KEYWORD: Guideline F: Guideline E
DIGEST: The Judge’s analysis did not give appropriate weight to Applicant’s intentional
decade-long inaction regarding his income tax filing and payment duties.  The Judge also erred
by concluding that Applicant had fully resolved the issue of outstanding tax returns.  The record
evidence, viewed as a whole, is not sufficient to mitigate security concerns under the Egan
standard.  Favorable decision reversed.
CASENO: 12-05053.a1
DATE: 10/30/2014
DATE: October 30, 2014 
In Re:
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Applicant for Security Clearance
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ISCR Case No. 12-05053
APPEAL BOARD DECISION
APPEARANCES
FOR GOVERNMENT
James B. Norman, Esq., Chief Department Counsel
FOR APPLICANT
Pro se
The Department of Defense (DoD) declined to grant Applicant a security clearance.  On
March 13, 2014, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that
decision—security concerns raised under Guideline F (Financial Considerations) and Guideline E
(Personal Conduct) of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended)
(Directive).  Department Counsel requested a hearing.  On July 23, 2014, after the hearing, Defense
Office of Hearings and Appeals (DOHA) Administrative Judge Mary E. Henry granted Applicant’s
1The SOR included an allegation of falsification under Guideline E.  The Judge made a finding favorable to
Applicant on this allegation.  That favorable finding is not at issue on appeal.
request for a security clearance.  Department Counsel appealed, pursuant to the Directive ¶¶ E3.1.28
and E3.1.30.1  
Department Counsel raises the following issue on appeal: whether the Judge’s decision is
arbitrary, capricious, or contrary to law.  For the following reasons, the Board reverses the Judge’s
favorable security clearance decision.
The Judge made the following findings: Applicant is 59 years old.  In 2000, Applicant
prepared his federal and state income tax returns for the tax year 1999.  As a result of his earnings
that year, Applicant owed approximately $10,000 in federal income taxes.  He did not think the IRS
allowed payment plans, so he did not discuss the possibility with the IRS.  Instead, he did not file
his income tax returns for that year.  He also did not file his federal and state income tax returns for
the years between 2000 and 2011 because he felt he would be in trouble with his employer or the
IRS.  During this time period, he increased the amount of money being withheld from his paycheck
for his yearly taxes.  He believed the increase would satisfy the amount of tax he owed.  He stated
his decision not to file tax returns resulted from ignorance and stupidity. 
The IRS filed a tax lien against Applicant in 2011 for $126,512 in past-due taxes, plus
interest and penalties.  The IRS instituted garnishment of his wages, taking out between $2,600 and
$2,700 per paycheck.  Between May 2011 and December 2012, Applicant paid the IRS about
$107,000.  He has paid his federal tax bill in full.  With the assistance of a tax professional,
Applicant filed several outstanding federal tax returns in September 2011.  Applicant has not filed
his federal income tax returns for the tax years 2001 and 2002.  His tax professional advised him
that, according to the IRS, he did not have to file income tax returns for those years.  Applicant does
not know why the IRS is not requesting his income tax returns for those years.  Applicant has
requested a letter from the IRS to verify that he did not need to file the income tax returns.  He has
not received any letter.
Applicant moved from State X to State Y in 2010, where he still lives.  Applicant has not
filed his past due income tax returns for State X because his tax professional told him that State X
would not accept income tax returns due earlier than the last three years.  Since moving to State Y,
Applicant has filed his state income tax returns there and paid any income taxes owed.  He filed
income tax returns with State X as a non-resident for the years 2011, 2012, and 2013 and received
refunds.  State X has not filed a lien against Applicant.  His tax professional has told Applicant he
would not have received refunds from State X if he owed back income taxes.  After the hearing,
Applicant contacted State X, which advised him that he did not have a tax liability.  He has not
received a written statement of account from State X.
The Judge reached the following conclusions: Applicant took control of his income tax debt
after the IRS garnished his pay.  Applicant understands that he exercised poor judgment and
recognizes the negative financial problems he can create for himself by not filing his taxes timely.
He is aware of the negative impact such conduct could have on his eligibility to maintain a security
2“[T]he 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[.]”
3“[T]he person has received or is receiving counseling for the problem and/or there are clear indications that
the problem is being resolved or is under control.”
clearance and possibly, his job.  He finally took responsibility for this conduct.  In all other aspects
of his life, he has acted responsibly and has shown good judgment.  It is unlikely that he will fail to
file future income tax returns.  Regarding his failure to file his income tax returns as a concern under
Guideline E, Applicant’s decision to ignore his income taxes raises serious questions about his
judgement and trustworthiness.  He has taken the necessary steps to change his behavior and to
prevent a recurrence of this problem.  By taking affirmative action to correct his past income tax
issues, Applicant eliminated his vulnerability to exploitation, manipulation, or duress, and has
removed questions or doubts as to his eligibility and suitability for a security clearance.    
Department Counsel argues that the Judge’s decision is arbitrary, capricious, and contrary
to law because it is unsupported by a reasonable reading of the record as a whole. He asserts that
even though Applicant has now resolved his outstanding tax liabilities, the underlying manner in
which the delinquencies were incurred and the manner in which he addressed them are the primary
focus of this security clearance proceeding.  He states that the Judge employed a piecemeal analysis
wherein she erroneously focused on Applicant’s extinguishment of his tax liabilities, rather than the
circumstances surrounding Applicant’s failure to file tax returns in the first place.  Department
Counsel argues that Guideline F Mitigating Conditions ¶20(a)2 and ¶20(c)3 have limited, if any,
applicability to the facts of this case and in no way serve to overcome the Government’s case.
Department Counsel further argues that the Judge erred when she uncritically accepted Applicant’s
assertion that he was not required to file tax returns for his state income taxes that were due prior
to the three most recent tax years.  Department Counsel’s arguments have merit.
A Judge is required to “examine the relevant data and articulate 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
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).  “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).  The Appeal Board may reverse the Judge’s
decision to grant, deny, or revoke a security clearance if it is arbitrary, capricious, or contrary to law.
Directive ¶¶ E3.1.32.3 and E3.1.33.3.
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 application of disqualifying and mitigating conditions and
whole person factors does not turn simply on a finding that one or more of them apply to the
particular facts of a case.  Rather, their application requires the exercise of sound discretion in light
of the record evidence as a whole.”  See, e.g., ISCR Case No. 05-03635 at 3 (App. Bd. Dec. 20,
2006).   
In deciding whether the Judge’s rulings or conclusions are arbitrary or capricious, the Board
will review the Judge’s decision to determine whether: it does not examine relevant evidence; it fails
to articulate a satisfactory explanation for its conclusions, including a rational connection between
the facts found and the choice made; it does not consider relevant factors; it reflects a clear error of
judgment; it fails to consider an important aspect of the case; it offers an explanation for the decision
that runs contrary to the record evidence; or it is so implausible that it cannot be ascribed to a mere
difference of opinion.  In deciding whether the Judge’s rulings or conclusions are contrary to law,
the Board will consider whether they are contrary to provisions of Executive Order 10865, the
Directive, or other applicable federal law.  See ISCR Case No. 03-22861 at 2-3 (App. Bd. Jun. 2,
2006).
Department Counsel asserts that the Judge took a “no harm, no foul” approach to Applicant’s
course of conduct and employed an “all’s well that ends well” analysis that did not give appropriate
weight to Applicant’s intentional decade-long inaction regarding his income tax filing and payment
duties.  The Board concludes that these are fair characterizations of the Judge’s resolution of the
case.  Security requirements include consideration of a person’s judgment, reliability, and a sense
of his or her legal obligations.  Cafeteria & Restaurant Workers Union, Local 473 v. McElroy, 284
F.2d 173, 183 (D.C. Cir. 1060), aff’d, 367 U.S. 886 (1961).  A person who fails repeatedly to fulfill
his or her legal obligations does not demonstrate the high degree of good judgment and reliability
required of persons granted access to classified information.  Indeed, the Board has previously noted
that a person who has a history of not fulfilling their legal obligation to file income tax returns may
be said not to have demonstrated the high degree of judgment and reliability required for access to
classified information.  See, e.g., ISCR Case No. 98-0608 at 2 (App. Bd. Jun. 27, 2000).  The
evidence in this case indicates that Applicant took no action to file income tax returns or pay
delinquent taxes until the IRS instituted lien and garnishment proceedings, which was more than ten
years after his initial decision not to file his tax returns.  These facts significantly undercut the
strength of Applicant’s recent filing and repayment efforts as matters in mitigation.  The Judge’s
decision does not analyze or comment upon the non-voluntary nature of the commencement of
remedial action on the part of Applicant, nor does it adequately explain how his latter-day efforts
mitigate the security significant conduct of not satisfying his legal obligations regarding taxes for
more than a decade.  By failing to analyze and discuss these matters in any depth, the Judge has
failed to consider an important aspect of the case.
The Judge’s discussion of the Guideline F mitigating conditions is couched primarily in
terms of Applicant’s newfound appreciation of the effects of his lengthy nonfeasance on his financial
health and praise for his retirement of delinquent tax debt.  Absent is a discussion as to how
Applicant’s recent conduct overcomes the Government’s overarching concern about his pronounced
lack of judgment regarding tax obligations.  We have held that a security clearance adjudication is
not a proceeding aimed at collecting an applicant’s debts.  See ISCR Case No. 07-08049 at 5 (App.
Bd. Jul. 22, 2008).  Similarly, a security clearance adjudication is not a vehicle aimed at insuring an
applicant’s compliance with the tax laws.  The fact that Applicant has purportedly corrected his
federal tax problem, and the fact that he is now motivated to prevent such problems in the future,
4This is especially true here, where, at the conclusion of the evidence, the Judge held the record open for a
period after the hearing and specifically requested that Applicant obtain a written statement from his tax preparer that
addressed the issue of the outstanding tax returns for both State X and the IRS (Tr. at 57).  At some point, Applicant
redefined the task to mean a direct correspondence from the IRS and State X respectively.  No corroborating evidence
from any source was forthcoming, yet the Judge proceeded to make findings on the issue based solely on Applicant’s
testimony.  
does not preclude careful consideration of Applicant’s security worthiness based on longstanding
prior behavior evidencing irresponsibility.  
Much of the Judge’s mitigation analysis is predicated upon her conclusion that Applicant has
fully resolved the issue of outstanding tax returns.  However, the record indicates that Applicant has
still not filed federal tax returns for the years 2001 and 2002, and he has not filed numerous state
income tax returns for the years he lived in State X.  The Judge appears to have accepted Applicant’s
uncorroborated statements that, according to his tax advisor, the filing of the returns was not
necessary.  While the Judge had to consider Applicant’s hearing testimony regarding filing
requirements, she was not bound by it.  It would be arbitrary and capricious to accept uncritically
a witness’s testimony without considering whether it is plausible and consistent with other evidence.
See, e.g., ISCR Case No. 01-07292 at 4 (App. Bd. Jan. 29, 2004).  Also, in making findings of fact,
a Judge must make a reasonable, common sense evaluation about the significance of the presence
or absence of corroborating evidence.  See, e.g., ISCR Case No. 00-0620 at 4 (App. Bd. Oct. 19,
2001).  In matters of mitigation, the burden of persuasion rests with Applicant.  The Judge’s reliance
on Applicant’s uncorroborated testimony, which contains no cogent explanation as to why the filings
were unnecessary, was not reasonable given the circumstances of this case.4                      
Department Counsel argues that the Judge’s perfunctory treatment of the security
significance of Applicant’s ten year history of tax delinquencies is also error under Guideline E and
the whole person concept.  For reasons previously stated, the Board agrees.  We note that Guideline
E specifically addresses conduct involving questionable judgment.  The Judge’s mitigation analysis
focused on the elimination of Applicant’s future vulnerability to exploitation, manipulation, or
duress as a result of the resolution of tax issues.  It did not discuss how the recent actions of
Applicant overcome the Government’s security concerns stemming from his long history of tax law
non-compliance.
We conclude that the Judge’s decision failed to consider important aspects of the case, and
ran contrary to the weight of the record evidence.  Furthermore, we conclude that the record
evidence, viewed as a whole, is not sufficient to mitigate Applicant’s security concerns under the
Egan standard.
 
 
Order
The decision of the Judge is REVERSED.
Signed: Michael Ra’anan     
Michael Ra’anan
Administrative Judge
Chairperson, Appeal Board
Signed: Jeffrey D. Billett      
 Jeffrey D. Billett
Administrative Judge
Member, Appeal Board
Signed: James E. Moody      
James E. Moody
Administrative Judge
Member, Appeal Board