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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
In the matter of: ) 
 ) 
 -------------- )  ISCR Case No. 14-01308 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Eric Borgstrom, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
MARSHALL, Jr., Arthur E., Administrative Judge: 
 
Applicant mitigated the Government’s security concerns under Guideline F, 
Financial Considerations. Applicant’s eligibility for a security clearance is granted. 
 
        Statement of the Case 
 
The Department of Defense (DOD) issued Applicant a Statement of Reasons 
(SOR), dated May 12, 2014, detailing security concerns under Guideline F (Financial 
Considerations). The action was taken under 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 adjudicative guidelines 
(AG) effective within the DOD on September 1, 2006. 
 
In a June 5, 2014, response to the SOR, Applicant requested a hearing before a 
Defense Office of Hearings and Appeals (DOHA) administrative judge. The case was 
assigned to me on August 1, 2014. DOHA issued a notice of hearing on August 15, 
2014, setting the hearing for September 11, 2014.  
 
The hearing was convened as scheduled. The Government offered 4 documents, 
which were accepted as Exhibits (EX) 1-4 without objection. Applicant offered testimony 
and six documents, which were accepted without objection as Exhibits (EX) A-F. She 
 
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was given until September 19, 2014, to submit any additional materials. The transcript 
of the proceedings (Tr.) was received on September 17, 2014. On September 18, 2014, 
Applicant submitted three additional documents through Department Counsel, who 
noted no objection and forwarded them to me on September 24, 2014. They were 
accepted as Exs. G-I. The record was then closed. Based on my review of the 
testimony and materials, I find that Applicant mitigated financial considerations security 
concerns.  
 
Applicant is a 55-year-old provider of administrative support for a defense 
contractor. She has worked for the same employer for nine years. She completed high 
school and has taken some post-secondary courses over the intervening years. 
Applicant is divorced and the mother of two grown children.  
 
 After nearly 25 years of marriage, Applicant’s husband left her, and the couple 
eventually divorced in 2004. Before their separation, her work experience outside the 
home had been limited. (Tr. 13) She was unemployed from April 2003 until September 
2005, when she started working for her present employer in a support capacity. During 
this period, she lived with her sister in their parents’ former home, collected 
unemployment benefits, used her savings, and served as a caregiver for a family friend, 
for which she earned about $100 a month.  
 
 Starting in 2006, her first full year as a single, working woman, Applicant failed to 
file her 2005 federal and state taxes. As noted in the SOR, she continued to fail to file 
her federal and state taxes from 2006 until 2011. (Tr. 19) She was initially unclear about 
the process for filing taxes. She never received correspondence requesting that she file 
returns. (Tr. 21) In retrospect, Applicant explained that her failure to timely file her taxes 
was the result of “forgetfulness, oversight, and stupidity.” (Tr. 57) At the time, she failed 
to understand that the behavior one exhibits after work hours can adversely impact an 
assessment of one’s personal qualifications for maintaining a security clearance. She 
now understands the connection and is seeking to comport her financial management 
skills appropriately. She noted: 
 
[Y]ou miss a deadline one year . . . and you think to yourself, I have to 
take care of that. Then other things get in the way. . . . Then the next thing 
you know, another year has gone by and you think I need to do this, but 
now you’re afraid because the [Internal Revenue Service or IRS] is like 
this big, scary bureaucracy and you read things, news articles, you talk to 
people and everybody tells you they’re just going to be so bad at you. And 
things just tend to snowball and at one point I even called the IRS to ask 
for their advice, where can I get current forms or what. And this person 
was just scary, telling me we’re going to do this and that. . . . And then 
finally I realized a couple of years ago, you know, they can’t take things 
from me because I don’t have anything for them to take. (Tr. 19-20) 
 
 With no significant past experience with taxes or tax filings, Applicant examined 
the situation on her own. She concluded that the IRS owed her money for the years at 
 
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issue. She acquired and learned how to use a well-known tax preparation software 
which first completes federal filings, then carries over the relevant information for 
completion of the state filing for that same year. Her federal filings for tax years 2007 
through 2011 were made in April or May 2014. Applicant failed to keep copies of all of 
these filings, but did provide evidence of her 2011 federal tax filing and evidence of her 
$1,318.76 refund. (Ex. B) In August 2014, Applicant filed her state taxes for 2007 
through 2011. (Tr. 21-25; Ex. C) She is presently awaiting copies of her IRS W-2 forms 
to complete her 2005 and 2006 tax year filings. (Tr. 27-28) She was unable to get 
official copies and refund check copies of her federal tax filings for 2008 through 2011 
before the record closed. It is her intent for any tax filings yet unaddressed to be filed as 
soon as practicable. (Tr. 33) For the years at issue, Applicant either received or is 
eligible to receive a refund, or owes no taxes. (Tr. 28-29) She has never been subject to 
a federal or state tax lien or assessment. (Tr. 29) 
 
Applicant earns under $45,000 a year. A few years ago, she moved out of 
parents’ former house to rent and share a home with her two grown daughters. The 
three women share expenses. Applicant lives within her means. The SOR, however, 
reflects two delinquent debts in collection by the same collection agency for a debt or 
debts owed to a local cardiology practice. The credit report entries each reflect an 
account number, but it is dissimilar with the account numbers and associated codes 
used by the cardiology practice. They have different dates for the opening of the 
account with the collection entity, but the other dates noted regarding the debts mirror 
each other. The debts alleged are for $2,470 and $1,130, respectively. Applicant initially 
disputed both entries on her credit report.  
 
The cardiologist’s billing records back to the mid-1990s fail to support a 
delinquent account balance of $2,470. With her answer to the SOR, however, Applicant 
provided a health insurance billing statement regarding the $1,130 balance. It indicates 
that she was only responsible for $50 on the account noted as delinquent in the amount 
of $1,130, because the service provided was subject to a pre-negotiated rate through 
her health care insurer. (SOR Answer, attachment; Ex. E) When Applicant questioned 
the collection effort, her cardiologist’s office stated that it concerned another sum of 
$1,130 for unidentified services. Despite the practice’s lack of evidence that there were 
ever two outstanding delinquent debts in the same amount of $1,130, Applicant paid 
$1,390 to the practice in August 2014 in order to “just to clear it up.” (Tr. 40) As of 
September 2014, her cardio-care provider reflected no past due balance owed to the 
practice by Applicant. (Ex. G)     
 
Applicant is highly valued at work. She has received an award for her 
outstanding service and support of her office’s mission. She is known for her attention to 
detail. Applicant is current on all of her regular and recurring expenses, such as utilities. 
Since beginning to address her tax issues, she has been diligent in making gradual 
progress on the past-due filings and her current filings. She does not handle anything 
related to finance at work. Applicant is timely on her two credit cards, both of which 
have modest and manageable limits.  
 
 
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Policies 
 
 When evaluating an applicant’s suitability for a security clearance, the 
administrative judge must consider the adjudicative guidelines. In addition to brief 
introductory explanations for each guideline, the adjudicative guidelines list potentially 
disqualifying conditions and mitigating conditions, which are used in evaluating an 
applicant’s eligibility for access to classified information. 
 
These guidelines are not inflexible rules of law. Instead, recognizing the 
complexities of human behavior, these guidelines are applied in conjunction with the 
factors listed in the adjudicative process. The administrative judge’s overarching 
adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 
2(c), the entire process is a conscientious scrutiny 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 ¶ 2(b) 
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 not drawn 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, an “applicant is 
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or 
mitigate facts admitted by applicant or proven by Department Counsel and has the 
ultimate burden of persuasion to obtain 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 transcends normal duty hours and endures throughout off-duty hours. 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 safeguard 
classified information.  
 
Section 7 of Executive Order 10865 provides that decisions shall be “in terms of 
the national interest and shall in no sense be a determination as to the loyalty of the 
applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites 
for access to classified or sensitive information).  
 
 
 
 
 
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Analysis 
 
Guideline F, Financial Considerations 
 
Under Guideline F, AG ¶ 18 sets forth that the security concern under this 
guideline is that 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 engaging in illegal acts to generate funds.  
 
Here, the Government introduced evidence indicating Applicant owed two 
delinquent debts to one cardiology practice amounting to about $3,600 It also showed 
that she failed to timely file federal and state tax returns for tax years 2006-2011. This is 
sufficient to raise three of the financial considerations disqualifying conditions:  
 
AG ¶ 19(a): inability or unwillingness to satisfy debts,   
 
AG ¶ 19(c): a history of not meeting financial obligations, and 
 
AG ¶ 19(g): failure to file annual Federal, state, or local income tax returns as 
required or the fraudulent filing of same.     
 
Five conditions could mitigate the finance-related security concerns in this case: 
 
 AG ¶ 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; 
 
 AG ¶ 20(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, or a death, divorce or 
separation), and the individual acted responsibly under the circumstances; 
 
 AG ¶ 20(c) the 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; 
 
 AG ¶ 20(d) the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts; and 
 
 AG ¶ 20(e) the individual has a reasonable basis to dispute the legitimacy 
of the past-due debt which is the cause of the problem and provides 
documented proof to substantiate the basis of the dispute or provides 
evidence of actions to resolve the issue. 
 
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 Applicant’s neglect of an alleged cardiology balance was based on a 
misunderstanding. She interpreted her health insurance company’s statement of 
benefits to indicate she owed no more than $50. When her cardiac care provider gave 
her a less than satisfactory explanation as to origin of the alleged debt, she paid the 
balance rather than further dispute it.  
 
Applicant’s initial failure to file federal and state taxes was similarly based on a 
misunderstanding. A recently divorced homemaker, she had little experience with such 
matters. When she discovered it was her obligation to make those filings, even if she 
owed no additional taxes, she was initially intimidated by the potential penalties that 
could be imposed for failure to file. After reviewing the situation, she realized she was 
owed refunds. Since that time, she has retroactively filed at least half of the state and 
federal forms referenced in the SOR, shown she owes no money for the tax years at 
issues, and expressed her clear intent to complete all neglected filings as soon as 
practicable. AG ¶ 20(d) applies.  
 
Whole-Person Concept 
 
 Under the whole-person concept, the administrative judge must evaluate an 
applicant’s eligibility for a security clearance by considering the totality of the applicant’s 
conduct and all relevant circumstances. The administrative judge should consider the 
nine adjudicative process factors listed at AG ¶ 2(a). Under AG ¶ 2(c), the ultimate 
determination of whether to grant eligibility for a security clearance must be an overall 
commonsense judgment based upon careful consideration of the guidelines and the 
whole-person concept.        
 
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. I have incorporated my comments 
under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were 
addressed under that guideline, but some warrant additional comment.  
 
The delinquent debt in this case is minimal and was readily paid by Applicant 
when she was told, albeit without substantiating documentation, it was owed. Her 
readiness to simply pay the debt, rather than protract her legitimate dispute, 
demonstrates a willingness to do what it takes to comport her actions with those 
expected of one who seeks to hold a security clearance.  
 
The Government has a genuine concern regarding Applicant’s failure to file 
federal and state taxes for multiple years. It is a failure of particular concern to both the 
Government and this process. That failure, however, was not the result of reckless 
behavior, an effort to avoid paying taxes, or a generally lackadaisical attitude with 
regard to the law. Applicant would have been about 20 years old when she married and 
in her mid-40s when her husband left her. She was primarily a homemaker, who raised 
two children. With a high school education, she had limited job market knowledge and 
skills. Her failure to inquire on how to file was as grievous as her failure to file. This 
 
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process, however, is not punitive. It is equally important to look at what she has done to 
fix the problem and amend her ways.  
 
Applicant has learned how to do her own taxes on tax preparation software and 
to learn how to file them. Her evidence shows that she has filed for all but two of the 
state filings owed, and is awaiting the relevant W-2 forms to file those two which remain 
outstanding. Her tax software prepares federal filings before moving on to preparing the 
user’s state filings, a not unusual pattern given that many states require that a federal 
filing be completed first in order to calculate one’s adjusted gross income (AGI). 
Therefore, although she only has evidence of a 2011 federal filing and refund, she 
provided evidence that she filed five state tax returns. This implies that she completed 
and filed corresponding federal tax returns for these same tax years, as she needed the 
AGI from the federal returns for her state calculations. She has taken this experience as 
a learning process. She lives within her means and economizes. Given her stated plan 
for addressing her tax situation and the significant progress thus far made, I find that 
security concerns are mitigated. Clearance is granted.   
 
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, Guideline F:    FOR APPLICANT 
 
  Subparagraphs 1.a-1.c:   For Applicant 
  
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is 
clearly consistent with the national interest to grant Applicant a security clearance. 
Eligibility for access to classified information is granted. 
 
 
                                                     
_____________________________ 
Arthur E. Marshall, Jr. 
Administrative Judge