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       DEPARTMENT OF DEFENSE 
   DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: )
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[NAME REDACTED] )       ISCR Case No. 18-00618 
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Applicant for Security Clearance ) 
Appearances 
For Government: Ross Hyams, Esq., Department Counsel 
For Applicant: Pro se 
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Decision 
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MALONE, Matthew E., Administrative Judge: 
A fair and commonsense assessment of the record evidence as a whole shows 
the security concerns raised by a tax lien recently entered against Applicant are mitigated. 
His request for continued security clearance eligibility is granted. 
Statement of the Case 
On January 29, 2016, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP) to renew his eligibility for a security clearance required 
for his employment with a federal contractor. Based on the results of the ensuing 
background investigation, Department of Defense (DOD) adjudicators could not 
01/10/2019
 
 
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determine that it is clearly consistent with the interests of national security for Applicant 
to have a security clearance.1 
 
 On March 23, 2018, DOD issued a Statement of Reasons (SOR) alleging facts 
that raise security concerns under the adjudicative guideline for financial considerations 
(Guideline F). Applicant timely responded to the SOR (Answer) and requested a hearing.  
 
 I received the case on August 9, 2018, and convened the requested hearing on 
November 29, 2018. The parties appeared as scheduled. Department Counsel proffered 
Government Exhibits (GX) 1 – 5. Applicant testified and proffered Applicant Exhibits (AX) 
A and B. All exhibits were admitted without objection. I received a transcript of the hearing 
(Tr.) on December 7, 2018. 
 
Findings of Fact 
 
 Under Guideline F, the Government alleged Applicant owed the IRS $22,167 for 
unpaid taxes in the 2012 tax year (SOR 1.a), and $28,175 for unpaid taxes in the 2013 
tax year (SOR 1.b), with the $50,342 total debt being preserved through a single tax lien 
entered against Applicant in September 2016. It was further alleged that Applicant owed 
$1,605 for an unpaid medical account (SOR 1.c). In response, Applicant admitted all three 
allegations, and he provided explanations and supporting documents. (Answer) In 
addition to the facts established by Applicant’s admissions, I make the following additional 
findings of fact.  
 
 As to SOR 1.c, Applicant disputed this debt during his November 14, 2017 
personal subject interview (PSI) with a government investigator. At hearing, Applicant 
presented information that shows this debt has been satisfied. SOR 1.c is resolved for 
Applicant. (Answer; GX 2; AX A; Tr. 11 – 12) 
 
 Applicant is 49 years old and works as an instructor for a federal contractor, where 
he has been employed since September 2015. Applicant served in the U.S. Army from 
January 1992 until July 1995, when he received an honorable discharge for medical 
reasons. Applicant has held a security clearance since early 1992. He and his wife have 
been married since September 2013 and have one child together. Applicant was married 
twice previously and has one adult child from his first marriage. (GX 1)  
 
 From August 2005 until September 2015, Applicant worked for two different federal 
contractors providing security for overseas diplomatic personnel. During that time, he 
lived and worked overseas on a nearly permanent basis. Most years during that period, 
Applicant qualified for exemption from federal income tax of the first $97,000 of his annual 
income. Each year he used a certified public accountant (CPA) to prepare and file his 
returns and to assist him in resolving any discrepancies that might arise with regard to his 
                                                 
1 Required by Executive Order 10865, as amended, and by DOD Directive 5220.6 (Directive), as amended. 
 
 
 
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federal and state income taxes. Applicant has always timely complied with his income 
reporting and payment obligations. (Answer; GX 1; GX 2; Tr. 34 – 35, 38, 40 – 41) 
 
 In 2014, the IRS audited Applicant’s taxes for the 2012 and 2013 tax years. Based 
on that audit, the IRS retroactively disallowed large portions of Applicant’s claimed 
overseas income tax exemptions and determined that he owed the taxes alleged in SOR 
1.a and 1.b. Applicant contacted his CPA and they notified the IRS of their intent to appeal 
the audit findings in federal tax court. After being given a court date, a deadline was set 
for submitting information in support of Applicant’s appeal. At the time the court date and 
filing deadlines were established, Applicant had been in the United States on medical 
leave for about two months. However, the notice of his court date and the filing deadline 
were sent to his overseas address. By the time Applicant became aware of the deadline, 
he was unable to timely submit the necessary information. As a result, his appeal was 
denied. Subsequently, the IRS perfected a single lien of $50,342 against Applicant to 
preserve the IRS’ claim against him. The lien was obtained in September 2016, but 
Applicant did not become aware of it until January 2017. (Answer; GX 1; GX 2; Tr. 26 – 
28, 30 – 33, 45 – 46) 
 
 Applicant’s finances are otherwise sound. Available information shows that he is 
currently carrying more credit card debt than he would prefer, he attributes those 
expenditures to unexpected repairs needed on a home he and his wife recently 
purchased. Aside from the liens documented in his credit report, all of his debts are in 
good standing. Applicant averred that the only reason the IRS obtained these liens is that 
he missed his filing deadline through no fault of his own. He is confident they will be 
resolved in his favor, but cannot say when that will happen. In response to the IRS’ action, 
Applicant and his CPA have been working to resolve Applicant’s tax debts through the 
Taxpayer Advocate Service (TAS) within the IRS. One of the TAS representatives 
advised Applicant on March 8, 2018, that Applicant’s case had an estimated resolution 
date of May 22, 2018. On October 4, 2018, Applicant’s case was still pending and another 
TAS representative advised that additional time would be needed to resolve the case and 
that Applicant would be notified of the status of his case by November 1, 2018. No 
additional information has been forthcoming from TAS. (Answer; AX B; Tr. 35 – 37, 51 – 
52) 
 
 Applicant believes that the IRS does not plan to levy any of his pay or assets to 
enforce the liens against him. In the event he does not prevail in having the liens released 
and the debts extinguished, Applicant will pursue one of two paths to resolve any 
remaining debt. He might negotiate a settlement for a lesser amount he could pay off in 
monthly installments. Alternatively, in most of the years he worked overseas, he received 
per diem benefits that were not taxable. Nonetheless, he declared that money as income 
out of a sense of obligation. In order to reduce his tax obligations for 2012 and 2013, his 
CPA has suggested that he could refile those returns without the previously declared per 
diem so as to reduce his overall tax for those years. Theoretically, this would reduce his 
tax debts that would be subject to the results of the 2014 audit. Regardless of which 
resolution he might pursue, available information shows Applicant has sufficient income 
 
 
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and monthly net cash flow to resolve the liens, should a final determination be made 
against him. (Answer; GX 2; Tr. 29 – 30, 39 – 40, 46 – 48) 
 
 Applicant excelled in his work overseas between 2005 and 2015. He now works in 
the United States and has continued his outstanding performance. He returned from 
overseas in September 2015 after being injured, and he does not plan on returning to 
overseas assignments with his current employer. (Answer; Tr. 33 – 35, 44) 
  
Policies 
 
 Each security clearance decision must be a fair, impartial, and commonsense 
determination based on examination of all available relevant and material information,2 
and consideration of the pertinent criteria and adjudication policy in the adjudicative 
guidelines (AG).3 Decisions must also reflect consideration of the factors listed in ¶ 2(d) 
of the guidelines. Commonly referred to as the “whole-person” concept, those factors are:  
 
  (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. 
 
 The presence or absence of a disqualifying or mitigating condition is not 
determinative of a conclusion for or against an applicant. However, specific applicable 
guidelines should be followed whenever a case can be measured against them as they 
represent policy guidance governing the grant or denial of access to classified 
information. A security clearance decision is intended only to resolve whether it is clearly 
consistent with the national interest4 for an applicant to either receive or continue to have 
access to classified information.  
 
 The Government bears the initial burden of producing admissible information on 
which it based the preliminary decision to deny or revoke a security clearance for an 
applicant. Additionally, the Government must be able to prove controverted facts alleged 
in the SOR. If the Government meets its burden, it then falls to the applicant to refute, 
extenuate or mitigate the Government’s case. Because no one has a “right” to a security 
                                                 
2 See Directive. 6.3. 
 
3 The current adjudicative guidelines were issued by the Director of National Intelligence on December 10, 
2016, to be effective for all adjudications on or after June 8, 2017. 
 
4 See Department of the Navy v. Egan, 484 U.S. 518 (1988). 
 
 
 
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clearance, an applicant bears a heavy burden of persuasion.5 A person who has access 
to classified information enters into a fiduciary relationship with the Government based 
on trust and confidence. Thus, the Government has a compelling interest in ensuring each 
applicant possesses the requisite judgment, reliability and trustworthiness of one who will 
protect the national interests as his or her own. The “clearly consistent with the national 
interest” standard compels resolution of any reasonable doubt about an applicant’s 
suitability for access in favor of the Government.6 
 
Analysis 
 
Financial Considerations  
 
 The Government established that in 2016, the IRS obtained a lien against 
Applicant for $50,342 for unpaid taxes from 2012 and 2013. Available information also 
documented an unpaid $1,605 medical debt attributed to Applicant; however, that debt 
was timely resolved. Because the tax lien has not been resolved, available information 
reasonably raised a security concern about Applicant’s finances that is articulated at 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 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. 
Affluence that cannot be explained by known sources of income is also a 
security concern insofar as it may result from criminal activity, including 
espionage. 
 
 More specifically, available information requires application of the disqualifying 
condition at 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). 
In this case, there is no indication that Applicant has ever failed to file his returns; rather, 
the focus is on an alleged failure to pay what he was obligated to pay. 
 
 The debt in question is based on a 2014 audit of Applicant’s 2012 and 2013 federal 
income tax returns. Specifically, the IRS retroactively disallowed significant claims for 
exemptions based on Applicant’s residence and work status for two of the ten years he 
                                                 
5 See Egan, 484 U.S. at 528, 531. 
 
6 See Egan; AG ¶ 2(b). 
 
 
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spent employed by a federal contractor overseas. The lien for those taxes was obtained 
after Applicant missed a filing deadline for appealing the results of the audit. The IRS has 
not levied the lien against Applicant’s income or assets, and Applicant has been 
negotiating in good faith with the IRS to resolve the status of his 2012 and 2013 taxes to 
the best of his ability. That process is still ongoing and it does not appear that a final 
decision has been made that Applicant will have to pay the amounts specified in the lien. 
Even if he is ultimately determined to be liable for those taxes, he has the means and a 
plan for resolving such a debt. All available information about Applicant’s finances shows 
they are sound and that he will resolve any tax liabilities in a prompt and reasonable 
manner. All of the foregoing supports application of the following AG ¶ 20 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 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; and 
  
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts. 
 
 Additionally, I considered the applicability of the mitigating condition at 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). Strictly speaking, it is 
premature to apply this mitigating condition, because Applicant has always filed his 
returns as required, and it as it has not yet been determined what taxes, if any, Applicant 
has to pay. But consistent with his ongoing contacts with the IRS and with my previous 
observations about the strength of his current finances, it is reasonable to conclude that 
he will comply with any future arrangements needed to resolve this matter. On balance, I 
conclude the record as a whole is sufficient to mitigate the security concerns raised in the 
SOR. 
 
I also have evaluated this record in the context of the whole-person factors listed 
in AG ¶ 2(d). Of note is the positive information about Applicant’s performance and 
reputation in the workplace. Applicant was candid about his efforts to resolve his tax lien, 
and his explanation of what occurred was plausible. A fair and commonsense assessment 
 
 
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of the record evidence as a whole shows the security concerns about his finances are 
mitigated. 
 
Formal Findings 
 
 Formal findings 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.c:  For Applicant 
 
Conclusion 
 
 In light of all of the foregoing, it is clearly consistent with the interests of national 
security for Applicant to have access to classified information. Applicant’s request for a 
security clearance is granted. 
 
 
 
                                        
MATTHEW E. MALONE 
Administrative Judge