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       DEPARTMENT OF DEFENSE 
   DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: )
)
) ISCR Case No. 17-03500 
) 
Applicant for Security Clearance ) 
Appearances 
For Government: Daniel F. Crowley, Esq., Department Counsel 
For Applicant: Pro se 
__________ 
Decision 
__________ 
RIVERA, Juan J., Administrative Judge: 
Applicant failed to timely file her federal and state income tax returns for tax 
years 2012 through 2015. Her recent income tax return filings are insufficient to 
establish a track record of financial responsibility. She failed to demonstrate good 
judgment, reliability, and willingness to comply with the law. The financial considerations 
security concerns are not mitigated. Clearance is denied. 
Statement of the Case 
Applicant submitted a security clearance application (SCA) on May 15, 2016, 
seeking the continuation of her clearance eligibility required for her position with a 
federal contractor. After reviewing the information gathered during the background 
investigation, the Department of Defense (DOD) issued a Statement of Reasons (SOR) 
on October 26, 2017, alleging security concerns under Guideline F (financial 
considerations). Applicant answered the SOR on June 21, 2018, and requested a 
hearing before an administrative judge from the Defense Office of Hearings and 
Appeals (DOHA). 
DOHA assigned the case to me on September 12, 2018, and issued a notice of 
hearing on November 6, 2018, setting the hearing for December 19, 2018. Applicant 
03/20/2019
 
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requested a delay due to health problems on December 18, 2018. I rescheduled the 
hearing for January 11, 2019. At the hearing, the Government offered seven exhibits 
(GE 1 through 7). Applicant objected to GE 3 - an unauthenticated summary of her 
interview with a background investigator, and I excluded the document. GE 3 was made 
part of the record, but it was not considered as evidence. Applicant testified and 
submitted 10 exhibits (AE 1 through 10). AE 10 was received post-hearing. All exhibits 
were admitted without objection, except for GE 3, as noted above. DOHA received the 
hearing transcript (Tr.) on January 23, 2019. 
 
Findings of Fact 
 
Applicant admitted that she failed to timely file her federal and state income tax 
returns for tax years 2012 through 2015. (SOR ¶ 1.a) She denied the remaining seven 
SOR allegations (¶¶ 1.b through 1.h), claiming that she had either paid or disputed 
them. Her SOR admission, and those at the hearing, are incorporated herein as findings 
of fact. After a thorough review of the record evidence, I make the following additional 
findings of fact: 
 
Applicant is a 41-year-old employee of a federal contractor. She received an 
associate’s degree in 2003, and has completed several technical certifications 
thereafter. She married in 2002 and divorced in 2006. She has two children, ages 16 
and 4. She receives $1,800 a month in child support. 
 
Applicant has worked for many federal contractors from 2004 to present, except 
for a short period of unemployment between July 2008 and August 2008. She also was 
laid off in October 2015, and worked as an independent contractor for federal 
contractors between October 2015 and May 2016. She received eligibility for a secret 
clearance in 2006, which has been continued to present without any issues or concerns, 
except for those in the SOR. Her current employer hired Applicant in May 2016.  
 
In her response to Section 26 (Financial Record) of her 2016 SCA, Applicant 
disclosed financial problems, which included her failure to timely file her federal and 
state tax returns for tax years 2012 through 2014, a state tax lien filed against her for 
her 2012 unpaid taxes, and several medical and consumer accounts that were 
delinquent or in collection.  
 
Applicant failed to timely file her federal and state income tax returns for tax 
years 2012 through 2017. Specifically, she filed her 2012 and 2013 income tax returns 
in 2017; and filed her federal and state 2014, 2015, 2016, and 2017 income tax returns 
in 2019. According to her income tax returns, Applicant owes $3,217 in taxes for tax 
year 2012. The IRS denied her refund of $1,755 for tax year 2013 because she filed 
more than three years late. She owed no taxes for tax year 2014, but she owed $573 for 
tax year 2015. For tax year 2016, she owed $11,314 in taxes; and she owed no taxes 
for tax year 2017. (See AEs 1, 2, 3, 10(a) and 10(b), and documents submitted with her 
SOR answer.)  
 
 
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Applicant testified that she agreed with her state tax authorities to pay $350 a 
month until the state determines her balance. Any overpayments she makes will be 
refunded. She is waiting for the IRS to provide her with a final balance.  
 
SOR ¶¶ 1.b and 1.f alleged debts in collection for telecommunications providers. 
Applicant disputed both accounts, but then paid SOR ¶ 1.f in January 2019. (AE 6) The 
remaining SOR allegations (¶¶ 1.c through 1.e, 1.g, and 1.h) alleged small medical 
debts, likely for unpaid insurance co-payments. Applicant paid SOR ¶ 1.h in April 2018. 
(AE 8) She testified that she either paid or disputed the remaining debts because she 
could not identify the creditor. Considering the evidence as a whole, I resolve SOR ¶¶ 
1.b through 1.h for Applicant. 
 
Applicant testified that she prepared and filed all her income tax returns before 
2012. She failed to file her 2012 tax return because of complications resulting from 
multiple states assessing income taxes against her. She was a stay-at-home employee 
with work connections to three different states. She did not know how to file her tax 
returns and procrastinated doing so. (Tr. 72) Applicant visited an IRS office in 2017, and 
they advised her they were not interested in her 2012 income tax returns, but on her 
more recent delinquent returns. She retained an accountant to help her file her 
delinquent income tax returns in 2017. 
 
Concerning her failure to timely file her 2013, 2014, and 2015 income tax returns, 
Applicant stated that she was under the mistaken belief that if she paid her taxes up-
front (by automatic pay deductions), she would not have any problems if she were to file 
her income tax returns late. She noted that after her uncle, an attorney, corrected her 
mistaken belief, she has been making every effort to file her income tax returns as soon 
as possible. Applicant believes that she has been open and forthcoming during the 
clearance process about not filing her tax returns. She testified that she takes her duties 
and clearance responsibilities seriously. 
 
The filing of Applicant’s income tax return for year 2016 was complicated 
because she was working as an independent contractor and was missing documents 
(bank statements and information from her business accounts). Her business failed 
when she got sick in 2017, and she claimed not having access to her business records 
and accounts.  
 
Applicant noted that her efforts to file her delinquent income taxes were 
hampered by her recent medical problems. In about September 2017, she was 
diagnosed with Cushing’s disease. The day before her operation for Cushing’s disease, 
she was diagnosed also with breast cancer. As a result, she underwent two operations 
and was incapacitated and unable to work for about seven months. During that period, 
she was unable to make any progress filing her delinquent tax returns. 
 
Applicant expressed sincere remorse for not filing her income tax returns on time. 
She claimed that she has learned a hard lesson and promised to timely file her income 
tax returns and to pay her taxes in the future. She is very concerned about losing her 
 
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clearance and her job because she is the sole provider for her children and she has 
serious ongoing medical problems. Applicant’s 2016 income tax returns shows that her 
income was $64,587; and for tax year 2017 her income was $84,657. (AE 10(b), AE 3) 
 
Policies 
 
The SOR was issued under Executive Order (Exec. Or.) 10865, Safeguarding 
Classified Information Within Industry (February 20, 1960), as amended; and DOD 
Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program 
(Directive) (January 2, 1992), as amended. The case will be adjudicated under the 
National Security Adjudicative Guidelines for Determining Eligibility for Access to 
Classified Information or Eligibility to Hold a Sensitive Position (AGs), applicable to all 
adjudicative decisions issued on or after June 8, 2017.  
 
Eligibility for access to classified information may be granted “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. 
The U.S. Supreme Court has recognized the substantial discretion of the Executive 
Branch 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 
U.S. 518, 528 (1988). 
 
The AG list disqualifying and mitigating conditions for evaluating a person’s 
suitability for access to classified information. Any one disqualifying or mitigating 
condition is not, by itself, conclusive. However, the AG should be followed where a case 
can be measured against them, as they represent policy guidance governing access to 
classified information. Each decision must reflect a fair, impartial, and commonsense 
consideration of the whole person and the factors listed in SEAD 4, App. A ¶¶ 2(d) and 
2(f). All available, reliable information about the person, past and present, favorable and 
unfavorable, must be considered.  
 
Security clearance decisions resolve whether it is clearly consistent with the 
national interest to grant or continue an applicant’s security clearance. The Government 
must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, 
the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. The 
applicant bears the heavy burden of demonstrating that it is clearly consistent with the 
national interest to grant or continue his or her security clearance.  
 
Persons with access to classified information enter 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 those who must protect national interest as their 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. 
“[S]ecurity clearance determinations should err, if they must, on the side of denials.” 
Egan, 484 U.S. at 531; SEAD 4, ¶ E(4); SEAD 4, App. A, ¶¶ 1(d) and 2(b). Clearance 
 
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decisions are not a determination of the loyalty of the applicant concerned. They are 
merely an indication that the applicant has or has not met the strict guidelines the 
Government has established for issuing a clearance. 
 
Analysis 
 
Financial Considerations 
 
AG ¶ 18 articulates the security concern for financial problems:  
 
Failure or inability to live within one’s means, satisfy debts, and meet 
financial obligations may indicate poor self-control, lack of judgment, or 
unwillingness to abide by rules and regulations, all of which can raise 
questions about an individual’s reliability, trustworthiness, and ability to 
protect classified 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 . . . .  
 
Applicant’s history of financial problems is documented in the record. She failed 
to timely file her federal and state income tax returns for tax years 2012 through 2015. 
Additionally, she had seven delinquent or collection accounts. AG ¶ 19 provides 
disqualifying conditions that raise a security concern and may be disqualifying in this 
case: “(a) inability to satisfy debts”; “(c) a history of not meeting financial obligations”; 
and “(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.” The 
record established the disqualifying conditions, requiring additional inquiry about the 
possible applicability of mitigating conditions.  
 
Six mitigating conditions under AG ¶ 20 are potentially applicable: 
 
(a) the behavior happened so long ago, was so infrequent, or occurred 
under such circumstances that it is unlikely to recur and does not cast 
doubt on the individual’s current reliability, trustworthiness, or good 
judgment;  
 
(b) the conditions that resulted in the financial problem were largely 
beyond the person’s control (e.g., loss of employment, a business 
downturn, unexpected medical emergency, 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 
 
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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; 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. 
 
The Appeal Board concisely explained Applicant’s responsibility for proving the 
applicability of mitigating conditions as follows:  
 
Once a concern arises regarding an Applicant’s security clearance 
eligibility, there is a strong presumption against the grant or maintenance 
of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th 
Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government 
presents evidence raising security concerns, the burden shifts to the 
applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The 
standard applicable in security clearance decisions is that articulated in 
Egan, supra. “Any doubt concerning personnel being considered for 
access to classified information will be resolved in favor of the national 
security.” Directive, Enclosure 2, ¶ 2(b).  
 
ISCR Case No. 10-04641 at 4 (App. Bd. Sep. 24, 2013).  
 
 Considering the evidence as a whole, I find that none of the mitigating conditions 
are sufficiently raised by the evidence and are not applicable. AG ¶ 20(a) does not 
apply because Applicant failed to timely file her taxes for five consecutive years and she 
finished filing her 2012 and 2016 delinquent tax returns after her clearance hearing. I 
find her behavior was frequent and recent.  
 
 Applicant failed to file income tax returns because some returns were 
complicated, her procrastination, her negligence seeking professional tax assistance, 
and her mistaken belief that if she paid any taxes due up-front she did not have to file 
her returns. She averred that she failed to file her returns any sooner because she was 
hampered by her recent medical problems. I note that she was not diagnosed with 
Cushing’s disease until September 2017. She presented no evidence of any medical 
problems before September 2017 that could have prevented her from filing her income 
tax returns.  
 
 
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 Giving due consideration to Applicant’s difficulties and challenging life events, I 
find that she failed to demonstrate financial responsibility under the circumstances. She 
failed to provide convincing evidence of efforts to timely file her federal and state 
income tax returns when they were due. Applicant’s efforts to file her delinquent income 
tax returns did not start until after she received the October 2017 SOR. I give Applicant 
credit for her recent efforts to file her late income tax returns and to pay her delinquent 
state taxes.  
 
 Applicant acknowledged that her failure to timely file her federal and state income 
tax returns resulted primarily from her lack of diligence. She neglected her legal 
obligation to timely file her income tax returns over an extended period. “Failure to 
comply with federal and state tax laws suggests that an applicant has a problem with 
abiding to well-established Government rules and regulations. Voluntary compliance 
with rules and regulations is essential for protecting classified information.” ISCR Case 
No. 14-04437 at 3 (App. Bd. Apr. 15, 2016). This is true even if the returns have been 
filed. See ISCR Case No. 15-03481 at 5 (App. Bd. Sep. 27, 2016).  
 
 Applicant’s repeated failure to file her federal and state income tax returns in a 
timely manner does not demonstrate the high degree of good judgment and reliability 
required of persons granted access to classified information. See, ISCR Case No. 14-
01894 at 5 (App. Bd. Sept. 27, 2016). In sum, Applicant failed to demonstrate financial 
responsibility. The financial considerations security concerns are not mitigated. 
 
Whole-Person Concept 
 
 I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case, and under the whole-person 
concept. Security Executive Agent Directive (SEAD) 4, App. A, ¶¶ 2(a) and 2(d). I have 
incorporated my comments under Guideline F in my whole-person analysis. Some of 
these factors were addressed under that guideline, but some warrant additional 
comment. 
 
Applicant, 41, has been employed with federal contractors since 2004, and has 
held a clearance since 2006. Because of her 13 years holding a clearance and working 
for federal contractors, Applicant was aware she was required to maintain her financial 
responsibility to be eligible for a clearance. She failed to demonstrate good judgment 
and reliability. Her failure to timely file her tax returns for six consecutive years shows 
that she has a problem complying with well-established government rules. At this time, 
her evidence is insufficient to establish a track record of financial responsibility. 
 
This decision should not be construed as a determination that Applicant cannot 
or will not attain the state of reform necessary for award of a security clearance in the 
future. With more effort towards documented resolution of her delinquent taxes and 
other delinquent debts, a healthy financial picture, and a track record of behavior 
consistent with her obligations, she may well be able to demonstrate persuasive 
evidence of her security clearance worthiness.  
 
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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:      AGAINST APPLICANT 
 
  Subparagraph 1.a:      Against Applicant 
 
  Subparagraphs 1.b - 1.h:     For Applicant 
 
Conclusion 
 
In light of all the circumstances presented by the record in this case, it is not 
clearly consistent with the national security interests of the United States to continue 
Applicant’s eligibility for a security clearance. Clearance is denied. 
 
 
 
____________________________ 
JUAN J. RIVERA 
Administrative Judge