NEWS + ADVICE
Can I Blame My Spouse for My Financial Problems – Security Clearance Case Spotlight
The Defense Office of Hearings and Appeals adjudicates industrial security clearance cases for contractor personnel. Stay apprised of recent Industrial Security Clearance Review (ISRC) cases and their outcomes to safeguard your own clearance.
Having a cleared career requires more than applying to a job and landing the gig. Your personal decisions and conduct play a pivotal role in maintaining your security clearance, and therefore your career.
There are 13 guidelines used to determine eligibility for a security clearance, one of which includes Guideline F, Financial Considerations. Guideline F leads to more denials and revocations of security clearances than any other guideline.
One ISCR case in particular that highlights an important lesson is Case No. 19-01541.1 Let’s dive into the case to see how they tried to mitigate security concerns.
The Applicant in this case is a 61-year-old who has worked for his current employer, a federal contractor, since 2005. He was issued a Statement of Reasons (SOR) detailing security concerns under Guideline F because he failed to file federal income tax returns for tax years 2013, 2015, 2016, 2017, and 2018. He owes delinquent federal taxes of approximately $115,000.
The Adjudicative Desk Reference, which assists Security Clearance Adjudicators, states that “Failure to file an income tax return when tax is due is a misdemeanor crime. It may also indicate financial problems, financial irresponsibility, or lack of respect for U.S. Government authority.”
So why did the applicant fail to file and pay his taxes? He alleges he was in the dark.
The Full (Spousal) Picture
After the applicant and his wife married in 2001, they decided she would be responsible for filing their federal income tax returns because of her business background. The applicant says he never inquired about whether their tax returns were timely filed. He testified that his wife never told him they owed taxes for the years in question. And he allegedly wasn’t even aware that he had years of unfiled tax returns until late 2018 or 2019.
However, the taxes weren’t their only financial issue. Over the years they experienced family emergencies that impacted their finances, and they had difficulties making their mortgage payments. They applied for mortgage relief in 2013 successfully, but they continued to fall behind and towards foreclosure. An attorney helped them negotiate a “cash for keys” resolution. The mortgage company received the property and agreed to waive the deficient balance.
Even though they had financial problems due to family emergencies that were beyond their control, those issues did not impact their ability to timely file their federal income tax returns and make payment arrangements with the IRS each year if they were unable to pay.
The Applicant’s wife says she recalls preparing and filing their 2013-2018 tax returns using Turbo Tax. However, the wife’s affidavit did not explain why, if she timely filed the federal tax returns as she stated, she and her husband failed to pay the taxes when due. In fact, the only return that was accepted during that time period was in 2014, when they received a refund—fishy…but let’s continue.
Being Unaware Isn’t an Excuse
Although the Applicant said his wife was completely responsible for their tax failures, he had an obligation to ensure the tax returns were filed and paid. Even if being unaware was a valid excuse, it’s hard to believe the applicant never inquired about receiving a refund or owing taxes while in the midst of other serious financial issues during those years.
The judge in this case noted, the fact that he says he was unaware of what was happening does not absolve him of his legal duties. Regardless of whether the Applicant was aware of the extent of their tax problems, he is equally responsible for ensuring his tax returns are filed on time and the taxes paid.
There are conditions that can help you mitigate the concerns of an ISCR hearing. When it comes to Guideline F, you should try to resolve any kind of delinquency and get on a payment plan as soon as possible. Life happens, but you need to do everything you can to show you’re on top of your situation and that you’re reliable.
Fortunately, the Applicant in this case did take some actions, eventually. In 2021, they hired a tax expert accountant who started the process of negotiating a payment plan with the IRS. The Applicant confirmed an installment agreement with the IRS, in which he would make monthly payments of $1,757 beginning in August 2021 over a period of six years or 72 payments. These payments will be applied to balances owed for tax years 2013, 2015, 2016, and 2017.
The applicant met the mitigating condition that states, “the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.”
However, this is a situation of too little, too late.
The judge noted the applicant still owes a substantial debt and has not yet established a track record of compliance. Additionally, the Applicant’s history of non-compliance with a fundamental legal obligation to timely file and pay his federal income taxes raises serious concerns. For those reasons the judge concluded the Applicant failed to mitigate the security concerns. He was denied access to classified information.
So if you asked if you can blame your spouse for your financial problems, the short answer is no. Pointing your finger and acting clueless won’t save your clearance. Stay involved and diligent in your personal affairs if you want to keep your cleared career.
Find more articles about safeguarding your security clearance here.