal and state tax issues. There is no doubt that Applicant neglected to timely file his federal and state income tax returns over a period of at least five years. However, he took the initiative and filed all of his late federal and state income tax returns by April 2024. This was more than six months before he applied for a security clearance. Although Applicant filed his state income tax returns in April 2024, they were lost. He was not aware that they were lost until January 2025. He attempted to consult a tax professional but finally decided to refile his state income tax returns in early June 2026. While he could have filed them sooner, he took the initiative. He also wrote checks for the years that he owed state income taxes which were TY 2019, 2020 and 2021. The state received the tax returns and cashed the checks Applicant sent to them. It appears that his tax refunds were applied to a debt to another agency. The other agency is likely the IRS. (AE B-2) 8

With regard to paying his delinquent tax debts, Applicant has been on a payment agreement with the IRS to pay off of his delinquent federal tax debts since July 2021. The IRS provided a copy of his payment history which indicated that he paid the IRS approximately $300 a month from July 2021 to May 2024. In September 2024, the payments increased to $1,885 a month. Applicant made timely payments each month until May 2026. While it is concerning that the balance of his delinquent federal tax debts total approximately $73,033, Applicant has a track record of making payments in compliance with an approved IRS installment agreement for over five years. He and his wife currently have a combined adjusted gross income of over $240,000. They can afford the payments and have demonstrated they are meeting the terms of the installment agreement with the IRS. The DOHA Appeal Board has held that failure to comply with tax laws suggests that an applicant has a problem with abiding by well-established government rules and systems. Voluntary compliance with rules and systems is essential for protecting classified information. (See, e.g., ISCR Case No. 16-01726 at 5 (App. Bd. Feb. 28, 2018)). A person who fails repeatedly to fulfill his or her legal obligations, such as filing tax returns and paying taxes when due, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information. See, e.g., ISCR Case No. 17-01382 at 4 (App. Bd. May 16, 2018)). The Appeal Board in ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013) explained an applicant’s responsibility for proving the applicability of mitigating conditions is as follows: Once a concern arises regarding an applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. (See Dorfmont v. Brown, 913 F.2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991)). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b). Applicant learned a difficult lesson about neglecting his federal and state income tax returns. He now timely files his state and federal income tax returns. He monitors his tax situation quarterly to ensure he is on top of the amount of taxes he owes. All of his state and federal tax returns are filed and he is making timely payments on his installment agreement with the IRS. He is making progress towards his federal tax debts and demonstrated that he will continue to do so in the future. The concerns raised under the Financial Considerations guideline are mitigated. 9

Whole-Person Concept Under AG ¶ 2(c), the ultimate determination of whether the granting or continuing of national security eligibility is clearly consistent with the interests of national security must be an overall commonsense judgment based upon careful consideration of the adjudicative guidelines, each of which is to be evaluated in the context of the whole person. An administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d): (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent behavioral changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence. I have incorporated my comments under Guideline F in my whole-person analysis, and I have considered the factors in AG ¶ 2(d). Applicant has worked for his employer for over six years without incident. His most recent performance rating was favorable. He honorably served on active duty in the U.S. Army from August 1990 to July 1997 and in the Army National Guard from February 1998 to February 1999. He is married and has an adult daughter. In 2017, he accepted that he is alcoholic and has been sober since that time. He also attended counseling for PTSD. Failure to timely file income tax returns and failure to pay federal and state income taxes raise serious security concerns for Applicants applying for a security clearance. However, Applicant demonstrated that he has been working on his federal tax issues since 2021 when he made $300 monthly payments. He prepared his federal and state income tax returns in April 2024. He increased the amount of his monthly installment agreement with the IRS to $1,885 a month in September 2024 and has been making timely payments. He and his wife can afford the monthly payments to the IRS installment plan based on their income. He refiled his state income tax returns in June 2026 after learning that the state had not received them. His state tax issues are likely resolved. He intends to pay his federal income tax debts within three years. He has demonstrated that he can meet the terms of the IRS installment agreement. He is also aware that should he not make payments on the installment agreement, fail to timely file future federal and state income tax returns, or incur additional delinquent federal or state income tax debts, his security clearance will likely be revoked. After weighing the disqualifying and mitigating conditions under Guideline F and evaluating all the evidence in the context of the whole person, I conclude that Applicant mitigated the security concerns raised under financial considerations. 10

Formal Findings Formal findings on the allegations set forth in the SOR, as required by Section E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F: FOR APPLICANT Subparagraphs 1.a, 1.c-1.k: For Applicant Subparagraph 1.b: Withdrawn by the Government Conclusion I conclude that it is clearly consistent with the interests of national security to grant Applicant eligibility for access to classified information. Clearance is granted. Erin C. Hogan Administrative Judge 11