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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)         ISCR Case No. 07-16143
SSN: )
)
Applicant for Security Clearance )
Appearances
For Government: Paul M. Delaney, Esquire, Department Counsel
For Applicant: Pro se 
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Decision
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MASON, Paul J., Administrative Judge:
Applicant submitted her Security Clearance Application (SCA), on March 9, 2007.
On December 21, 2007, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) detailing security concerns under financial considerations
(Guideline F). The action was taken pursuant to Executive Order 10865, Safeguarding
Classified Information within Industry (February 20, 1960), as amended; Department of
Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review
Program (January 2, 1992), as amended (Directive), and the revised adjudicative
guidelines (AG) promulgated by the President on December 29, 2005, and made
effective within the Department of Defense for SORs issued on or after September 1,
2006. 
 
Applicant submitted her answer to the SOR on January 30, 2008. DOHA issued a
notice of hearing on March 4, 2008, and the hearing was held on March 26, 2008. At the
hearing, three exhibits (GE 1 through 3) were admitted in evidence without objection to
support the government’s case. Applicant’s two exhibits (AE A and AE B) were received
in evidence without objection. She also testified. In the time allowed for Applicant to
submit additional documentation, she submitted AE C (in two parts) containing her
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requests to the state tax authority for her tax records, and their response. DOHA
obtained a copy of the hearing transcript on April 4, 2008. Based upon a review of the
case file, pleadings, exhibits, and testimony, eligibility for access to classified information
is granted.
Findings of Fact
The SOR contains two allegations under the  financial considerations guideline
that Applicant admitted. She is 57 years old, divorced, with four adult children. She has
been employed as a functional/business analyst by her employer since August 2005.
She seeks a security clearance. 
At the present time, three of Applicant’s four adult children are no longer living
with her. The fourth child is attending community college, and will be leaving the
household in September 2008 when he meets his educational objectives. (AE A1)
Applicant’s mother lived with her for about a year following a stroke in 2004, but is
currently living in a nursing home, with Applicant’s brother providing most of the
monetary assistance. (Tr. 43-45) Applicant has paid for her father’s medical prescriptions
since 2002. (AE B; Tr. 42-44)
From 1989 to June 2005, Applicant was a software consultant for an organization
established to monitor currencies throughout the world. She trained individuals on
various software applications. Her tax problems resulted from not understanding the
immediate federal tax consequences of her job position status as an “independent
consultant,” that required her to make quarterly rather than yearly tax payments. The
employment practice in the early 1990s was that employers did not hire full-time
employees to train other employees. Instead, hiring independent consultants meant the
employers did not have to pay them full benefits they had to pay full-time employees. (Tr.
84-86)
When she realized in 1991 or 1992 that she had to commence paying taxes
quarterly as an independent contractor, she talked to an Internal Revenue Service (IRS)
agent, and was given quarterly payment vouchers to pay the current and also delinquent
debt that hac already accrued. (Tr. 23) Though the record does not reflect how
delinquent she was in 1991 or 1992, Applicant recalled her persistent difficulties in
keeping up-to-date on her current taxes while consistently paying off any tax arrearage.
(Tr. 24) She participated in periodic payment plans or tried to increase quarterly
payments when she could, but sometimes the fluctuation in quarterly amounts occurred
simply because she was earning less money. (Tr. 53) Also, the amount of tax payments
she was making was impacted because she was still raising three of her four children at
home in the early 1990s. (Id.) 
In the three college school years between 1996-1997, 1997-1998, and 1998-
1999, Applicant decided to pay for her daughter’s tuition when Applicant’s former,
common law husband indicated he was not going to underwrite the tuition after the
daughter’s first year. (Tr. 28) Applicant even took out some loans to help her pay the
 Even though there is no documentation showing what tax years the payments were being applied.1
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daughter’s tuition. (Tr. 57) She paid the tuition even though she was aware her tax debt
was continuing to accumulate. (Tr. 58) Her federal tax payment history (AE A3) was
regular throughout the three-year period she was paying her daughter’s tuition.1
However, the payment history revealed no payments for the years 1993, 1994, 1995,
and 1996, either on a quarterly or monthly frequency.
As AE A3 shows, her payment plan for the existing liens ended in April 2000 with
her lump sum payment of $3000.00. She continued to make lump sum payments until
April 2005; her total payment between 1996 and June 2005 was approximately
$83,585.00. (AE 3) Applicant was advised in January 2008 that new liens had been filed
(or periods had been assessed but liens had not been filed) for tax years 1995, 1996,
1997, 1998, and 1999, and the total amount of her tax liability would be $150,027.92. 
Applicant testified she made tax payments to the IRS even before the
documented payment history (1993-2005). (AE A3) While she was not certain about the
frequency of the payments she made, she was positive she was making payments
before 1993 of as much as $800.00 a month toward her current tax obligation or
arrearage. (Tr. 89-98) She stated, “Right. I remember those significantly, because I
couldn’t make that payment.” (Tr. 97)
In November 2002, Applicant submitted her first offer-in-compromise (OIC) to
settle her outstanding debt with the IRS. (AE A10) She knew the $2,196.00 offer was
insufficient, but she was seeking guidance on the overall process, and willing to
negotiate. She was informed in December 2003 that her offer was rejected as too low
because a larger amount was deemed to be collectible. She could not pay approximately
$900.00 a month for 105 months under the deferred payment plan offer, either. 
Between June and August 2004, Applicant made a second OIC. (AE A8) She
offered approximately $16,000.00 (Tr. 29), but the IRS wanted a lump sum of
$70,000.00. (Tr. 68) She hired counsel, and appealed. (AE A8) Her appeal of the IRS
decision was denied.
After receiving an IRS collection notice in June 2005 (AE A9), Applicant decided
to obtain a full-time job because independent consultant work was disappearing. She
submitted a financial statement to the IRS. They subsequently recommended she
resubmit an OIC when she had full-time employment. Even though she began full-time
employment in August 2005, her plans were to build a sizeable savings account and
retirement account before she approached the IRS with another offer. Then, in
September 2008, she planned to return to the IRS with her third OIC proposal. (Tr. 32)
After receiving the SOR in December 2007, Applicant moved up the timetable for the
OIC by arranging for a $32,000.00 loan with her credit union (Tr. 33) that she has
already begun to repay. She filed the OIC on March 7, 2008 to settle the IRS tax lien of
approximately $150,000, including penalties and interest. (Tr. 68; AE 4) If the IRS
accepts her offer, Applicant would have bank payments of about $1000.00 a month for
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three years to satisfy the bank loan. (Tr. 69) Even after learning that she had filled out
Form 433-A (Collection Information Statement for Wage Earners and Self-Employed
Individuals, part of the OIC presentation package) incorrectly by failing to include her
monthly tax payments on line 43 of page 4 of the form, Applicant was confidant that
through more budgeting and part-time work, she would be able to make the monthly
$1,000.00 payments on the bank loan. (Tr. 71-77)
The federal tax lien of $15,520.00 that was filed in December 1995 (for tax years
1993 and 1994), and identified in SOR 1.b. was released on January 28, 2008. Though
Applicant is certain she made some payments for the delinquent tax years covered by
the lien (Tr. 50), she did not know what the figure was because her documentation did
not break down the release into how much had been paid before the limitations statute
extinguished the remainder of the debt altogether. (Tr. 54) 
On reflection, Applicant is aware she made some poor decisions regarding her
finances. (Tr. 79) Though payment of her daughter’s tuition exemplified poor judgment,
Applicant is gratified she provided the tuition so her daughter could be where she is
today. (Tr. 81) The federal tax liens are the only tax problems Applicant has remaining.
In the past she had state tax problems, but the problems have been resolved. See, AE
C. Her current federal and state taxes have been up-to-date since 2002. (AE B, AE C;
Tr. 34)
Character Evidence
Applicant considers herself a law-abiding citizen who does not have unhealthy
habits. (Tr. 35) For the appraisal period ending in July 2007, Applicant’s performance
evaluation was rated as superior, triggering a raise in her salary. (AE A11) Her
retirement account carries a vested balance of $5,254.93. (Id.) She has kept her overall
card balances at manageable levels through regular payments (AE A6), while providing
the necessary documentation requiring another credit card company to issue a credit of
approximately $638.00 to Applicant’s closed account due to mistakes or changes made
to her closed account. See, AE A12.
AE 13 contains documentation showing Applicant’s timely repayment of loans
over the years beginning with: (1) a bank loan for $3,366.00 that she repaid in May 1993
(AE 13); a student loan she repaid in June 1989; and, another bank loan for $4589.24
that she successfully repaid in May 1991. 
Considering the evidence as a whole, including Applicant’s demeanor and
conduct during the course of the hearing, I found her testimony credible. 
Policies
When evaluating an applicant’s suitability for a security clearance, the
Administrative Judge must consider the revised adjudicative guidelines (AG). In addition
to brief introductory explanations for each guideline, the adjudicative guidelines list
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potentially disqualifying conditions and mitigating conditions, which are useful in
evaluating an Applicant’s eligibility for access to classified information.
These guidelines are flexible rules of law. Recognizing the complexities of human
behavior, these guidelines are applied in conjunction with the factors listed in the
adjudicative process. The Administrative Judge’s ultimate adjudicative goal is a fair,
impartial and common sense decision. According to the AG, the entire process is a
careful, thorough evaluation of a number of variables known as the “whole person
concept.” The Administrative Judge must consider all available, reliable information
about the person, past and present, favorable and unfavorable, in making a decision.
The protection of the national security is the paramount consideration. AG ¶ 2b.
requires that “[a]ny doubt concerning personnel being considered for access to classified
information will be resolved in favor of national security.” In reaching this decision, I have
drawn only those conclusions that are reasonable, logical and based on the evidence
contained in the record. Likewise, I have avoided drawing inferences grounded on mere
speculation or conjecture.
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the Applicant is
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or
mitigate facts admitted by applicant or proven by Department Counsel. . . .” The
applicant has the ultimate burden of persuasion as to obtaining a favorable security
decision. 
A person who seeks access to classified information enters into a fiduciary
relationship with the government predicated upon trust and confidence. This relationship
is not restricted to normal duty hours. Rather, the relationship is an-around-the-clock
responsibility between an applicant and the federal government. The government
reposes a high degree of trust and confidence in individuals to whom it grants access to
classified information. Decisions include, by necessity, consideration of the possible risk
the applicant may deliberately or inadvertently fail to protect or safeguard classified
information. Such decisions entail a certain degree of legally permissible extrapolation as
to potential, rather than actual, risk of compromise of classified information.
Analysis
18. The Concern. Failure or inability 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 information. An
individual who is financially overextended is at risk of having to engage in illegal acts to
generate funds. Compulsive gambling is a concern as it may lead to financial crimes
including espionage. Affluence that cannot be explained by known sources of income is
also a security concern. It may indicate proceeds from financially profitable criminal acts. 
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The record shows that Applicant made a serious mistake in the early 1990s by not
paying her tax obligations on a quarterly basis as required by her position as an
independent consultant. While she indicated that after she found out in 1991 that she
was required to pay quarterly because of her job status, she exercised seriously poor
judgment in not devising a more effective way to pay her current taxes as she was
managing the arrearage. Financial considerations (FC) disqualifying condition (DC) 19.a.
(inability or unwillingness to satisfy debts) applies based on her inability, not
unwillingness to pay her back taxes. FC DC 19.c. (a history of not meeting financial
obligations) applies due to her 18-year history of financial difficulties. 
There are four mitigating conditions that apply to overcome the adverse evidence
under the FC guideline. FC MC 20.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)
applies. Though she is still dealing with the federal liens in SOR 1.a. and more recent
liens (AE 4), Applicant has brought her current state and federal taxes to a current status
as of 2002. Moreover, the chances of her falling into the same kind of tax quandary in
the future is implausible because of her decision to terminate her independent consultant
status in June 2005, followed by her acceptance of her current full-time position in
August 2005. Though the federal tax problems are still present, the circumstances under
which they occurred does not cast doubt on Applicant’s good judgment and reliability. 
FC MC 20.b. (the conditions that resulted in the financial problem were largely
beyond the person’s control and the individual acted responsibly under the
circumstances) has no application to the origin of Applicant’s financial problems because
she clearly made the decision to become an independent consultant in 1991, but failed
to investigate the tax consequences of her decision. Applicant’s ability to pay the IRS in
the early to middle 1990s was complicated by raising three of four children as a single
mother. Applicant receives limited mitigation for these familial challenges. 
When Applicant’s common law husband declined to pay tuition after her
daughter’s first year in 1996, Applicant faced a choice of either “picking up the slack” or
continuing to deal with her own federal tax problems. She chose to help her daughter so
that she would not have to suspend her education at a critical time in her life. Applicant
even obtained loans to ensure the daughter’s tuition was paid. Although she knew the
federal liens would continue to increase, she still feels she made the right decision.
Applicant’s monetary assistance to her father since 2002, and her mother since her
stroke in 2004 cannot be overlooked either. Applicant receives additional mitigation
under FC MC 20.b.
Though the record does not indicate Applicant has ever received formal financial
counseling, her long-term relationship with the IRS between approximately 1991 and
today, coupled with the financial challenges associated with raising her four children as a
single parent for much of the time, has sharpened her financial habits and practices. She
receives limited mitigation under FC MC 20.c. (the person has received or is receiving
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counseling for the problem and/or there are clear indications the problem is being
resolved or is under control) 
FC MC 20.d. (the individual initiated a good-faith effort to repay overdue creditors
or otherwise resolve debts) applies. Applicant recognizes she made a mistake with her
taxes that has cost her dearly. Rather, than abandon her efforts to resolve her federal
lien problems, she has made documented efforts to repay what she owes. Though her
first OIC in 2002 may have been unreasonably low, she has continued to make
documented efforts to satisfy the liens. Even though it is impossible to determine what
part of the lien in SOR 1.b was actually paid off before the lien was extinguished by the
statute of limitations, I conclude from her payment history that some of the money was
applied to the lien. Having weighed and balanced all the evidence, Applicant’s payment
history and her commendable efforts to repay the remaining liens, the FC guideline is
resolved in her favor.
Whole Person Concept (WPC) 
I have weighed the circumstances of this case under the general factors of the
whole person concept. Applicant’s failure to address her federal tax problems was
serious. Applicant was almost 40 years old when she became an independent
consultant. She should have done her homework to find out about the tax consequences
of her position. However, her tax lien payment history between 1991 and 2002
demonstrates she was not trying to shirk her tax responsibilities. In 2002, her yearly
federal and state taxes became current, even though the arrearage relating to previous
tax years continues to grow via penalties and interest. In June 2005, she terminated her
independent consultant status, and took a full-time job with her current employer. She
received a superior rating at her job in 2007. Based on her documented actions in trying
to resolve the federal tax liens, Applicant has met her burden of persuasion under the FC
guideline. 
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR, as
required by section E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1 (Financial Considerations, Guideline F): FOR APPLICANT
Subparagraph 1.a. For Applicant
Subparagraph 1.b. For Applicant
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Conclusion
In light of all of the circumstances presented by the record in this case, it is clearly
consistent with national security to grant Applicant eligibility for a security clearance.
Eligibility for access to classified information is granted. 
                       
Paul J. Mason
Administrative Judge