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Can I Maintain My Security Clearance If I Owe Back Taxes

Learn how Guideline F, Financial Considerations, can impact your security clearance this tax filing season from national security attorney Brittany Forrester, Esq.

Both having outstanding federal or state tax debt and/or filing federal or state tax can negatively impact an individual’s ability to obtain or maintain a security clearance. Under the Security Executive Agent (SEAD) 4, National Security Adjudicative Guidelines, tax issues fall under Guideline F, Financial Considerations.

Under Guideline F, the concern involves the failure to live within one’s means, satisfy debts, and meet financial obligations. This 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.

Guideline F Disqualifying Conditions

There are several disqualifying conditions under Guideline F which relate to both outstanding tax debt and untimely filing. For example:

• ¶19(a) states that a disqualifying factor is the inability to satisfy debts.
• ¶19(b) states that a disqualifying factor is an unwillingness to repay debts regardless of the ability to do so.
• ¶19(f) states that a disqualifying factor is the 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.

Guideline F Mitigation

When reviewing the impact of outstanding tax debt or untimely tax filings, there are several mitigating factors the government takes into account when ultimately determining whether it is clearly consistent with national interests for an individual to obtain or maintain a security clearance.

A few of those factors include the events that resulted in the outstanding debt or untimely filing and the actions the individual has taken to resolve the outstanding issue.

It is imperative when applying for security clearance or responding to a Notice of Intent to Revoke, to have a clear, documented plan in place to resolve the outstanding tax debt. It is also important to provide mitigation as to why the debt was incurred to begin with and a plan to ensure that future tax debt will not occur.

Potential conditions that could mitigate Guideline F security concerns include:

• ¶20(a) states the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur.
• ¶20(c) states the individual received or is receiving financial counseling for the problem from a legitimate and credible source.
• ¶20(g) 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.

Example Tax Issues That Can Trigger Guideline F Concerns

Tax issues have arisen in the past for many different reasons such as:

• Individuals being unaware they can receive an extension to file taxes on a timely basis as long as it is requested and approved in advance.
• We have often seen cleared individuals depend on their spouses to file taxes where mistakes are unintentionally made but are unbeknownst to the cleared individual.
• Additionally, issues have resulted from individuals that have ignored filing federal and state taxes for several years which can pose a tremendous problem with obtaining and/or maintaining a security clearance.

However, there has been a plethora of successful outcomes related to tax issues when an applicant shows a compelling reason the taxes were not filed or paid on a timely basis so long as the individual makes diligent efforts to file and pay the outstanding taxes.

This same analysis is reviewed for other financial issues such as delinquent loans or credit card accounts.

Unforeseen circumstances occur outside of an individual’s control quite often. Thus, to ensure it is consistently clear with National interests for an individual to obtain or maintain access to classified material, their actions are reviewed to ensure the individual acted as responsibly as one could under those circumstances.

Find more articles about your security clearance here.

Tully Rinckey attorneys understand that issues involving security clearances can be challenging, and they will handle your matter with the attention it deserves. If you have additional questions about rejection, or revocation of a security clearance, our team of attorneys is available to assist you today. Please call (888) 677-2608 to schedule a consultation or schedule a consultation online.

Brittany D. Forrester, Esq., is a Senior Associate at Tully Rinckey PLLC, where she focuses her practice primarily on national security law with experience in federal employment matters. Brittany represents clients who have security clearance issues with agencies such as the FBI, CIA, NSA, DIA, DOD, NRO, NGA, and DOE.