1 
      DEPARTMENT OF DEFENSE 
     DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of:  ) 
 ) 
REDACTED  ) ISCR Case No. 18-01103 
 ) 
Applicant for Security Clearance  ) 
Appearances 
For Government: Nicholas T. Temple, Esq., Department Counsel 
For Applicant: Pro se 
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Decision 
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MATCHINSKI, Elizabeth M., Administrative Judge: 
Applicant did not timely file her Federal and state income tax returns for tax years 
2013 and 2014. Her Federal income tax return for tax year 2014 was filed in June 2018, 
but her ongoing failure to file her delinquent returns for 2013 and her state income tax 
return for 2014 casts doubt about her judgment and reliability. Clearance is denied. 
Statement of the Case 
On May 4, 2018, the Department of Defense Consolidated Adjudications Facility 
(DOD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing a security 
concern under Guideline F, financial considerations. The SOR explained why the DOD 
CAF was unable to find it clearly consistent with the national interest to grant or continue 
security clearance eligibility for her. The DOD CAF took the action under Executive Order 
(EO) 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 National Security Adjudicative 
Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to 
Hold a Sensitive Position (AG) effective within the DOD on June 8, 2017. 
11/19/2018
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Applicant responded to the SOR on May 29, 2018, and requested a hearing before 
an administrative judge from the Defense Office of Hearings and Appeals (DOHA). On July 
18, 2018, the case was assigned to me to conduct a hearing to determine whether it is 
clearly consistent with the national interest to grant or continue a security clearance for 
Applicant. On August 6, 2018, I scheduled a hearing for September 17, 2018. 
 
At the hearing, three Government exhibits (GEs 1-3) were admitted. A June 25, 
2018 letter forwarding the proposed GEs to Applicant was marked as a hearing exhibit (HE 
1) for the record but not admitted in evidence. Seven Applicant exhibits (AEs A-G) were 
admitted in evidence. Applicant testified, as reflected in a transcript (Tr.) received on 
September 26, 2018. 
 
Findings of Fact 
 
 The SOR alleges under Guideline F that Applicant failed to file, as required, her 
Federal and state income tax returns for tax years 2013 and 2014 (SOR ¶ 1.a). Applicant 
admitted the allegation, but indicated that she had completed her tax returns for tax year 
2014 as of May 29, 2018. After considering the pleadings, exhibits, and transcript, I make 
the following findings of fact. 
 
Applicant is a 65-year-old widow with a 29-year-old son, who has had mental-health 
issues since he was a young child. Her son lives with her, and he has Social Security 
disability income. Applicant has a bachelor’s degree awarded in June 1982. She spent 
most of her career in the commercial sector. In June 2015, she lost her employment of 33 
years when she was laid off during a reduction-in-force. She was unemployed until August 
2016, when she began working in the defense industry as a technical content manager for 
her current employer. (GEs 1, 3; Tr. 47, 50-51.) 
 
Applicant did not file her Federal and state income tax returns when they were due 
for tax years 2013 and 2014. She filed for an extension to October 2014 to file her income 
tax returns for tax year 2013. Shortly before the deadline, her son was hospitalized for six 
weeks from October 2014 to November 2014. Insurance claims show that the institutional 
provider filed medical claims with Applicant’s then insurer for $18,084 for her son on 
October 14, 2014, and for $18,084 on November 1, 2014. Applicant had medical issues of 
her own from January 2014 through May 2015. (AE D.) She did not file her tax returns for 
2013, but paid the Internal Revenue Service (IRS) an estimated tax liability of $462. When 
her Federal and state income tax returns for 2014 were due in 2015, she attempted to file 
for an extension using tax software but was unsuccessful because she had not filed her 
income tax returns for 2013. She made a Federal tax payment of $400 for tax year 2014 at 
the tax deadline without submitting her tax return. (GE 2; AE E; Tr. 40-42.)  
 
On July 28, 2016, Applicant completed and certified to the accuracy of a 
Questionnaire for National Security Positions (SF 86) for a DOD security clearance needed 
for access to military bases without an escort. (Tr. 45.) In response to financial record 
inquiries concerning whether she had failed to file or pay any Federal, state, or other taxes, 
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Applicant indicated that she had failed to file state income taxes for 2013, but that she had 
satisfied a tax assessment of $196 in May 2016. (GE 1.)  
 
On September 26, 2017, Applicant was interviewed by an authorized investigator for 
the Office of Personnel Management (OPM). She volunteered that she prepares and files 
her income tax returns, and that she failed to file her Federal and state income tax returns 
for tax year 2013. She asserted that she paid a $500 late filing fee, but had not yet filed her 
returns for 2013. She denied any intention to evade taxes and attributed her failure to file to 
procrastination; to having to locate some paperwork needed for her tax returns for tax year 
2013; and to feeling overwhelmed at times about filing her tax returns. Applicant stated that 
she had filed her returns for subsequent tax years. She explained that she was considering 
hiring a professional accountant to file her tax returns for 2013 and all income tax returns 
due in the future. (GE 3.) She did not recall at the time that she had also not filed her 
income tax returns for tax year 2014. (Tr. 40.) 
 
On October 25, 2017, Applicant was re-interviewed by telephone. She admitted she 
had not yet filed her delinquent Federal and state income tax returns for tax years 2013. 
She clarified that she paid fees of $500 to the IRS and $196 to the state for not filing her 
returns for tax year 2013. (GE 3.) 
 
In response to a January 23, 2018, request from the DOD CAF, Applicant provided 
on March 23, 2018, her IRS tax account transcripts for tax years 2013 through 2016. The 
IRS account transcripts showed that she had paid the IRS $426 in April 2014 for tax year 
2013 and $400 in April 2015 for tax year 2014, with no returns filed for those tax years. 
She filed her Federal tax return for tax year 2015 on time and was entitled to a $170 refund 
on adjusted gross income of $69,447. She submitted her Federal income tax return for tax 
year 2016 within the extended deadline and was issued a Federal tax refund of $2,387 on 
adjusted gross income of $36,372. As of May 23, 2018, state tax records showed that she 
paid $196 in May 2016 for tax year 2013, and $200 on April 15, 2015, for tax year 2014. 
Tax returns had not been received by the state for tax year 2013 or 2014. She filed her 
state income tax returns on time for tax year 2015 and 2016. She paid $146 for tax year 
2015 and was credited $1,216 for tax year 2016. (GE 2.) 
 
 Applicant filed her Federal income tax return for tax year 2014 on June 1, 2018, 
using tax software. She was assessed penalties for late filing and late payment. She paid 
almost $277 on August 21, 2018, in full resolution of her Federal tax delinquency for tax 
year 2014. (AE E; Tr. 42-43, 52.) As of her hearing in September 2018, she had completed 
her state income tax return for tax year 2014 using tax software, but she had not submitted 
it. She expected a state tax refund of $500 for tax year 2014. (Tr. 52.) 
 
 Applicant had not filed her Federal or state income tax returns for tax year 2013 as 
of her September 17, 2018 hearing. (Tr. 51-52.) It is too late to file online for tax year 2013 
so she has to obtain the paper forms to file the returns. (Tr. 43, 54.) She believes that she 
has a “mental block against [filing] taxes.” She consulted psychotherapists and behavioral 
therapists “probably before 2014 and 2015” about her anxiety in that regard. (Tr. 46, 53-
54.) She also has “trouble with the paperwork and getting all the records together because 
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[she is] a little bit disorganized, especially with paperwork, and [she tends] to put things 
off.” (Tr. 47.) She finds tax preparation confusing but has not sought professional 
assistance because gathering the paperwork is her responsibility, and she has difficulty 
doing it. (Tr. 56-57.) 
 
 Applicant had not filed her Federal and state income tax returns for tax year 2017 as 
of September 2018, but she had an extension to file to mid-October 2018. (Tr. 57.) When 
asked about her intention regarding filing her tax returns on time in the future, she 
responded: 
 
Well, I can’t give you a big guarantee, but I will try because this is kind of a 
big mess. And I’m not sure if I will be working next year on April 15th, but I’ll 
have plenty of time to get the paper—get the things together, get all the 
papers together. I’ve had some medical issues, so that’s kind of, you know, I 
come home and I just go to bed. But, you know, I mean, basically it’s my 
responsibility. It’s my—you know, I’m not saying that those things are the 
reasons why I haven’t done it, but it is definitely my big—my big sore spot. 
And it doesn’t really make sense, because I think that I would have had more 
money in refunds if I had filed my taxes on time and, you know, found the 
paperwork to do the insurance correctly and, you know, the medical 
deductions and all that stuff. (Tr. 64-65.) 
 
 Applicant’s annual gross income is approximately $85,000. (Tr. 58.) She has an 
investment portfolio with a value exceeding $500,000 as of late April 2018. (AE A.) She has 
a mortgage on her home that she repays at $2,248 per month. As of early June 2018, the 
principal balance of her mortgage loan was $203,565. She has more than $400,000 in 
equity in her home. (AE B.) 
 
A military officer familiar with Applicant’s work performance attested that her 
attention to detail and commitment to her duties is invaluable. She has been an “overall 
contributor” to the organization’s success. He has “utmost confidence” in her dedication 
and her abilities to execute her duties, and he considers her to be of “great moral 
character.” In his opinion, Applicant has demonstrated that she is worthy of being trusted 
with the security clearance needed to perform her work more effectively. (AE G.) 
 
A co-worker described Applicant as “efficient, detail-oriented, and extremely 
competent.” Applicant has been extremely responsible and a leader when it comes to 
meeting project schedules with quality. She has demonstrated an understanding of 
complex technical content and high interpersonal skills. This co-worker highly recommends 
Applicant as a valuable asset. (AE F.) 
 
Policies 
 
The U.S. Supreme Court has recognized the substantial discretion the Executive 
Branch has in regulating access to information pertaining to national security,  emphasizing 
that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 
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U.S. 518, 528 (1988). 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 
disqualifying conditions and mitigating conditions, which are required to 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 overall adjudicative goal is a fair, impartial, and 
commonsense decision. According to AG ¶ 2(a), 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 national security 
eligibility will be resolved in favor of the 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 
that 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. Section 7 of 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 
 
 The security concerns about financial considerations are articulated in AG ¶ 18: 
 
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. Financial distress can also be caused or exacerbated 
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by, and thus can be a possible indicator of, other issues of personnel security 
concern such as excessive gambling, mental health conditions, substance 
misuse, or alcohol abuse or dependence. 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. 
 
Applicant did not timely file her Federal and state income tax returns for tax years 
2013 and 2014. She did not intend to evade any taxes and paid what she estimated she 
owed when the tax returns were due. Even so, Guideline F security concerns are 
established when an individual fails to comply with her tax filing obligations whether or not 
any taxes are owed. Disqualifying condition AG ¶ 19(f), “failure to file or fraudulently filing 
annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or 
local income tax as required,” applies. 
 
Applicant has the burden of establishing that matters in mitigation apply. Regarding 
possible mitigation under the AGs, one or more of the following conditions under AG ¶ 20 
may apply: 
 
(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 person has received or is receiving 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; 
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(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts; 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’s Federal and state income tax returns for 2013 were due in October 2014 
because she had timely requested an extension of the filing deadline. Her Federal and 
state income tax returns for 2014 were due in April 2015 because she did not obtain the 
six-month automatic extension of the filing deadline.1 Her initial noncompliance was not 
recent, but she had not filed any of her delinquent tax returns by the issuance of the SOR 
on May 4, 2018. As of her September 2018 hearing, she had not filed her Federal and 
state income tax returns for tax year 2013 or her state income tax return for tax year 2014. 
Her failure to comply with her tax-filing obligation is an ongoing course of conduct that is 
not mitigated under AG ¶ 20(a). 
 
Applicant has a case for partial mitigation under AG ¶ 20(b) in that her son had 
serious mental-health issues that led to his hospitalization shortly before her income tax 
returns were due for tax year 2013. Applicant submitted some medical insurance claims 
information (AE D) for herself and her disabled son from January 2014 through May 2015, 
which could explain some delay in filing her income tax returns for tax year 2014 as well. 
However, AG ¶ 20(b) requires that an individual act responsibly once the crisis has passed, 
and Applicant has not provided sufficient evidence of unforeseen circumstances or 
situations outside of her control that could justify the inordinate delay in addressing her 
delinquent tax returns for 2013 and 2014. She attributed her difficulty in filing her tax 
returns to psychological issues (“mental block” and anxiety) for which she sought treatment 
before 2015, but she managed to file her tax returns for 2015 and 2016 on time. She was 
unemployed from June 2015 until August 2016 and yet did not gather the paperwork 
needed and file all of her delinquent tax returns. AG ¶ 20(b) does not fully apply. 
 
AGs ¶¶ 20(c), 20(d), and 20(g) have some applicability because she filed her 
Federal income tax return for tax year 2014 in June 2018, after she received the SOR. She 
had her state income tax return for 2014 ready for electronic filing as of her September 
2018 security clearance hearing, but inexplicably had not submitted her return. 
 
Applicant is credited with filing her income tax returns for tax years 2015 and 2016 
on time. This shows some ability to comply with her tax-filing obligations, notwithstanding 
her reported anxiety about tax filing and difficulties in gathering her paperwork. Even where 
tax problems have been corrected and an applicant is motivated to prevent such problems 
in the future, the administrative judge is not precluded from considering an applicant’s 
trustworthiness in light of longstanding prior behavior evidencing irresponsibility. See e.g., 
                                                 
1 The state allows for an automatic six-month extension to file the state income tax return provided Applicant 
paid at least 80% of the total amount of taxes due on or before the due date. However, the taxpayer is 
required to apply for the extension for it to be granted. 
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ISCR Case No. 14-01894 at 5 (App. Bd. Aug. 2015). The Appeal Board has long held that 
the failure to file tax returns suggests a problem with complying with well-established 
government rules and systems. See e.g., ISCR Case No. 14-04437 (App. Bd. Apr. 15, 
2016). Moreover, the Appeal Board recently reaffirmed that the timing of corrective action 
is an appropriate factor to consider in applying AG ¶ 20(g). See e.g., ISCR Case No. 17-
01382 at 4 (App. Bd. May 16, 2018) (citing ISCR Case No. 17-01807 at 3-4 (App. Bd. Mar. 
7, 2018)). In reversing favorable clearance grants to applicants with tax issues by DOHA 
judges in ISCR Case No. 17-01382 (App. Bd. May 16, 2018) and ISCR Case No. 16-01211 
(App. Bd. May 30, 2018), the Appeal Board noted that applicants who only begin to 
address their delinquent tax returns after having been placed on notice that their clearance 
might be in jeopardy may not comply with laws, rules, and regulations when their 
immediate interests are not imperiled. 
 
Applicant was placed on notice as of her July 2016 SF 86 that failure to file tax 
returns when required by law was an issue for the DOD in granting security clearance 
eligibility. During her September 2017 interview and on receipt of January 2018 
interrogatories from the DOD CAF, Applicant was reminded that her tax matters were of 
concern. As of her September 2018 hearing, she had not filed three of the four delinquent 
tax returns. While there is nothing in the Directive that requires an individual to resolve all 
of the SOR concerns before she can be granted a security clearance, doubt persists about 
whether she can be counted on to comply with her tax filing obligations in the future. Her 
testimony that she “will try because this is kind of a big mess” does not inspire confidence 
in her ability or willingness to attend to this important civic and legal responsibility. The 
financial considerations security concerns are not fully mitigated. 
 
Whole-Person Concept 
 
In assessing the whole person, the administrative judge must consider the totality of 
an applicant’s conduct and all relevant circumstances in light of the nine adjudicative 
process factors in AG ¶ 2(d). The analysis under Guideline F is incorporated in my whole-
person analysis. Some of the factors in AG ¶ 2(d) were addressed under that guideline, but 
some warrant additional comment. 
 
 The security clearance adjudication involves an evaluation of an applicant’s 
judgment, reliability, and trustworthiness in light of the security guidelines in the Directive. 
See ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010). Applicant’s dedication to her work 
with a defense contractor is unassailable, and there is no indication that she has exercised 
poor judgment on the job. Applicant understandably was distracted by her son’s mental 
health issues requiring hospitalization when her tax returns for 2013 were due. Applicant 
showed good judgment in seeking professional help to address her anxiety about filing tax 
returns. However, Applicant’s ongoing inattention to her tax return filings for tax year 2013, 
without adequate justification, raises considerable doubt about whether she fully 
appreciates the importance of complying with her tax-filing obligations. The Appeal Board 
has repeatedly held that the government need not wait until an applicant mishandles or 
fails to safeguard classified information before denying or revoking security clearance 
eligibility. See, e.g., ISCR Case No. 08-09918 (App. Bd. Oct. 29, 2009) (citing Adams v. 
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Laird, 420 F.2d 230, 238-239 (D.C. Cir. 1969)). It is well settled that once a concern arises 
regarding an applicant’s security clearance eligibility, there is a strong presumption against 
the grant or renewal of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 
(9th Cir. 1990). Under Appeal Board precedent, an applicant who waits to address tax 
issues until his or her immediate interests are at stake does not show sound judgment and 
reliability. Her failure to give priority to such an important obligation as filing tax returns 
required by law causes lingering doubt about her security worthiness that has not been fully 
mitigated. 
 
Formal Finding 
 
Formal finding for or against Applicant on the allegation set forth in the SOR, as 
required by section E3.1.25 of Enclosure 3 of the Directive, is: 
 
Paragraph 1, Guideline F:   AGAINST APPLICANT 
 
Subparagraph 1.a:    Against Applicant 
 
Conclusion 
 
In light of all of the circumstances, it is not clearly consistent with the national 
interest to grant or continue Applicant’s eligibility for a security clearance. Eligibility for 
access to classified information is denied. 
 
 
_____________________ 
Elizabeth M. Matchinski 
Administrative Judge