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   DEPARTMENT OF DEFENSE 
       DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
    )  ISCR Case No. 15-07140 
  ) 
Applicant for Security Clearance   ) 
 
 
Appearances 
 
For Government: Gina Marine, Esq., Department Counsel 
For Applicant: Jason R. Perry, Esq. 
 
 
___________ 
 
Decision 
___________ 
 
TUIDER, Robert, Administrative Judge: 
 
 Applicant mitigated security concerns pertaining to Guideline F (financial 
consideration). Clearance is granted.      
  
Statement of the Case 
  
On March 24, 2015, Applicant completed and signed a Questionnaire for National 
Security Positions (SF-86). On March 15, 2016, the Department of Defense (DOD) 
Consolidated Adjudications Facility (CAF) issued a Statement of Reasons (SOR) to 
Applicant under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information 
within Industry, February 20, 1960; DOD Directive 5220.6, Defense Industrial Personnel 
Security Clearance Review Program (Directive), January 2, 1992; and the Adjudicative 
Guidelines for Determining Eligibility for Access to Classified Information, which became 
effective on September 1, 2006 (Sept. 1, 2006 AGs).  
 
The SOR detailed reasons why the DOD CAF did not find under the Directive that 
it is clearly consistent with the interests of national security to grant or continue a security 
clearance for Applicant, and recommended referral to an administrative judge to 
determine whether a clearance should be granted, continued, denied, or revoked. 
Specifically, the SOR set forth security concerns arising under the financial 
considerations guideline. 
 
 
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On April 12, 2016, Applicant responded to the SOR and requested a hearing. On 
August 1, 2016, Department Counsel was prepared to proceed. On August 4, 2016, the 
Defense Office of Hearings and Appeals (DOHA) assigned the case to me. On September 
28, 2016, DOHA issued a notice of the hearing, setting the hearing on October 25, 2016. 
The hearing was held as scheduled.  
 
At the hearing, Department Counsel offered Government Exhibits (GE) 1 through 
16, which were received into evidence without objection. Applicant testified and offered 
Applicant Exhibits (AE) A through H, which were received without objection. On 
November 2, 2016, DOHA received the hearing transcript (Tr.). I held the record open 
until December 30, 2016, to permit Applicant to submit additional evidence. Applicant 
timely submitted AE I through BB, which were received without objection.  
 
While this case was pending a decision, the Director of National Intelligence issued 
Security Executive Agent Directive 4, establishing National Security Adjudicative 
Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to 
Hold a Sensitive Position (AGs) which he made applicable to all covered individuals who 
require initial or continued eligibility for access to classified information or eligibility to hold 
a sensitive position. The new AGs supersede the Sept. 1, 2006 AGs and are effective “for 
all covered individuals” on or after June 8, 2017. Accordingly, I have evaluated Applicant’s 
security clearance eligibility under the new AGs, as required.1 
 
Findings of Fact2 
 
 In Applicant’s SOR response, she denied all of the allegations (SOR ¶¶ 1.a -1.e), 
with explanations. Additional findings of fact follow. (Tr. 78-81) 
 
Background Information 
 
Applicant is a 57-year-old information technology office service delivery consultant 
employed by a defense contractor since August 2009. She seeks to retain her secret 
security clearance, which is a requirement of her continued employment. Applicant has 
successfully held a clearance since 2001. (Tr. 13-15) 
 
Applicant graduated from high school in June 1978. She has been working on her 
bachelor’s degree since 2014 and has earned approximately 35 to 38 credit hours. 
Applicant was married from 1978 to 1995, and that marriage ended by divorce. She 
remarried in 1996. Her husband is employed full time as a service technician. Applicant 
has two adult children from her first marriage and one adult stepchild from her second 
marriage. She provides approximately $1,500 in monthly support to her mother. Applicant 
did not serve in the U.S. armed forces. (Tr. 15-21, 38) 
 
                                            
1 The new AGs are available at http://ogc.osd.mil/doha/SEAD4_20170608.pdf.  
 
2 Some details were excluded to protect Applicant’s right to privacy. Specific information is available 
in the cited exhibits. 
 
 
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Financial Considerations 
 
The SOR alleged that Applicant failed to file her Federal income tax returns for tax 
years 2004 through 2012, that she has a December 2012 $92,800 federal tax lien; an 
April 2011 $1,430 recreational vehicle (RV) resort judgment; a $79 medical collection 
account; and a $129 medical collection account. (SOR ¶¶ 1.a – 1.e) These allegations 
are established through the Government’s exhibits. (GE 1 - 16) 
 
Applicant first discovered that her tax returns had not been filed when she pulled 
her credit report before completing her March 2015 SF-86. Per the agreement between 
Applicant and her second husband, he was responsible for filing their tax returns. When 
Applicant queried her husband why their taxes had not been filed, he responded that 
since taxes were not owed, they were not required to file a tax return. Applicant’s had no 
reason to believe that her husband’s assessment of their tax filing requirements was 
incorrect. Her husband submitted a notarized statement corroborating her testimony. 
Applicant added during that timeframe, she never received any written notice from the 
IRS that their taxes had not been filed. (SOR answer; Tr. 22-26, 29-30, 52-58, 60-64, 83; 
AE E) 
 
Furthermore, Applicant was not aware that a December 2012 $92,800 IRS tax lien 
had been filed against her until she completed her March 2015 SF-86. To complicate 
matters even more, the IRS issued the lien using her former married name, and sent the 
lien to her former husband’s address. Applicant’s former husband never advised her of 
the lien. At the time of her hearing, Applicant estimated that the amount actually owed to 
the IRS was “less than $10,000.” In her testimony, Applicant was unsure what tax years 
gave rise to the lien, stating that the lien could have arisen while married to her previous 
husband. (SOR answer; Tr. 26-27, 30-33, 48-52, 58-60, 64, 67) 
 
In March 2014, Applicant retained a tax preparer, who filed all required Federal tax 
returns. Her post-hearing evidence indicated that her husband’s previous assessment of 
their tax liability was incorrect and they actually owed taxes to the IRS for most of the 
years in question. Her tax consultant also addressed the lien issue and back taxes and 
successfully finalized a settlement with the IRS in December 2016. Beginning in February 
2017 after the record closed, Applicant began paying the IRS $1,645 monthly payments 
by direct debit. Her tax consultant provided documentation that all of Applicant’s required 
returns have been filed and that she is in an approved IRS payment plan. To ensure that 
they have no tax issues, Applicant and her husband will use a tax preparer to file all future 
Federal tax returns. SOR ¶ 1.A RESOLVED. SOR ¶ 1.B BEING RESOLVED. (SOR 
answer; Tr. 27-29, 47-48, 52-57, 65-67, 76-78; Counsel December 30, 2016 e-mail; AE 
F, AE G, AE I-AE Q, AE Z, AE AA) 
 
The April 2011 $1,430 RV resort judgment arose from a property owned by 
Applicant’s mother and stepfather. Her stepfather added Applicant to the deed to allow 
her access to the facility. Applicant believed that being added to the deed did not result 
in incurring any financial liability on her part. After adding Applicant to the deed, her 
stepfather became ill and stopped paying yearly dues to the RV facility. When her 
stepfather passed away in February 2010, the RV facility sued Applicant for back dues 
 
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and obtained a default judgment against her. To resolve this, Applicant signed a quitclaim 
deed removing both her and mother from having any interest in the RV facility. Applicant 
also paid the judgment in full, and on October 13, 2016, the creditor filed a notice of 
satisfaction in the county courthouse. SOR ¶ 1.C. RESOLVED. (SOR answer; Tr. 33-36, 
46-47; AE C) 
 
The $79 and $129 medical collection accounts went into collections because the 
first bill had not been forwarded and the second bill had been miscoded when billed. 
Applicant became aware that these debts were outstanding because of these 
proceedings and paid both accounts in full on April 7, 2016. SOR ¶¶1.D AND 1.E 
RESOLVED. (SOR answer; Tr. 36-38, 41-46; AE B, AE D) 
 
Department Counsel thoroughly questioned Applicant on the tax issues. Applicant 
never wavered in her responses nor did she give me any indication that she was being 
untruthful. Having had a chance to observe Applicant’s demeanor and listen to her 
testimony, I found her to be credible, albeit mistaken, on the requirement to file federal 
income taxes.  
 
Applicant and her husband divide their household finance responsibilities and 
maintain a budget. Applicant is also taking financial counseling courses through her 
employer. Applicant’s recent credit reports, from August 2016 and October 2016, are 
favorable. Their budget reflects that she and her husband are leading a measured lifestyle 
and always have a net monthly remainder. (Tr. 68-75; AE A, AE B, AE BB) 
 
Character Evidence 
 
 Applicant submitted performance evaluations covering the years 2011 to 2016 as 
well as two work-related reference letters. Her superiors view her as a valued employee. 
One of her references described her as a “highly-disciplined and ethical person . . . and 
“has gained a reputation for being a stickler for the rules.” The other reference described 
her as having “demonstrated reliability, accountability, leadership and commitment to 
always deliver excellent service to our clients.” (AE H, AE R – AE Y) 
 
Policies 
 
The U.S. Supreme Court has recognized the substantial discretion of the Executive 
Branch in regulating access to information pertaining to national security emphasizing, 
“no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 
518, 528 (1988). As Commander in Chief, the President has the authority to control 
access to information bearing on national security and to determine whether an individual 
is sufficiently trustworthy to have access to such information.” Id. at 527. The President 
has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for 
access to classified information “only upon a finding that it is clearly consistent with the 
national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within 
Industry § 2 (Feb. 20, 1960), as amended.  
 
 
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Eligibility for a security clearance is predicated upon the applicant meeting the 
criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules 
of law. Instead, recognizing the complexities of human behavior, these guidelines are 
applied in conjunction with an evaluation of the whole person. An administrative judge’s 
overarching adjudicative goal is a fair, impartial, and commonsense decision. An 
administrative judge must consider all available, reliable information about the person, 
past and present, favorable and unfavorable.  
 
The Government reposes a high degree of trust and confidence in persons with 
access to classified information. This relationship transcends normal duty hours and 
endures throughout off-duty hours. 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 
about potential, rather than actual, risk of compromise of classified information. Clearance 
decisions must be “in terms of the national interest and shall in no sense be a 
determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. 
Thus, nothing in this decision should be construed to suggest that it is based, in whole or 
in part, on any express or implied determination about applicant’s allegiance, loyalty, or 
patriotism. It is merely an indication the applicant has not met the strict guidelines the 
President and the Secretary of Defense have established for issuing a clearance. 
  
 Initially, the Government must establish, by substantial evidence, conditions in the 
personal or professional history of the applicant that may disqualify the applicant from 
being eligible for access to classified information. The Government has the burden of 
establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. 
“Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. 
Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines 
presume a nexus or rational connection between proven conduct under any of the criteria 
listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 
(App. Bd. May 2, 1996). 
 
Once the Government establishes a disqualifying condition by substantial 
evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the 
facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it 
is clearly consistent with the national interest to grant or continue his security clearance.” 
ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a 
mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 
(App. Bd. Sep. 22, 2005). “[S]ecurity clearance determinations should err, if they must, 
on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).  
 
Analysis 
 
Financial Considerations 
 
AG ¶ 18 articulates the security concern for financial problems: 
 
 
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Failure 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 or sensitive information. . . . An individual who is financially 
overextended is at greater risk of having to engage in illegal or otherwise 
questionable acts to generate funds. . . . 
 
The Appeal Board explained the scope and rationale for the financial 
considerations security concern in ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012) 
(citation omitted) as follows: 
 
This concern is broader than the possibility that an applicant might 
knowingly compromise classified information in order to raise money in 
satisfaction of his or her debts. Rather, it requires a Judge to examine the 
totality of an applicant’s financial history and circumstances. The Judge 
must consider pertinent evidence regarding the applicant’s self-control, 
judgment, and other qualities essential to protecting the national secrets as 
well as the vulnerabilities inherent in the circumstances. The Directive 
presumes a nexus between proven conduct under any of the Guidelines 
and an applicant’s security eligibility.  
 
  AG ¶ 19 includes four disqualifying conditions that could raise a security concern 
and may be disqualifying in this case: “(a) inability to satisfy debts;” “(b) unwillingness to 
satisfy debts regardless of the inability to do so;” “(c) a history of not meeting financial 
obligations;” and “(f) failure to file . . . annual Federal . . . income tax returns or failure to 
pay annual Federal . . . income tax as required.” The record establishes these 
disqualifying conditions, requiring additional inquiry about the possible applicability of 
mitigating conditions. 
 
Applicant did not timely file her Federal income tax returns for tax years 2004 to 
2012. A willful failure to timely make (means complete and file with the IRS) a federal 
income tax return is a misdemeanor-level federal criminal offense.3 For purposes of this 
decision, I am not weighing Applicant’s failure to file timely her Federal income tax returns 
against her as a federal crime, since her actions were not alleged under the criminal 
conduct AG. Based on this and other information in the SOR, the record established the 
                                            
3 Title 26 U.S.C, § 7203, willful failure to file return, supply information, or pay tax, reads:  
 
Any person . . . required by this title or by regulations made under authority thereof to make 
a return, keep any records, or supply any information, who willfully fails to . . .  make such 
return, keep such records, or supply such information, at the time or times required by law 
or regulations, shall, in addition to other penalties provided by law, be guilty of a 
misdemeanor . . . .  
 
A willful failure to make return, keep records, or supply information when required, is a misdemeanor 
without regard to existence of any tax liability. Spies v. United States, 317 U.S. 492 (1943); United States 
v. Walker, 479 F.2d 407 (9th Cir. 1973); United States v. McCabe, 416 F.2d 957 (7th Cir. 1969); O’Brien v. 
United States, 51 F.2d 193 (7th Cir. 1931). 
 
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disqualifying conditions in AG ¶¶ 19(a), 19(b), 19(c), and 19(f) requiring additional inquiry 
about the possible applicability of mitigating conditions. 
 
AG ¶ 20 lists seven potential mitigating conditions: 
 
(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, a death, divorce or separation, clear 
victimization by predatory lending practices, or identity theft), and the 
individual acted responsibly under the circumstances; 
 
(c) the individual has received or is receiving financial counseling for the 
problem from a legitimate and credible source, such as a non-profit credit 
counseling service, and there are clear indications that the problem is being 
resolved or is under control; 
 
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts; 
 
(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; 
 
(f) the affluence resulted from a legal source of income; and 
 
(g) the individual has made arrangements with the appropriate tax authority 
to file or pay the amount owed and is in compliance with those 
arrangements. 
 
Applicant has resolved or is resolving her SOR debts. AG ¶ 20(c) is applicable to 
all of the SOR allegations and ¶ 20(d) is applicable to the remaining SOR allegations 
except to SOR ¶ 1.a (failure to file Federal income tax returns). 
 
The remainder of this analysis will primarily focus on Applicant’s failure to timely 
file her Federal income tax returns from 2004 to 2012, the most significant security 
concern alleged. Under these facts, application of AG ¶ 20(a) initially appears limited 
because the multiple income tax returns at issue were for recent years and her other 
debts have been ongoing until recently. Now apprised of the importance of filing tax 
returns, even when a refund is expected, Applicant is aware of her obligations in that 
regard. She promised to seek professional guidance in the future and to file her Federal 
tax returns on time, as required. Consequently, I find AG ¶ 20(a) applies. Moreover, 
Applicant is genuinely contrite over her laxity and oversight. She has taken the 
 
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appropriate corrective action. Evidence of her Federal tax return filings was introduced. 
The situation is now under control and AG ¶ 20(g) applies.  
 
 Applicant believed she was due refunds for all of those tax years. The DOHA 
Appeal Board has commented: 
 
Failure to file tax returns suggests that an applicant has a problem with 
complying with well-established governmental rules and systems. Voluntary 
compliance with such rules and systems is essential for protecting classified 
information. ISCR Case No. 01-05340 at 3 (App. Bd. Dec. 20, 2002). As we 
have noted in the past, a clearance adjudication is not directed at collecting 
debts. See, e.g., ISCR Case No. 07-08049 at 5 (App. Bd. Jul. 22, 2008). By 
the same token, neither is it directed toward inducing an applicant to file tax 
returns. Rather, it is a proceeding aimed at evaluating an applicant’s 
judgment and reliability. Id. A person who fails repeatedly to fulfill his or her 
legal obligations does not demonstrate the high degree of good judgment 
and reliability required of those granted access to classified information. 
See, e.g., ISCR Case No. 14-01894 at 5 (App. Bd. Aug. 18, 2015). See 
Cafeteria & Restaurant Workers Union Local 473 v. McElroy, 284 F.2d 173, 
183 (D.C. Cir. 1960), aff’d, 367 U.S. 886 (1961). 
 
ISCR Case No. 14-04437 at 3 (App. Bd. Apr. 15, 2016) (emphasis in original). See ISCR 
Case No. 14-05476 at 5 (App. Bd. Mar. 25, 2016) (citing ISCR Case No. 01-05340 at 3 
(App. Bd. Dec. 20, 2002)); ISCR Case No. 14-01894 at 4-5 (App. Bd. Aug. 18, 2015). The 
Appeal Board clarified that even in instances where an “[a]pplicant has purportedly 
corrected [the applicant’s] federal tax problem, and the fact that [applicant] is now 
motivated to prevent such problems in the future, does not preclude careful consideration 
of [a]pplicant’s security worthiness in light of [applicant’s] longstanding prior behavior 
evidencing irresponsibility” including a failure to timely file federal income tax returns. See 
ISCR Case No. 15-01031 at 3 and note 3 (App. Bd. Jun. 15, 2016)  
 
In ISCR Case No. 15-01031 at 2 (App. Bd. Jun. 15, 2016), the Appeal Board 
reversed the grant of a security clearance, and noted the following primary relevant 
disqualifying facts:  
 
Applicant filed his 2011 Federal income tax return in December 2013 and 
received a $2,074 tax refund. He filed his 2012 Federal tax return in 
September 2014 and his 2013 Federal tax return in October 2015. He 
received Federal tax refunds of $3,664 for 2012 and $1,013 for 2013. 
 
Notwithstanding the lack of any tax debt owed when the tax returns were filed in ISCR 
Case No. 15-01031 (App. Bd. June 15, 2016), the Appeal Board provided the following 
principal rationale for reversing the grant of a security clearance, “By failing to file his 
2011, 2012, and 2013 Federal income tax returns in a timely manner, Applicant did not 
demonstrate the high degree of good judgment and reliability required of persons granted 
access to classified information.” ISCR Case No. 15-01031 at 4 (App. Bd. Jun. 15, 2016) 
(citations omitted).  
 
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On June 8, 2017, the new AGs went into effect.  In 2014, shortly after learning of 
the requirement to file tax returns, regardless of whether she was owed a refund, 
Applicant “made arrangements with the appropriate tax authority to file [all required 
federal income tax returns] . . . and is in compliance with those arrangements.” AG ¶ 
20(g). Based on consideration of her credibility, contrition, and new understanding of her 
responsibilities, there is sufficient assurance that her financial problems are resolved, are 
under control, and will not recur in the future. Under all the circumstances, financial 
considerations security concerns are mitigated. 
 
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 circumstances. The administrative judge should consider the nine 
adjudicative process factors listed at AG ¶ 2(d):  
 
(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), “[t]he ultimate determination” of whether to grant a security 
clearance “must be an overall commonsense judgment based upon careful consideration” 
of the guidelines and the whole-person concept. My comments under Guideline F are 
incorporated in my whole-person analysis. Some of the factors in AG ¶ 2(d) were 
addressed under that guideline but some warrant additional comment. 
 
Applicant is a 57-year-old information technology office service delivery consultant 
employed by a defense contractor since August 2009. She has worked the majority of her 
adult working life in the defense industry and has successfully held a security clearance 
since 2001. Her employer values her as an employee and supports her for a security 
clearance.  
 
Once Applicant became aware that she was required to file Federal income tax 
returns, regardless of whether she was owed a refund, she took prompt corrective action. 
She is current on the filing of all of her income tax returns. I agree with Applicant’s 
admission of negligence. Applicant’s error in judgment is less serious because it was not 
motivated by a desire to withhold funds due to the IRS or having a laissez faire attitude. 
This process had a sobering effect on Applicant and I am confident that she will endeavor 
to timely file and her taxes in the future. 
  
I have carefully applied the law, as set forth in Egan, Exec. Or. 10865, and the new 
AGs, to the facts and circumstances in the context of the whole person. I conclude that 
 
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financial consideration security concerns are mitigated. It is clearly consistent with the 
interests of national security to grant Applicant security clearance eligibility. 
 
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.e:   For Applicant 
 
Conclusion 
 
In light of all of the circumstances in this case, it is clearly consistent with the 
interests of national security to grant Applicant’s eligibility for a security clearance. 
Eligibility for access to classified information is granted. 
 
 
_________________________ 
ROBERT TUIDER 
Administrative Judge