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    DEPARTMENT OF DEFENSE 
  DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 15-01132 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Benjamin R. Dorsey, Esq., Department Counsel 
For Applicant: Pro se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
Applicant contests the Department of Defense’s (DoD) intent to deny his eligibility 
for a security clearance to work in the defense industry. He was delinquent in filing his 
federal and state income tax returns for two tax years. He has now filed his returns and 
received sizable tax refunds. He has mitigated the financial considerations security 
concerns. Clearance is granted.  
 
Statement of the Case 
 Acting under the relevant Executive Order and DoD Directive,1 on August 22, 
2015, the DoD issued a Statement of Reasons (SOR) detailing financial considerations 
security concerns. On October 1, 2015, Applicant answered the SOR and elected to 
have the matter decided without a hearing. Defense Office of Hearings and Appeals 
                                                          
1 Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as 
amended; DoD 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. 
 
 
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(DOHA) Department Counsel (DC) submitted the Government's case in a File of 
Relevant Material (FORM), dated November 19, 2015. The FORM contained five 
attachments (Items). On December 1, 2015, Applicant received a copy of the FORM, 
along with notice of his opportunity to file objections and submit material to refute, 
extenuate, or mitigate the potentially disqualifying conditions. On December 28, 2015, 
Applicant responded to the FORM and provided documentation from the Internal 
Revenue Service (IRS) and from his bank. There was no objection to Applicant’s 
response to the FORM; it was admitted as Item A. On March 14, 2016, I was assigned 
the case.  
 
Findings of Fact 
 
In Applicant’s Answer to the SOR, he denied the allegations asserting he had 
filed his delinquent federal tax returns on April 15, 2015, and had filed his state tax 
returns. (Item 2) After a thorough review of the pleadings, exhibits, and submissions, I 
make the following additional findings of fact. 
 
 Applicant is a 56-year-old senior research programmer who has worked for a 
defense contractor since January 1985 and seeks to retain a security clearance. He has 
been married since 1985 and has two children. (Item 3)  
 
On Applicant’s January 2014 Electronic Questionnaires for Investigations 
Processing (e-QIP), he indicated he had not filed his 2012 and 2013 tax returns. (Item 
3) He indicated in a personal subject interview (PSI) that he had failed to file due to 
procrastination. (Item 4) 
 
On April 15, 2015, Applicant filed his federal tax returns for tax years 2012, 2013, 
and 20142. For tax year 2012, his federal taxes were $9,844. He had $22,899 withheld 
from his salary and he received a $13,055 refund. (Item A) For tax year 2013, his taxes 
were $1,071. He had $23,719 withheld and received a $12,647 refund. For tax year 
2014, his taxes were $13,320. He had $26,821 withheld and received a $13,501 refund. 
His federal income tax refunds for these three years totaled more than $39,000. 
 
For tax year 2012, Applicant’s state taxes were $5,333. He had $6,360 withheld 
and received a $1,027 refund. For tax year 2013, his state taxes were $5,349. He had 
$6,578 withheld and received a $1,229 refund. For tax year 2014, his state taxes were 
$5,863. He had $6,817 withheld and received a $954 refund. His state income tax 
refunds for these three years totaled approximately $3,200. Applicant provided 
documents verifying the state income tax refunds and also provided bank statements 
showing the state refunds were deposited to his bank account.  
 
Policies 
 
 When evaluating an applicant’s suitability for a security clearance, the 
administrative judge must consider the adjudicative guidelines. In addition to brief 
                                                          
2 The SOR did not allege failure to file tax returns for tax year 2014. 
 
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introductory explanations for each guideline, the adjudicative guidelines list potentially 
disqualifying conditions and mitigating conditions, which must be considered 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 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.  
 
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 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. Such decisions entail a certain degree of legally permissible 
extrapolation of potential, rather than actual, risk of compromise of classified 
information. 
  
Section 7 of Executive Order (EO) 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).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
 Adjudicative Guideline (AG) ¶ 18 articulates the security concerns relating to 
financial problems: 
 
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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. 
 
Additionally, an individual who is financially irresponsible may also be 
irresponsible, unconcerned, negligent, or careless in properly handling and 
safeguarding classified information. Behaving responsibly or irresponsibly in one aspect 
of life provides an indication of how a person may behave in other aspects of life.  
 
A person’s relationship with his or her creditors is a private matter until evidence 
is uncovered demonstrating an inability or unwillingness to repay debts as agreed. 
Absent substantial evidence of extenuating or mitigating circumstances, an applicant 
with a history of serious or recurring financial difficulties is in a position of risk that is 
inconsistent with holding a security clearance. An applicant is not required to be debt 
free, but is required to manage their finances to meet their financial obligations. 
 
 For two tax years Applicant failed to timely file his federal and state income tax 
returns in a timely manner.  However, he had over withheld his state and federal taxes 
by more than $42,000. Disqualifying Conditions AG ¶ 19(g), “failure to file annual 
Federal, state, or local income tax returns as required or the fraudulent filing of the 
same,” applies.  
 
 Five financial considerations mitigating conditions under AG ¶ 20 are potentially 
applicable: 
 
(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; 
 
(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; 
 
(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; 
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts; and 
 
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(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. 
 
 Applicant did not timely file his federal and state income tax returns for tax years 
2012 and 2013. However, he had more than sufficient funds withheld from his pay to 
meet his tax obligations. In fact, once he filed his returns for the two years listed in the 
SOR and also tax year 2014, he received a $42,000 refund.  
 
 AG ¶ 20(a) has application because Applicant never had a delinquent debt. 
Applicant filed his past-due returns in 2015. Failing to timely file his income tax returns, 
when entitled to a substantial refund casts very limited doubt on his current reliability, 
trustworthiness, and good judgment.  
 
AG & 20(b) does not apply. Applicant provided no information concerning factors 
beyond his control. He failed to file due to procrastination. However, he has now acted 
responsibly by filing the returns and receiving refunds. 
 
The mitigating condition listed in AG ¶ 20(c) applies. There are clear indications 
the problem of filing has been resolved and clear indications his finances are under 
control. The mitigating condition listed in AG ¶ 20(d) and AG ¶ 20(e) do not apply 
because there was never an over-due or past-due obligation.  
 
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):  
 
(1) the nature, extent, and seriousness of the conduct; (2) the 
circumstances surrounding the conduct, to include knowledgeable 
participation; (3) the frequency and recency of the conduct; (4) the 
individual’s age and maturity at the time of the conduct; (5) the extent to 
which participation is voluntary; (6) the presence or absence of 
rehabilitation and other permanent behavioral changes; (7) the motivation 
for the conduct; (8) the potential for pressure, coercion, exploitation, or 
duress; and (9) the likelihood of continuation or recurrence. 
 
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.  
 
 
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I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. Applicant has been employed and 
held a clearance for more than 30 years. He provided no information about his duty 
performance. He should have filed his state and federal returns in a timelier manner. 
However, the returns are now filed and he has received federal and state income tax 
refunds of more than $42,000. Overall, the record evidence leaves me without any 
doubt as to Applicant’s eligibility and suitability for a security clearance. Having never 
been delinquent on the payment of his taxes, and having now filed his returns, he has 
mitigated the financial considerations security concerns.  
 
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: FOR APPLICANT 
 
  Subparagraphs 1.a and 1.b: 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.  
 
 
_______________________ 
CLAUDE R. HEINY II 
Administrative Judge