1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00087 ) Applicant for Security Clearance ) Appearances For Government: Chris Morin, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ RICCIARDELLO, Carol G., Administrative Judge: Applicant mitigated the security concerns under Guideline F, financial considerations. Eligibility for a security clearance is granted. Statement of the Case On June 14, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued to Applicant a Statement of Reasons (SOR) 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; 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. Applicant answered the SOR on June 24, 2016, and requested a hearing before an administrative judge. The Government amended the SOR on August 11, 2016. Applicant answered the amended SOR on September 6, 2016. The case was assigned to me on October 5, 2016. The Defense Office of Hearings and Appeals (DOHA) issued 2 a notice of hearing on December 19, 2016. I convened the hearing as scheduled on January 25, 2017. The Government offered exhibits (GE) 1 and 2, which were admitted into evidence without objection. Applicant testified and offered Applicant Exhibits (AE) A through G, which were admitted into evidence without objection. After the hearing she provided AE H, which was admitted without objection.1 DOHA received the hearing transcript (Tr.) on February 2, 2017. Findings of Fact Applicant admitted the amended allegation in the SOR. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact.2 Applicant is 26 years old. She graduated from high school in 2008 and earned some college credits. She married in 2013 and has a one-year-old child. She has been employed by a government contractor since December 2014.3 Applicant admitted she did not timely file her 2012, 2013, and 2014 federal income tax returns.4 In 2010, Applicant was living with her parents. Her parents had Applicant’s 2011 federal income tax return prepared by the same tax professional they used. In 2012, Applicant was no longer living with her parents. The tax professional prepared Applicant’s tax return, but refused to file the return until Applicant paid her. Applicant did not have the money to pay the tax professional. She was earning between $8 and $9 an hour at the time. She credibly testified that she was unaware that she could prepare and file her own tax returns. She believed a professional tax preparer was required. This is why she did not timely file her income tax returns for 2012 through 2014.5 Subsequently, Applicant began earning more money. She contacted another tax professional and filed her 2012, 2013, and 2014 Federal income tax returns at the same time in April 2015. She retrieved transcripts from the IRS and noted that the transcripts did not report that her 2012 and 2013 returns were filed. She contacted her tax professional and was advised that because Applicant’s husband previously had his identity stolen, and they were filing jointly, the tax professional had to use a special 1 Hearing Exhibit (HE) I is the Government’s exhibit list. HE II is its discovery letter. 2 The original SOR alleged tax years 2012 through 2014. The amended SOR alleged 2012 and 2013. 3 Tr. 19-21. 4 I have not considered Applicant’s admission that she did not timely file her 2014 Federal income tax return for disqualifying purposes, but will consider it when analyzing her credibility, in mitigation and the whole person. 5 Tr. 24-31. 3 code. The tax professional incorrectly put the wrong code on the tax returns and the IRS rejected the returns. The tax professional provided a letter confirming that Applicant filed her 2012 and 2013 federal income tax returns in April 2015, and that he failed to inform Applicant that the returns were rejected by the IRS. The tax professional failed to timely resubmit the returns with the correct information. Applicant was unaware of the problem until she requested copies of her tax transcripts. Upon learning of the problem, she made an appointment at the IRS and submitted the completed returns in person. She provided copies of the date stamped returns for 2012 and 2013. Applicant does not intend on using the same tax professional in the future.6 Applicant testified that she owes taxes for 2015. When she contacted the IRS about retrieving her 2012 and 2013 transcripts, they advised her she could arrange an installment agreement. She was previously unaware of this option. She stated she called the IRS to negotiate an installment agreement, but waited on hold on the telephone for hours for a representative until she had to go retrieve her daughter from daycare. She subsequently made a payment toward the balance owed for her 2015 taxes. After the hearing, she contacted the IRS again to arrange an installment agreement for her 2015 taxes and was advised the process takes four to six weeks. Because she is due refunds from tax years 2012 and 2013, the IRS representative advised her to wait until those refunds are applied to her 2015 taxes and then she can arrange an installment agreement. The IRS agreed to waive the penalties that were originally accessed. She was granted an extension so collection notices would not be triggered.7 Applicant credibly testified that she understands the seriousness of her conduct and apologized for her actions. She is committed to ensuring her tax returns are timely filed in the future.8 Applicant provided character letters that describe her as trustworthy, responsible, reliable, efficient, valuable, organized, competent, intelligent, dedicated, mature, honest, loyal, and dependable. She has an outstanding work ethic and is a person with integrity. She is a dedicated church member and actively participates in many of the various ministries of her church.9 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 6 Tr. 31-40; AE B, C, D, F. 7 Tr. 41-51; AE G, H. 8 Tr. 51-52. 9 AE E. 4 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. 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 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 The security concern for financial considerations is set out in AG & 18: 5 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. This concern is broader than the possibility that an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handing and safeguarding classified information.10 The guideline notes several conditions that could raise security concerns. I have considered all of the disqualifying conditions under AG & 19, and the following is potentially applicable: (f) failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same. Applicant failed to timely file her 2012 and 2013 ederal income tax returns, as required. The above disqualifying condition applies. The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. The following 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; and (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. 10 See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 6 Applicant did not timely file her 2012 and 2013 Federal income tax returns because she did not have the money to pay a tax professional. In the past, her parents arranged to have her tax returns timely filed. She was unaware that she did not need a tax professional to file her returns. Her testimony was credible. She hired a tax professional to file her 2012, 2013, and 2014 Federal income tax returns. The tax professional failed to do so correctly and failed to notify Applicant when the returns were rejected. When Applicant learned of the problem, she contacted the IRS and filed the delinquent returns. She is committed to ensuring future tax returns are timely filed. It is unlikely she will have this problem again and her behavior does not cast doubt on her current reliability, trustworthiness, or good judgment. AG ¶ 20(a) applies. Applicant’s conduct was somewhat beyond her control, because she did not have sufficient money to pay a tax professional to prepare and file the returns. Due to her youth and naiveté, she was unaware that she was not required to use a tax professional. For the full application of AG ¶ 20(b), Applicant must have acted responsibly under the circumstances. She acted responsibly when she contacted a tax professional to file her delinquent returns. Later she learned that he failed to notify her when the returns were rejected because of his mistake. She subsequently had her returns prepared and hand carried the returns to the IRS. Applicant acted responsibly under the circumstances. AG ¶ 20(b) applies. She now understands her responsibilities regarding timely filing her tax returns. AG ¶ 20(c) applies, as the matters are under control. 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. I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I have incorporated my comments 7 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. Applicant is a 26 years old. She clearly was confused about the available options for timely filing her Federal income tax returns. She has rectified the problem and understands her obligations. Her youth and misunderstanding were evident. I am convinced her actions were not due to an unwillingness to abide by rules and regulations, but rather she was unaware of available alternatives for filing the returns when she did not have the financial resources to pay a tax professional. I do not have questions about her reliability, trustworthiness, and good judgment. Overall, the record evidence leaves me with no questions or doubts about Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant 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, Guideline F: FOR APPLICANT Subparagraph 1.a: 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. _____________________________ Carol G. Ricciardello Administrative Judge