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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 [REDACTED] )  ISCR Case No. 17-01199 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Ross Hyams, Esq., Department Counsel 
For Applicant: Ronald C. Sykstus, Esq. 
 
 
______________ 
 
Decision 
______________ 
 
 
HESS, Stephanie C., Administrative Judge: 
 
Applicant failed to mitigate the security concerns raised by his delinquent tax 
filings, tax debts, and other financial delinquencies. Eligibility for access to classified 
information is denied. 
 
Statement of the Case 
 
Applicant submitted a security clearance application (e-QIP) on September 1, 
2015. On May 3, 2017, the Department of Defense (DOD) sent him a Statement of 
Reasons (SOR), alleging security concerns under Guidelines F (Financial 
Considerations). The DOD acted under Executive Order (Ex. Or.) 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) implemented by 
DOD on September 1, 2006.  
  
Applicant submitted his Answer to the SOR on June 6, 2017, and requested a 
hearing before an administrative judge. Department Counsel was ready to proceed on 
August 14, 2017, the case was assigned to another administrative judge, and the hearing 
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was scheduled for March 8, 2018. The hearing was canceled and the case was assigned 
to me on March 20, 2018. On May 18, 2018, the Defense Office of Hearings and Appeals 
(DOHA) notified Applicant’s counsel that the hearing was scheduled for June 4, 2018. I 
convened the hearing as scheduled. Government Exhibits (GX) 1 through 4 were 
admitted into evidence without objection. Applicant testified, called four witnesses, and 
submitted Applicant’s Exhibits (AX) A through V, which were admitted without objection. 
DOHA received the transcript (Tr.) on June 12, 2018. 
 
 The SOR was issued under the AG implemented on September 1, 2006. The DOD 
implemented the amended AG on June 8, 2017, while this decision was pending. This 
decision is based on the amended AG effective June 8, 2017.  
 
Findings of Fact 
 
Applicant, 52, is a field service technician currently employed by a defense 
contractor since October 2011. He was previously employed by defense contractors since 
March 2009. He served honorably on active duty in the U.S. Navy from July 1985 until he 
retired in July 2005. Applicant received multiple awards and commendations during his 
service. He earned a bachelor’s degree in 2004. He and his wife married in 1991 and 
have three adult children. He was granted his first security clearance in 1990. (GX 1.)  
 
Under Guideline F, the SOR alleges that Applicant:  failed to timely file his state 
and federal tax returns for tax years 2011, 2012, 2013, and 2014; is indebted to the 
Federal government for a 2016 tax lien in the amount of $59,902; is indebted to his former 
state of residence for a tax lien entered in 2016 in the amount of $8,428; is indebted on 
five delinquent accounts totaling $5,152. The delinquent accounts include: two medical 
accounts; the balance owed for a repossessed vehicle; a utility bill; and, a cable bill. 
Applicant admits each of the SOR allegations. The tax liens and delinquent debts are 
reflected in Applicant’s February 2017 and September 2015 credit bureau reports (CBR). 
(GX 4; GX 3.) His admissions are incorporated in my findings of fact. 
 
Applicant’s wife has historically been, and remains primarily responsible for 
managing the household finances, including preparing and filing their tax returns. (Tr. 21; 
Tr. 60-61.) In April 2009, Applicant began working abroad in a hazardous-duty 
environment. It was Applicant’s understanding that because the work environment was 
characterized as hazardous, the majority of his pay was not taxable. Applicant worked 
abroad until October 2011, when he returned to the United States for different 
employment. (Tr. 21-22.) In 2012, after preparing his 2011 taxes, Applicant discovered 
that a large portion of his pay from 2011 was not tax free, and that he owed approximately 
$32,000 in Federal income taxes, and an additional amount in state income taxes. (Tr. 
24.) 
 
Applicant’s wife testified that she panicked when she and her husband realized 
how much they owed for the 2011 taxes because they did not have the money to pay 
them. She told her husband that she would figure out how to take care of the taxes, but 
because she thought they would be required to pay the total amount owed upon filing, 
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Applicant’s wife did not file their 2011 tax returns. She did not consult with an accountant 
or a tax preparer to determine what action she needed to take. (Tr. 24; Tr. 31; Tr. 65; Tr. 
76.) 
 
Applicant and his wife have an adult son with special needs. In late 2011, 
Applicant’s son moved into a group home where he resided until 2014. Because of some 
administrative glitches, the approval of Applicant’s son’s application for Medicare 
coverage was delayed and Applicant was contractually required to pay his son’s entire 
living expenses, including nursing care. These costs were thousands of dollars a month, 
and consumed virtually all of Applicant’s disposable income. (Tr. 76-77.) 
 
Although Applicant started with his current employer in October 2011, and taxes 
were withheld from his pay, he improperly calculated his withholdings. Applicant’s Federal 
tax liability for 2012 was approximately $1,400. Because Applicant’s wife had not yet filed 
and paid their 2011 tax liability, she did not file or pay the 2012 taxes. This pattern 
recurred in 2013 with an approximately $4,200 Federal tax liability, and in 2014 with an 
approximately $3,600 Federal tax liability. (AX P through AX T.) 
 
In August 2015, Applicant was notified by his employer that they were investigating 
his clearance. Although his employer did not state what the concerns were about, 
Applicant understood that it was about his failure to file and pay his taxes. (Tr. 53; 63-64.) 
Applicant obtained a copy of his CBR which he used when listing his delinquent accounts 
on his September 1, 2015, e-QIP. Applicant disclosed the debts alleged in SOR ¶¶ 1.f 
through 1.i. He listed a 2012 state tax debt of approximately $2,500, and stated that the 
debt was resolved through garnishment. He listed a 2012 IRS tax debt for approximately 
$10,000, and stated that he was “working with [an] attorney to reach agreement.” (GX 1.) 
 
Applicant underwent a personal subject interview in October 2015, during which 
he discussed his listed delinquent accounts as well as his tax debt for tax year 2011. 
Applicant did not disclose his failure to file and pay his 2012, 2013, and 2014 taxes, nor 
did he disclose his 2015 filing extension or tax debt. (GX 2.) Applicant filed his 2015 
Federal tax return on October 24, 2016, the day of his personal subject interview. (AX O.) 
 
On August 14, 2015, after doing research on the Internet, Applicant’s wife filed the 
2011 Federal returns. She filed the 2012 and 2013 returns on September 4, 2015, and 
the 2014 return on November 27, 2015. She then contacted the IRS to work out an 
installment plan, on which Applicant has been making timely payments of $500 a month 
since February 2016. (Tr. 97-98.) The IRS placed a lien on Applicant’s assets in the 
amount of $59,902 in March 2016. (GX 4; AX P.) As of May 2018, Applicant owes: 
$37,638 for 2011; $0 for 2012; $7,071 for 2013; and, $4,201 for 2014. (AX L; AX Q 
through AX S.) 
 
In 2016, Applicant was required an extension for filing his 2015 Federal tax return 
because he owed approximately $5,800. In November 2016, Applicant entered another 
installment agreement with the IRS. As of May 2018, Applicant owes $6,915 for his 2015 
taxes. (AX O.) 
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Applicant did not file or pay his state taxes for 2009 through 2011 while he was 
working abroad. Applicant stated that this was due to a miscommunication with his wife 
in which each thought the other had paid the state taxes. (GX 2.) The state filed three 
liens against Applicant for $286, $114, and $2,339. In early 2015, Applicant received 
notice from the state of the liens and the state’s intent to garnish Applicant’s wages. 
Applicant submitted to the wage garnishment of $282 per week. The liens were satisfied 
and released in July and September 2015. (GX 2; Tr. 58.)  
 
In February 2016, the state filed another tax lien against Applicant for $8,428 for 
taxes owed for 2012, 2013, and 2014. (Tr. 21-22.) Applicant entered an installment 
agreement and this debt was satisfied as of May 2018. (AX K.) 
 
Applicant was unemployed from November 2008 until January 2009 and 
underemployed as a part-time employee from January 2009 until March 2009. This period 
of unemployment had a negative impact on Applicant’s finances at that time, and 
Applicant fell behind on his monthly financial obligations. The $453 utility bill (SOR ¶ 1.g) 
and the $309 cable bill (SOR ¶ 1.h) went delinquent in March 2009. In April 2009, 
Applicant defaulted on his vehicle loan, and the vehicle was later repossessed. The 
$3,790 balance (SOR 1.f) was charged-off by the creditor in August 2010. (GX 2; GX 3.) 
  
 Applicant’s wife testified that she does not recall being contacted by the IRS, the 
state treasury, or the creditors of the delinquent accounts. She theorizes this was due in 
part to the fact that she moved to another town in mid-2009 until Applicant returned from 
working abroad in 2011. Following his return, Applicant and his family moved to another 
state, and moved to three or four different homes within that state before moving to their 
current state of residence in 2016. (Tr. 79; Tr. 99.) 
 
 After receiving the SOR in May 2017, Applicant settled the $361 medical debt 
alleged in SOR ¶ 1.e. The $239 medical debt alleged in SOR ¶ 1.i was owed to a collection 
agency. Applicant provided documentary evidence that the debt alleged in SOR ¶ 1.i is a 
duplicate of the debt alleged in SOR ¶ 1.e. These two debts are resolved. (AX V; AX T; 
AX U.) 
 
 After receiving the SOR, Applicant’s wife contacted the utility-company creditor of 
the $453 debt alleged in SOR ¶ 1.g. The representative stated that the account was 
closed and that the company could not release the closed account information without a 
court order. Applicant did not contact the creditors for the $3,790 balance owed for the 
repossessed vehicle (SOR ¶ 1.f) or the $309 cable account (SOR ¶ 1.h). Although, these 
accounts do not appear on Applicant’s recent CBRs, they remain unresolved. (AX T; AX 
U.)  
 
 Applicant has not incurred any recent delinquent debts other than his failure to 
timely pay his 2015 tax obligation. (GX 3; GX 4; AX T; AX U.) He lives within his means 
and is financially stable. (Tr. 61-62; Tr. 111.) 
  
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 Applicant’s witnesses, a coworker, a former coworker whom Applicant managed, 
and a former fellow sailor, all hold security clearances. They collectively testified that they 
were aware of Applicant’s financial issues, but given Applicant’s character and 
trustworthiness, highly recommend Applicant for continued access to classified 
information. (Tr. 115-127.) Applicant has received excellent performance evaluations 
from his employer since 2012. (AX E through AX J.) 
  
Policies 
 
 “[N]o 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 applicants 
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.  
 
Eligibility for a security clearance is predicated upon the applicant’s meeting the 
criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, 
recognizing the complexities of human behavior, an administrative judge applies these 
guidelines 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 and 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 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. 
 
Clearance decisions must be made “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, a decision to deny a security clearance 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 
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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. 92-1106 at 3, 
1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993).  
 
 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 burden of proving a mitigating condition, 
and the burden of disproving it never shifts to the Government. See ISCR Case No. 02-
31154 at 5 (App. Bd. Sep. 22, 2005).  
 
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). “[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 
 
Guideline F, Financial Considerations 
 
The concern under this guideline is set out 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. 
 
 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 handling and safeguarding classified 
information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 
  
The record evidence establishes two disqualifying conditions: 
 
AG ¶ 19(a): inability to satisfy debts;  
 
AG ¶ 19(c): a history of not meeting financial obligations; and 
 
AG ¶ 19(f): failure to file . . . annual Federal, state, or local income tax 
returns or failure to pay annual Federal, state, or local income tax as 
required.  
 
 
 
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 The following mitigating conditions are potentially applicable: 
 
AG ¶ 20(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; 
 
AG ¶ 20(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;  
 
AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to 
repay overdue creditors or otherwise resolve debts; and 
 
AG ¶ 20(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. 
 
 Despite obtaining a CBR in September 2015 and learning of specific delinquent 
accounts, Applicant took no action to contact the creditors of those accounts until after he 
received the SOR in May 2017. By that time, the majority of the debts were no longer 
collectible or even identifiable to the creditors. Of the five non-tax-related SOR debts 
totaling $5,152, Applicant has resolved only two, leaving a remaining delinquent-debt 
balance of $4,552. 
 
 Applicant did not file or pay his 2011 through 2014 taxes, as required. He did not 
begin to address his Federal tax issues until after August 2015 when he filed his 2011 
taxes in the same month as his employer notified him that there were concerns about his 
security clearance eligibility. Applicant did not file his 2012 and 2013 returns until after 
completing his e-QIP and his 2014 return until a month after his personal subject 
interview. 
 
 Applicant entered an installment agreement with the IRS in February 2016, under 
which Applicant pays $500 a month. As of May 2018, he remains indebted to the IRS for 
$50,922 for tax years 2011 through 2014. 
 
 In February 2016, Applicant’s former state of residents entered and $8,428 lien 
against Applicant for delinquent state taxes. He entered an installment agreement and 
the lien was released as of May 2018. 
  
The appeal board has regularly held that “applicants who only begin to address 
their security-significant conduct when their personal interests are at stake may be lacking 
in judgment and reliability. See, e.g., ISCR Case No. 15-06707 at 3 (App. Bd. Aug. 15, 
2017.) In specifically addressing mitigating condition 20(g) in ISCR Case No. 17-01807 
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(App. Bd. Mar. 7, 2018), which has very similar facts to this case, the appeal board 
observed: 
 
The mere filing of delinquent tax returns or the existence of a payment 
agreement with an appropriate tax authority does not compel a Judge to 
issue a favorable decision. As with the application of any mitigating 
condition, the Judge must examine the record evidence and decide whether 
the favorable evidence outweighs the unfavorable evidence or vice versa. 
The timing of corrective action is an appropriate factor for the judge to 
consider in the application of [this mitigating condition]. pp 3-4. 
 
 Finally, Applicant’s last-minute attempt to address his debts does not constitute a 
good-faith effort to resolve his financial issues. See ISCR Case No. 10-05909 at 4 (App. 
Bd. Sep. 27, 2012). Applicant incurred delinquent debts due to periods of unemployment 
and underemployment, and significant financial obligations for his son’s care. However, 
he did not act responsibly under the circumstances. Despite his awareness of his 
delinquent accounts and tax-related issues, he continued to rely on his wife to resolve 
their significant financial problems to his peril. He remains indebted to the IRS and his 
other delinquent accounts remain primarily unresolved. None of the mitigating conditions 
apply. 
 
Whole-Person Concept 
  
 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. In applying the whole-
person concept, an 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 in light of the nine adjudicative process factors listed at AG ¶ 2(d).  
 
 I have incorporated my comments under Guideline F in my whole-person analysis. 
Some of the factors in AG ¶ 2(d) were addressed under that guideline, but I have also 
considered the following: 
  
 Applicant served honorably in the U.S. Navy for 20 years and received numerous 
awards and commendations for his service. He has worked for his current government-
contractor employer since 2011. His past and current coworkers highly recommend 
Applicant for a continued security clearance, and he has regularly received excellent 
performance evaluations from his employer. He has held a security clearance since 1990. 
 
 Despite Applicant’s awareness of his unfiled and unpaid Federal and state taxes 
from tax year 2011 through tax year 2014, and his 2015 wage garnishment for state tax 
liens, he failed to ensure that his 2015 tax withholdings were correct. Applicant applied 
for an extension to file his 2015 Federal taxes, but remains indebted to the IRS for 
approximately $6,915 for 2015. He made no effort to address his other delinquent 
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accounts until after he received the SOR. Applicant has not demonstrated the judgment 
and reliability required of individuals granted access to classified information. 
  
 After weighing the disqualifying and mitigating conditions under Guideline F, and 
evaluating all the evidence in the context of the whole person, I conclude Applicant has 
not mitigated the security concerns raised by his failure to file and pay his taxes as 
required and to resolve his other delinquent debts. Accordingly, I conclude he has not 
carried his burden of showing that it is clearly consistent with the national interest to grant 
him eligibility for access to classified information. 
 
Formal Findings 
 
As required by section E3.1.25 of Enclosure 3 of the Directive, I make the following 
formal findings on the allegations in the SOR: 
  
 Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT 
 
  Subparagraphs 1.a – 1.c and 1.f – 1.h:  Against Applicant 
 
  Subparagraphs 1.d, 1.e, and 1.i:   For Applicant 
 
Conclusion 
 
 I conclude that it is not clearly consistent with the national interest to grant 
Applicant’s eligibility for a security clearance. Eligibility for access to classified information 
is denied. 
 
 
 
Stephanie C. Hess 
Administrative Judge