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                             DEPARTMENT OF DEFENSE
               DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
---------------------- )       ISCR Case No. 12-09201
)
Applicant for Security Clearance )
Appearances
For Government: Andrew Henderson, Esquire, Department Counsel
For Applicant: Pro se
June 17, 2016
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DECISION
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ROSS, Wilford H., Administrative Judge:
Applicant submitted his Electronic Questionnaire for Investigations Processing
(e-QIP), on January 31, 2012. (Government Exhibit 1.) On February 25, 2015, the
Department of Defense issued a Statement of Reasons (SOR) detailing the security
concerns under Guideline F (Financial Considerations) concerning Applicant. 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
Department of Defense on September 1, 2006. 
 
Applicant answered the SOR in writing on April 1, 2015, (Answer) and requested
a hearing before an administrative judge. Department Counsel was prepared to proceed
on July 1, 2015. This case was assigned to another administrative judge on July 13,
2015. It was reassigned to me on September 9, 2015. The Defense Office of Hearings
and Appeals (DOHA) issued notices of hearing on September 8, and September 15,
2015. I convened the hearing as scheduled on October 22, 2015. The Government
offered Government Exhibits 1 through 5, which were admitted without objection.
Applicant submitted Applicant Exhibits A through C, which were also admitted without
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objection, and testified on his own behalf. At Applicant’s request the record was left
open for the receipt of additional documentation. On November 12, 2015, Applicant
submitted Applicant Exhibits D and E, which were also admitted without objection.
DOHA received the transcript of the hearing (Tr.) on November 4, 2015. The record
closed on November 12, 2015. Based upon a review of the pleadings, exhibits, and
testimony, eligibility for access to classified information is denied.
Findings of Fact
Applicant is 49 and married. He is an honorably retired veteran of the United
States Navy. He is employed by a defense contractor and seeks to retain a security
clearance in connection with his employment.
Paragraph 1 (Guideline F, Financial Considerations)
The Government alleges in this paragraph that Applicant is ineligible for
clearance because he is financially overextended and therefore potentially unreliable,
untrustworthy, or at risk of having to engage in illegal acts to generate funds. Applicant
denied all the allegations under this paragraph.
The SOR allegations primarily concern Applicant’s failure to file Federal and state
tax returns, and pay the back taxes he owes. For ease of discussion, a single allegation
regarding a judgment will be discussed first, followed by the tax return situation, and
finally the allegations concerning his back taxes for specific years.
1.g. Applicant denied that he owed a judgment to his state taxing authority in the
amount of $7,734.88. According to Applicant the only judgment on his record concerns
his condominium homeowners’ association. The available credit reports in the record do
not show any judgment debt, either to the state or Applicant’s homeowners’ association.
Department Counsel conceded at the hearing that there is no support for this allegation.
Accordingly, it is found for Applicant. (Government Exhibits 3, 4, and 5; Applicant Exhibit
C; Tr. 19-25.)
1.e. Applicant freely admits that he did not file his Federal income tax returns in a
timely manner for tax years 2010, 2011, and 2012. However, Applicant states that he
has now filed all the applicable returns. He submitted copies of all three tax returns,
which show they were filed in approximately August 2014. (Applicant Exhibit B at 6-7,
Exhibit E at 13-14; Tr. 25-26, 52-56, 64-65.)
1.f. Similarly, Applicant freely admits that he did not file his state tax returns for
the tax years 2006 through 2012. Once again, Applicant states that he has now filed all
the applicable returns. He submitted copies of these returns, which also show they were
filed in approximately August 2014. Applicant states he does not owe the state any
money for back taxes. (Applicant Exhibits A and D; Tr. 26, 50-52, 68, 71.)
There is documentary evidence that refunds from tax years 2011 and 2013 were also applied to the 2007 tax1
year. (Applicant Exhibit B at 6,8.)
His 2013 Federal tax return is dated August 6, 2014. The 2014 Federal tax return is dated October 1, 2015.2
(Applicant Exhibit E at 20-23.)
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1.a. Applicant denied that he owed $5,000.85 to the IRS for 2006 back taxes. His
2006 Federal tax return, which he filed in August 2014, showed that he is due a refund
of $2,011. According to Applicant that refund has been applied to other Federal taxes
that he owes. The available record does not confirm that statement. Applicant thought
he would owe money that year, which is why he did not file or pay his taxes.
(Government Exhibit 2 at 22-23; Applicant Exhibit B at 3, Exhibit E at 3-5; Tr. 39-40, 56-
58.)
1.b.  Applicant denied that he owed $30,012.05 to the IRS for 2007 back taxes.
His 2007 Federal tax return, which he filed in August 2014, showed that he owed
$5,271. The IRS notified Applicant on July 13, 2015, that they had changed his tax
return and he was owed a refund of $1,582.13. According to Applicant that refund has
been applied to other Federal taxes that he owes. (Government Exhibit 2 at 24-25;
Applicant Exhibit B at 4, Exhibit E at 6-8; Tr. 40-41, 58-59.)1
1.c. Applicant denied that he owed $41,633.75 to the IRS for 2008 back taxes.
His 2008 Federal tax return, which he filed in August 2014, showed that he owed
$11,067. The IRS notified Applicant on July 13, 2015, that they had changed his tax
return and he now owed $18,457.19. Applicant has not yet resolved this tax situation.
(Government Exhibit 2 at 26-27; Applicant Exhibit B at 5, Exhibit E at 9-11; Tr. 50-51,
59-60.)
1.d. Applicant denied that he owed $47,429.79 to the IRS for 2009 back taxes.
His 2009 Federal tax return, which he filed in August 2014, showed that he owed
$17,012. Applicant has not yet resolved this tax situation. (Government Exhibit 2 at 28-
29; Applicant E at 12-13; Tr. 51-52, 61-62.)
In general, Applicant believes he currently owes about $40,000 to the IRS for
back taxes. However, Applicant was uncertain of his situation and was unable to
provide documentation showing with specificity how much he owes to the IRS. Applicant
indicated that his 2010 through 2014 Federal income tax returns show him receiving
refunds that total approximately $25,000.  However, Applicant was unable to provide2
any information as to the status of those tax returns. He currently has no payment plan
with the IRS to resolve his back taxes, but he has requested one. (Applicant Exhibit E at
14-23; Tr. 65, 72-73.)
Applicant admits that he was seriously delinquent in taking care of his tax
liabilities for several years. Most of this was due simply to his procrastination. Another
reason was that Applicant was running two households for several years - 2006 through
2009. In addition, his wife was ill in 2006. According to Applicant, he knew that he owed
back taxes, but did not have the money to pay them and elected not to file his tax
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returns. He acknowledges that these were poor decisions on his part. Applicant was
unable to satisfactorily explain the sources of his financial problems from 2007 onwards.
His budget as of February 2014 showed a monthly net remainder of $2,659.
(Government Exhibit 2 at 15; Tr. 27-39, 41-50, 67.) 
Policies
Security clearance decisions are not made in a vacuum.  When evaluating an
applicant’s suitability for a security clearance, the administrative judge must consider
the adjudicative guidelines (AG). In addition to brief introductory explanations for each
guideline, the adjudicative guidelines list potentially disqualifying conditions and
mitigating conditions, which are to be used as appropriate 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s
over-arching 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.  In addition, the administrative judge may also rely on
his or her own common sense, as well as knowledge of the law, human nature, and the
ways of the world, in making a reasoned decision.
The protection of the national security is the paramount consideration. AG ¶ 2(b)
requires that, “Any 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 avoided drawing 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, “The applicant is
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or
mitigate facts admitted by the applicant or proven by Department Counsel, and has the
ultimate burden of persuasion as to obtaining a favorable clearance 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. Security clearance decisions include, by
necessity, consideration of the possible risk that the applicant may deliberately or
inadvertently fail to protect or safeguard classified information. Such decisions entail a
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certain degree of legally permissible extrapolation as to potential, rather than actual, risk
of compromise of classified information.
 Finally, as emphasized in Section 7 of Executive Order 10865, “Any
determination under this order adverse to an applicant shall be a determination 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
Paragraph 1 (Guideline F, Financial Considerations)
The security concern relating to the guideline for Financial Considerations is set
out in AG & 18:      
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. 
The guideline notes several conditions that could raise security concerns. Under
AG & 19(a), an “inability or unwillingness to satisfy debts, is potentially disqualifying.
Similarly under AG & 19(c), “a history of not meeting financial obligations,” may raise
security concerns. Finally, AG ¶ 19(g) states a “failure to file Federal, state, or local
income tax returns as required or fraudulent filing of the same,” may also raise security
concerns. Applicant, by his own admission, and as supported by the documentary
evidence, failed to file Federal and state tax returns for a substantial period of time and
has a large Federal tax debt. The evidence is sufficient to raise these potentially
disqualifying conditions.
The guideline also includes examples of conditions that could mitigate security
concerns arising from financial difficulties. Under AG ¶ 20(a), disqualifying conditions
may be mitigated where Athe 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.@
Applicant intentionally failed to file his Federal and state tax returns for about
eight years. While several incidents happened along the way, which affected his ability
to file his taxes to some extent, in general the fault was simply procrastination that
became a habit. He allegedly filed all of his back tax returns in August 2014, which is a
little more than a year before the record closed. He has virtually no track record of filing
his tax returns in a timely manner. AG ¶ 20(a) does not apply to the facts of this case.
ISCR Case No. 07-09966 at 3 (App. Bd. June 27, 2008).3
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In addition, AG ¶ 20(b) states that disqualifying conditions may be mitigated
where “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.”  Applicant’s problems do not rise to the level required to
apply this mitigating condition, especially given the eight year period when he did not file
tax returns.
I also cannot find that Applicant has “initiated a good-faith effort to repay overdue
creditors or otherwise resolve debts,” as required by AG ¶ 20(d). The situation
concerning his Federal taxes is, in a word, confusing. Beginning in 2012, when he filled
out his e-QIP, Applicant knew of the Government’s concerns about his unfiled and
unpaid Federal and state taxes. (Government Exhibit 1.) He answered Interrogatories in
April 2014 concerning the same issues, attaching some documentation. The SOR was
issued in February 2015. Yet, as of the date of the hearing in October 2015, Applicant
was unable to state with any particularity how much he owed the IRS in back taxes, or
how he intended to pay it. As stated, he believed that tax debt to be approximately
$40,000, towards which he is not making payments despite a substantial monthly
budget surplus. Accordingly, I cannot find that “there are clear indications that the
problem is being resolved or is under control,” as required by AG ¶ 20(c). 
The DOHA Appeal Board has stated, “A security clearance adjudication is not a
proceeding aimed at collecting an applicant’s personal debts. Rather, it is a proceeding
aimed at evaluating an applicant’s judgment, reliability, and trustworthiness.”  Applicant3
is asking DOHA to trust that he will fulfill his Federal income tax responsibilities. Based
on the current record that is not a supportable position. There are simply too many
unanswered questions concerning his tax situation and his judgment. The stated
mitigating conditions do not apply to the facts of this case. Paragraph 1 is found against
Applicant.
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 the relevant circumstances. 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. The administrative judge must 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
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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.      
I considered the potentially disqualifying and mitigating conditions in light of all
the relevant facts and circumstances surrounding this case. The discussion under
Guideline F, above, applies here as well. Applicant has not submitted sufficient
evidence showing his tax situation has been responsibly addressed or resolved. That is
his burden to meet and he has not done so.
Under AG ¶ 2(a)(2), I have considered the facts of Applicant’s tax history. Based
on the record, I cannot find that there have been permanent behavioral changes under
AG ¶ 2(a)(6). Accordingly, I also cannot find that there is little to no potential for
pressure, coercion, exploitation, or duress (AG ¶ 2(a)(8)); or that there is a low
likelihood of recurrence (AG ¶ 2(a)(9)). 
Overall, the record evidence leaves me with questions and doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant has not mitigated the security concerns arising from his financial
situation. Accordingly, the evidence supports denying his request for a security
clearance.
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: AGAINST APPLICANT
Subparagraph 1.a: Against Applicant
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: Against Applicant
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: Against Applicant
Subparagraph 1.f: Against Applicant
Subparagraph 1.g: For Applicant
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Conclusion
In light of all of the circumstances presented by the record in this case, it is not
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance.  Eligibility for access to classified information is denied.
WILFORD H. ROSS
Administrative Judge