KEYWORD: Guideline F
DIGEST: Applicant failed to pay withholding taxes for his employees.  The Judge reasonably
explained that he could not favorably apply mitigating conditions because of Applicant’s eight
year delay in attempting to resolve the debts and failure to pay the monthly payments.  Adverse
decision affirmed.
CASENO: 09-07064.a1
DATE: 11/18/2011
DATE: November 18, 2011
In Re:
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Applicant for Security Clearance
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ISCR Case No. 09-07064
APPEAL BOARD DECISION
APPEARANCES
FOR GOVERNMENT
James B. Norman, Esq., Chief Department Counsel
FOR APPLICANT
Alan V. Edmunds, Esq.
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The Defense Office of Hearings and Appeals (DOHA) declined to grant Applicant a security
clearance.  On May 6, 2010, DOHA issued a statement of reasons (SOR) advising Applicant of the
basis for that decision–security concerns raised under Guideline F (Financial Considerations) of
Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended) (Directive).  Applicant
requested a hearing.  On August 29, 2011, after the hearing, Administrative Judge James F. Duffy
denied Applicant’s request for a security clearance.  Applicant appealed pursuant to Directive ¶¶
E3.1.28 and E3.1.30.
Applicant raised the following issue on appeal: whether the Judge failed properly to apply
the Guideline F mitigating conditions.  Consistent with the following, we affirm the Judge’s
decision.
The Judge made the following pertinent findings of fact: Applicant is an employee of a
Defense contractor, for whom he has worked since April 2009.  A high school graduate, he is
divorced, with two minor children.
From 1997 to 2002, Applicant and his brother operated a business.  The business experienced
a downturn in 2000, and customers delayed paying.  Although their business declined, Applicant
and his brother did not lay off employees.  However, they failed to pay their employees’ payroll
taxes.  This resulted in a substantial tax deficiency.  Since closure of this business, Applicant has
started two others, which also failed. 
These business failures resulted in Applicant acquiring numerous delinquent debts, for such
things as telephone services, a credit card, vehicle loans, etc.  The Judge found in Applicant’s favor
for all the SOR debts except for two: a state tax lien of $344 and an IRS tax lien of $128,000.  The
Judge ruled in Applicant’s favor on a separate IRS lien of $10,000.  In addition, Applicant filed for
Chapter 7 bankruptcy protection, but the court dismissed the petition.  In 2010, he filed a second
petition for Chapter 7 bankruptcy protection that resulted in discharge of his debts.
Applicant incurred the $128,000 IRS lien in 2002.  In April 2011, he offered the IRS a
repayment plan, which the agency accepted the following June.  Under that plan Applicant is to pay
$200 a month until the debt is paid off.  Applicant lives with his ex-spouse and shares expenses with
her.  
The Judge noted his answer to DOHA interrogatories, dated December 2009, to the effect
that he has a net monthly income remainder of $385.  However, the Judge also cited Applicant’s
2010 bankruptcy petition, which showed a net monthly remainder of $20.  
Applicant enjoys an excellent reputation for the quality of his job performance and for his
honesty, trustworthiness, and responsibility.
In the Analysis, the Judge addressed the security significance of the state and IRS tax liens.
Characterizing the state tax debt as “minor,” the Judge devoted his attention principally to the IRS
1See Directive, Enclosure 2 ¶ 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[.]” The Judge quoted ISCR Case
No. 09-08462 at 3 (App. Bd. May 31, 2011) in his discussion of responsible action.
 
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debt.  He acknowledged that Applicant’s financial situation was affected by events outside his
control, his business failures, divorce, and unemployment.  
However, the Judge also concluded that Applicant’s decision not to pay withholding tax for
his employees was a matter within his control.  Moreover, the Judge stated that the record did not
establish that Applicant will necessarily be able to make his payments under his agreement with the
IRS.  The Judge stated that Applicant’s
eight-year delay in attempting to resolve this tax deficiency casts doubt on his
current reliability, trustworthiness, and good judgment.  These last-minute efforts fail
to mitigate the security concerns that arise from the remaining federal tax lien.
Given the doubtful nature of his current plan for resolving this tax lien and his
lengthy period of inaction in addressing it, I cannot find that he acted “responsibly
given his circumstances and develop[ed] a reasonable plan for repayment,
accompanied by ‘concomitant conduct,’ that is, actions which evidence a serious
intent to effectuate the plan.” Decision at 10.1  
Applicant’s brief challenges the Judge’s application of the mitigating conditions to the state
and IRS tax debts described above.  As noted above, the Judge reasonably explained that the
mitigating conditions could not be favorably applied to the delinquent tax debts cited in SOR
paragraphs 1(b) and 1(c) for two reasons: Applicant’s failure to make monthly payments to reduce
the debts and his eight year delay in attempting to resolve the tax debts.  The Judge’s explanation
is sustainable.  The brief also challenges the Judge’s treatment of a tax debt alleged in SOR ¶ 1(d).
However, the Judge resolved this debt in Applicant’s favor.  
The record supports a conclusion that the Judge examined the relevant data and articulated
a satisfactory explanation for the decision, “including a ‘rational connection between the facts found
and the choice made.’”  Motor Vehicle Mfrs. Ass’n of the United States v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29, 43 (1983)(quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168
(1962)).  The Judge’s adverse decision is sustainable on this record.  “The general standard is that
a clearance may be granted only when ‘clearly consistent with the interests of the national security.’”
Department of the Navy v. Egan, 484 U.S. 518, 528 (1988).  See also Directive, Enclosure 2 ¶ 2(b):
“Any doubt concerning personnel being considered for access to classified information will be
resolved in favor of the national security.” 
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Order
The Judge’s adverse security clearance decision is AFFIRMED.  
Signed: Michael Y. Ra’anan      
Michael Y. Ra’anan
Administrative Judge
Chairperson, Appeal Board
Signed: William S. Fields            
William S. Fields
Administrative Judge
Member, Appeal Board
Signed: James E. Moody               
James E. Moody
Administrative Judge
Member, Appeal Board