KEYWORD: Guideline E; Guideline F
DIGEST: The expectation of a tax refund is not sufficient to mitigate security concerns arising
from a failure to file tax returns.  Adverse decision affirmed.
CASENO: 12-00608.a1
DATE: 04/11/2014
DATE: April 11, 2014
In Re:
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Applicant for Security Clearance
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ISCR Case No. 12-00608
APPEAL BOARD DECISION
APPEARANCES
FOR GOVERNMENT
James B. Norman, Esq., Chief Department Counsel
FOR APPLICANT
Amy Broderick, Esq.
The Department of Defense (DoD) declined to grant Applicant a security clearance.  On July
24, 2013, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that
decision–security concerns raised under Guideline E (Personal Conduct) and Guideline F (Financial
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Considerations) of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended) (Directive).
Applicant requested a hearing.  On January 31, 2014, after the hearing, Defense Office of Hearings
and Appeals (DOHA) Administrative Judge Wilford H. Ross 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’s adverse decision was
arbitrary, capricious, or contrary to law.  The Judge’s favorable findings under Guideline E are not
at issue in this appeal.  Consistent with the following, we affirm.
The Judge’s Findings of Fact
Applicant has been employed by Defense contractors overseas for 17 years.  He failed to file
his Federal tax returns for tax years 2000 and 2002 through 2010 in a timely manner.  He has
explained this failure as a result of his belief that he did not owe taxes, due to the tax exclusion on
foreign earned income.  However, he has also admitted that the reason was his own procrastination.
The IRS filed a levy against Applicant for back taxes, interest, and penalties in the amount
of $789,746.07.  The IRS recouped nearly that amount by attaching Applicant’s investment accounts
and by garnishing his pay.  Although Applicant has known of his problems since around 2007 and
subsequently hired a tax preparer to help him, it was not until 2013 that he gave this person the
information required for him to prepare and file the returns.
Additionally, Applicant has been in a dispute with a state regarding a tax notice sent him in
2012.  He has reached a resolution, requiring him to send the state a copy of his 2010 Federal tax
return.  As of the date of the hearing, he had not done so.
Applicant enjoys an excellent reputation among his fellow workers for conscientiousness and
honesty.  His colleagues believe that he can be trusted with sensitive information.
The Judge’s Analysis
The Judge cleared Applicant under Guideline E.  In deciding otherwise under Guideline F,
the Judge stated that Applicant failed to file his taxes for “no good reason.”  Decision at 7.  He stated
that, despite Applicant’s recent efforts to address his tax delinquencies, he does not have a track
record of timely filing.  He stated that, with virtually no history of timeliness, Applicant had failed
to demonstrate that his procrastination was behind him.  In the whole-person analysis, the Judge
stated that the evidence did not establish permanent behavioral changes, given Applicant’s long
history of failing to file his tax returns.
Discussion
Applicant cites to his efforts to resolve his tax problems and to his evidence that he had
honestly believed that he had not owed the IRS any money.  He also argues that, because he expects
to get a refund after all his returns are filed, he had a legitimate basis to dispute the debts at issue
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here.  This last point, even if it is true, is not sufficient to mitigate concerns arising from a failure
to  discharge one’s legal obligation to file tax returns.  See Directive, Enclosure 2 ¶ 19(g): “failure
to file annual Federal, state, or local income tax returns as required . . .”  The Judge made findings
about Applicant’s efforts to resolve his tax problems, and he discussed them in the Analysis.
Applicant has not rebutted the presumption that the Judge considered all of the evidence in the
record.  See, e.g., ISCR Case No. 11-13948 at 3 (App. Bd. Feb. 26, 2014). 
The Judge examined the relevant data and articulated a satisfactory explanation for the
decision.  Failure to discharge legal obligations, such as filing tax returns, can impugn an applicant’s
judgment and reliability.  See, e.g., ISCR Case No. 98-0810 at 4 (App. Bd. Jun. 8, 2000).  The
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.” 
Order
The 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