DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
) ISCR Case No. 15-00408
          )
Applicant for Security Clearance )
Appearances
For Government: Rhett Petcher, Esq., Department Counsel
For Applicant: Pro se
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Decision
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CURRY, Marc E., Administrative Judge:
Applicant did not file his 2012 and 2013 federal or state income tax returns on
time, prompting a financial considerations security concern. He filed the 2012 tax
returns in July 2014 and he filed the 2013 tax returns in July 2015, paying a nominal late
penalty for 2012 and receiving refunds from both the federal government and his state’s
taxing authority for his 2013 income tax returns. Applicant has mitigated the security
clearance concern. Clearance is granted. 
Statement of the Case
On September 19, 2015, the Department of Defense Consolidated Adjudications
Facility (DOD CAF) issued a Statement of Reasons (SOR) to Applicant 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) implemented by the DOD on
September 1, 2006.
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 On October 19, 2015, Applicant answered the SOR, denying the allegations. He
initially requested a hearing, then decided to forego a hearing and have his case
decided based on the written record. On January 26, 2016, Department Counsel
prepared a File of Relevant Material (FORM) consisting of documents supporting the
government’s allegations. Applicant received the file on February 26, 2016. On April 1,
2016, Applicant filed a response, and the case was subsequently assigned to me on
April 1, 2016.
Findings of Fact
Applicant is a 50-year-old married man with two children and one stepchild. He
has been married since 2004.  A previous marriage ended in divorce in 2003. (Item 3 at
14-15) He earned a bachelor’s degree in electrical engineering in 1989, and he earned
a master’s degree in the same field in 1991. (Item 3 at 9) Currently, Applicant works as
a unit director at a defense contractor. His tasks involve program management, contract
drafting, quality control, and manufacturing. (Response at 3)
Applicant is highly respected on the job. According to his supervisor, he “always
demonstrated . . . that he respects, understands, and lives by all of the obligations and
responsibilities required to maintain his position and standing of trust within our
country.” (Response at 49) According to a government client, Applicant has good
technical insights and attention to detail. (Response at 50) 
Applicant failed to file his federal and state income tax returns on time in 2012
and 2013. He filed for extensions each year, but missed the extension deadlines. He
filed his 2012 state income tax return in June 2014, and received a $1,491 refund.
(Response at 24) He filed his 2012 federal income tax return in August 2014. He owed
no income taxes, but had to pay an $87 late fee. (Response at 5, 45) In August 2015,
he filed his federal and state tax returns for 2013. He received a $1,058 refund for his
federal income tax return, and he received a state tax refund of $2,117. (Response at
11, 26) He filed his 2014 federal and state income tax returns in November 2015. It is
unclear from the record whether this was past the extended deadline. He received a
federal income tax refund of $1,058 and a state tax refund of $25. (Response at 11, 18) 
Applicant’s income between 2012 and 2014 ranged between $218,000 per year
and $238,000 per year. In each of these years, he paid more income taxes through
withholdings than he owed. Applicant attributes his failure to file his income tax returns
on time to procrastination. 
Policies
The adjudicative guidelines list potentially disqualifying conditions and mitigating
conditions. These guidelines are not inflexible rules of law. Instead, recognizing the
complexities of human behavior, they are applied together with the factors listed in the
adjudicative process. According to AG ¶ 2(c), the entire process is a conscientious
scrutiny of a number of variables known as the “whole-person concept.” The
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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.” 
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 for obtaining a favorable security
decision.
Under the whole-person concept, the administrative judge should consider the
nine adjudicative process factors listed at AG ¶ 2(a). They are as follows: 
(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.
Analysis
Guideline F, Financial Considerations
Under this guideline, “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.”
(AG ¶ 18) Applicant filed his federal and state income taxes returns for tax years 2012
and 2013 late, missing the extended deadline during both years. When he ultimately
filed them, his tax transcripts reveal that he had paid more in 2013 through withholdings
than he owed, and that the only amount that he owed for 2012 was a nominal penalty of
$87. Under these circumstances, AG ¶ 19(a), “inability or unwillingness to satisfy debts,”
and AG ¶ 19(c), “a history of not meeting financial obligations,” do not apply.
Applicant’s failure to file his income taxes is not without security significance,
however. Filing one’s income taxes is a legal requirement and a civic responsibility.
Under these circumstances, AG ¶ 19(g), “failure to file annual federal, state, or local
income tax returns, as required . . ,” applies.
3
 
Applicant’s late tax filings revealed that in the years in question he paid all of his
income taxes or paid more income taxes than he owed. Because the record does not
establish that he had any financial problems, none of the mitigating conditions is
relevant. Instead, Applicant’s failure to file his income tax returns on time must be
evaluated through the prism of the whole-person concept. The misconduct was serious.
However, the evidence of rehabilitation is significant as he subsequently filed the
returns and paid the nominal penalty for tax year 2012. This evidence, together with his
strong character references, outweigh the negative security inference generated by his
failure to file his income tax returns on time. I conclude Applicant has mitigated the
security concern.  
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.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 eligibility for a security
clearance. Eligibility for access to classified information is granted.
MARC E. CURRY
Administrative Judge
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