A Department of Energy contractor was recently denied access to a security clearance by an administrative judge for failing to file federal and state income tax returns in both 2015 and 2016. The failure was disclosed to the local security investigator in January of 2018, which prompted the investigator to ask for further information from the individual in December of 2018. In February of 2019, the individual received notice that the failure to file raised substantial doubt as to the eligibility of the individual to hold a security clearance. The Individual requested a hearing, which happened in October.
The guidelines on financial concerns cited in the case specifically state:
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.
It further gives failing to file tax returns as an example of this conduct.
Despite the above, the individual had an opportunity at his hearing to show with evidence that granting access to him, according to the administrative hearing guidelines, “will not endanger the common defense and security and will be clearly consistent with the national interest”.
At the hearing the individual produced evidence that he had, two day prior to the hearing, filed his federal tax returns for 2015 and 2016, but had not paid the balance owed, nor had he filed his 2015 state tax returns as of the date of the hearing. The balance owed on the federal taxes was over $1,000. In the adjudicative guidelines at10 C.F.R Part 710 there are several criteria that need to be met to allow a clearance to be granted.
- the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts;
- 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;
- the affluence resulted from a legal source of income; and
- 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 affluence resulted from a legal source of income; and
- 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 administrative judge in this case was not sold on the individual’s efforts to meet the criteria above, citing the very late filing of the taxes just before the hearing, and the fact that he had made little to no effort to pay off the balance owed. She specifically noted that the matter should have been of heightened concern and action to him when he received the letter of notification some ten months prior to the hearing. Further, his excuses of “forgetfulness’ did not meet the standard set out in the guidelines listed. Thus, she denied access to a clearance based on the applicable laws and regulations.
Moral: don’t fail to fix a very fixable financial problem
A lesson learned from this case is that many financial issues are fixable, but the solution must be dealt with or at least initiated by the individual as soon as they have an indication of a problem. The request for information was the last point in time that fixing the issue should have started and in fact, a red flag should’ve went up when he saw the question asked on his questionnaire that the answer might be important. A reasonable person, one could argue, would be concerned enough about the question to inquire further about repercussions to their derogatory answers.
