The process of rebutting and appealing security clearance actions pertaining to industry personnel through the Defense Office of Hearings and Appeals (DOHA) has been the subject of prior articles on this site, so I will not bore you with reviewing the details of those articles. My intent is to summarize cases that have been processed through DOHA and analyze the facts of the case and the decisions made by DOHA in order to educate readers on the process and, in some cases, review non-investigative information that is used in the decision making.
Failure to Pay Income Taxes – Case No. 12-05053
Applicant is an engineering project manager for a DoD contractor. In August 2006, applicant completed and certified an electronic Questionnaire for Investigation Processing (eQIP) and answered “no” to questions regarding financial delinquencies during the past 7 years. He also answered “no” to questions regarding having his wages garnished, and having judgments or liens for failing to pay taxes. In April 2011, Applicant completed and certified an eQIP again answering “no” to questions regarding financial delinquencies during the past 7 years. However, he did admit to failure to file his federal and state income taxes and that his wages had been garnished. A subsequent credit check revealed the Internal Revenue Service (IRS) filed a tax lien against the Applicant in May 2011 for approximately $126,000. Applicant admitted that in 2000 he prepared his federal and state income taxes for year 1999 and realized he owed about $10,000 in federal taxes. He did not contact the IRS as he did not think the IRS allowed payment plans, nor did he seek help from any other source to address this situation. Additionally, applicant did not file his federal or state income tax returns for tax years 2000 through 2011 because he was concerned he would be in trouble with his employer or the IRS.
After receiving notice of the garnishment, Applicant retained the services of a tax professional who facilitated filing federal income tax returns for tax years 1999, 2000, and 2003 through 2011. The tax lien was subsequently removed; however, Applicant has not yet filed tax returns for tax years 2001 and 2002. He has also filed tax returns for 2012 and 2013 in a timely manner. Subsequent to moving in 2010, he filed and paid state income taxes. The tax professional advised him the state he previously lived in would not accept tax returns beyond 3 years and has not filed a tax lien for any back taxes owed.
In March 2014, Applicant was issued a Statement of Reasons (SOR) to deny his security clearance based on adjudicative criteria E, Personal Conduct (providing false information on his 2006 eQIP), and criteria F, Financial Considerations (failure to file and pay Federal and state income taxes). During the Industrial Security Clearance Review (ISCR) hearing, Applicant admitted to the material facts presented in the case and admitted to poor judgment in failing to truthfully answering questions on his eQIP and denied deliberately falsifying information as he believed the questions referred only to recurring monthly expenses and consumer debt. He also admitted ignorance and stupidity in failing to file and pay income taxes in a timely manner and provided documentation of his efforts to work with a tax professional. He stated that he has since corrected the delinquent tax situation and pledged continued actions to ensure timely filing and satisfaction of all income taxes due.
On July 23, 2014, the DOHA Administrative Judge (AJ), found Applicant’s statement and actions to address and resolve his delinquent taxes mitigated his prior actions and granted Applicant access to classified information.
Part 2 – The Appeal of the Decision
The AJ’s decision in DOHA cases involving industry personnel can be appealed by either the Applicant or the Government. In this case, the Department Counsel representing the Government believed that the AJ’s decision was not correct and appealed the case to the DOHA Appeal Board. The Appeal Board consists of three AJs. They review the case for completeness of the record, compliance with procedures, and correctness in the application of adjudication guidelines. The outcome can be an affirmation of the AJ’s decision, an overturn of the AJ’s decision or the case can be remanded back to the AJ due to a procedural error.
On October 30, 2014, the Appeal Board reversed the AJ’s decision and denied the security clearance. The reversal was based on the applicant’s intentional failure to file and pay his income taxes for more than a decade and he failed to provide documentation that he had filed for tax years 2001 and 2002.
I agree completely with the Appeals Board that Applicant should not be granted a security clearance until he has proven compliance with federal and state laws regarding income tax filing and satisfaction of any taxes due over a period of time. From time to time, the federal government has placed emphasis on closely scrutinizing anyone who owes delinquent federal or state obligations (income or other taxes, student loans, personal property tax, etc). Such delinquent obligations reflect poorly on an individual’s compliance with established laws and failure to demonstrate financial responsibility.
Many articles on this site discuss delinquent debt as it affects security clearances, most notably Tax Debt Plagues Clearance Holders, which reports that 8,400 federal employees holding security clearances had delinquent tax obligations.
Note that Applicant appeared pro se during the DOHA proceedings, meaning he represented himself. This is a bad, repeat bad, idea. I cannot stress enough that if an individual’s clearance application or adjudication process turns negative, the individual should consult with a security clearance attorney or a security clearance advocate to help them through the process.