In a Department of Energy hearing decided on 20 October 2025, a clearance holder proved he had filed the two delinquent years alleged against him, documented that both tax authorities received the returns, and showed he had overpaid and owed nothing. The judge agreed the mitigating condition written for tax cases was established, and declined to restore his access authorization anyway.

That case, DOE No. PSH-25-0122, marks a distinction most advice blurs. Squaring things with the IRS and squaring them with an adjudicator are two different tests, and failing to file is a separate finding from failing to pay. Our post on owing back taxes answers the second; this one answers the first.

Not advice. This describes published guidelines, IRS guidance and decided cases. It is not tax advice, not legal advice, and it predicts no outcome. If you have unfiled years and a clearance, see a tax professional and an attorney who practises in clearance matters.

Is not filing a separate problem from not paying?

Yes. Guideline F’s disqualifying condition 19(f) holds three triggers: failure to file, fraudulent filing, and failure to pay. It is met by the non-filing itself, whether or not anything is owed.

Here is 19(f) in full, from Security Executive Agent Directive 4, effective 8 June 2017 and superseding all earlier adjudicative criteria: “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.” One of nine disqualifying conditions, 19(a) through 19(i). No amount, no count of years, no carve-out for a small balance, which is why how much debt is too much has no clean answer here.

The SF-86 draws the same line. Question 26.3: “In the last seven (7) years have you failed to file or pay Federal, state, or other taxes when required by law or ordinance?” Answer yes and it asks “Did you fail to file, pay as required, or both?” It then wants the year, the amount, the reason, and what you have done about it. That is the SF-86, November 2016 revision; a consolidated replacement questionnaire is being phased in; no primary federal source for its tax question could be found.

What is the tax question actually measuring?

Judgment, not revenue. Guideline F calls failure to meet financial obligations a possible indicator of “poor self-control, lack of judgment, or unwillingness to abide by rules and regulations,” then widens into gambling, mental health, substance misuse and unexplained affluence.

The clearest statement of purpose sits in ISCR Case No. 22-01925, a DoD industrial decision of 18 March 2025, quoting the Appeal Board: “Failure to file tax returns suggests that an applicant has a problem with complying with well-established governmental rules and systems… a clearance adjudication is not directed at collecting debts… By the same token, neither is it directed toward inducing an applicant to file tax returns. Rather, it is a proceeding aimed at evaluating an applicant’s judgment and reliability. A person who fails repeatedly to fulfill his or her legal obligations does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information.”

Criminal law stays in the background. Under 26 U.S.C. 7203, willfully failing to file is a misdemeanor carrying up to a year in prison. The fine ceiling printed in 7203 is $25,000, but 18 U.S.C. 3571 sets an individual’s maximum for a Class A misdemeanor at $100,000 unless the offense statute exempts itself “by specific reference,” and 7203 does not. Section 7203 spares estimated-tax failures carrying no addition to tax under section 6654 or 6655, and makes a willful section 6050I violation a five-year felony. Willfulness is the operative word, and the judge in 22-01925 declined to weigh the failure to file “against him as a crime” — the whole-person concept at work.

How would an investigator find out?

Mostly because the form asks you. Returns are confidential by statute; the routes that matter are the one you sign and the one your employer is obliged to use.

26 U.S.C. 6103 makes returns and return information confidential, then authorises many exceptions, to state tax officials, law enforcement and others. No disclosure authority for a personnel security investigation appears in it. Your own file sits elsewhere in the statute: 6103(e)(1)(A)(i) opens an individual’s return “upon written request” to that individual, and what you then hand an investigator is your disclosure, not the IRS’s. Subsection (c) is the separate route for data released to someone you designate. A Notice of Federal Tax Lien becomes public only after the IRS assesses the liability, bills you, and you neglect or refuse to pay. A non-filer who owes nothing produces no lien at all.

One channel runs through your own company. Under 32 CFR 117.8(c)(1) cleared contractors “are required to report adverse information coming to their attention concerning any of their employees determined to be eligible for access to classified information,” though not “based on rumor or innuendo.” Quitting does not stop it: “the termination of employment of an employee does not negate the requirement to submit this report.” It also shields the contractor from defamation liability for that report (Becker v. Philco). A conversation with your FSO is not an informal one.

How many years back does anyone look?

Three windows, in three systems. Merging them is the commonest error here.

The six-year figure is Internal Revenue Manual 5.1.11.7.1, collection policy that says nothing about clearances, and it does not stop where it is usually quoted: revenue officers must “always request all (non-fraudulent) unfiled returns,” and “the taxpayer may file for all open periods regardless of the age of the delinquency.”

What does the tax mitigating condition require?

Arrangements plus compliance. Guideline F has seven mitigating conditions, 20(a) through 20(g), and only 20(g) is written for taxes. Its second half is the half people forget.

The condition credits “the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.” In PSH-25-0122, a DOE proceeding under 10 C.F.R. Part 710 applying the same SEAD 4 guidelines, the judge held that three conditions cannot reach a filing-only allegation: “mitigating conditions (d), (e), and (f) lack application since the cited security concerns do not involve overdue or unresolved debts or unexplained affluence.” One judge, one case: for a DoD contractor that is a persuasive analogue, not a rulebook.

A popular shortcut misreads that wording. The IRS online payment agreement gates its own web form: to apply online for the long-term installment agreement you must owe $50,000 or less in combined tax, penalties and interest and “have filed all required returns.” That gates the online application, not the arrangement; the same page notes setup fees are higher by phone, mail or in person. And 20(g) credits arrangements “to file or pay,” so an arrangement to file counts on its own. PSH-25-0122 proves it: 20(g) was established there with no payment plan in the record and no tax owed.

The IRS’s own penalty discount, though, is the one benefit this article’s reader cannot claim. The failure-to-pay penalty falls from 0.5% to 0.25% per month only “if you filed your tax return on time as an individual and you have an approved payment plan.” The page states the reduction twice and attaches that condition both times. File late and the rate stays at 0.5% a month, or 1% a month once a notice of intent to levy goes ten days unanswered. Budget on the higher number.

Waiting is not neutral either. The IRS may file a substitute return that “might not give you credit for deductions and exemptions you may be entitled to receive,” then send Notice CP3219N, a 90-day letter. You have 90 days to file your own return or petition the Tax Court, and once CP3219N arrives “you can not request an extension to file.” The proposed figure is not final: the IRS says filing your own return remains in your interest and that it “will generally adjust your account to reflect the correct figures.”

What do the decided cases show?

Documentation decides more of these than tax arithmetic. No federal statistic breaking Guideline F outcomes down by tax conduct could be found, so the decisions below are examples, not a sample.

ISCR 22-01925 (DoD industrial, denied, 18 March 2025). The Statement of Reasons alleged failure to timely file federal returns for tax year 2017 and $26,626 owed. Paper sank him. He said he had paid $360 a month since about January 2023; his TY2017 transcript showed one $361 payment on 20 June 2023 and nothing else. The judge asked for returns for TYs 2017 to 2022 and proof of payment, and got nothing. Under 32 CFR part 155, Appendix A puts “the ultimate burden of persuasion” on the applicant and bars the Appeal Board from taking new evidence, so what he never produced could not be produced later. That procedure has limits: 155.2(f) excludes cases for access to sensitive compartmented information or a special access program, and 155.2(e) three withdrawal situations. Those are subject-matter exclusions, not status ones, so holding TS/SCI does not by itself put your collateral case outside the process.

PSH-25-0122 (DOE, denied, 20 October 2025). He filed. He proved receipt. He had overpaid. The judge found 20(g) established, then held that the guidelines say mitigating conditions “‘could’ mitigate security concerns under Guideline F, not that they necessarily do so in every case.” The five stated reasons were about judgment: he took faulty advice from people he called CPAs without interrogating the advice or their qualifications, over his wife’s protests; he repeatedly failed to file timely for tax years 2017, 2019, 2020, 2021, 2022, 2023 and 2024; at the hearing he failed to appreciate that filing was a legal obligation, not just a clearance obligation; he testified he would keep using the same adviser; and the judge inferred he might heed unconventional advice elsewhere. The decision calls the failure to file itself “only moderate” in seriousness. What enhanced it was “the process by which the Individual formed his beliefs and his adherence to those beliefs.”

PSH-24-0155 (DOE, granted, 29 January 2025). The counterweight, narrower than it looks. He disclosed failing to file federal and state returns for 2020 and 2021, and access was granted under 20(a) after he established he had not in fact been required to file those years: his IRS wage-and-income transcripts showed gross income of $7,460 in 2020 and $6,680 in 2021, against Form 1040 thresholds of $12,400 and $12,550 for a single filer under 65. His answer on the form was worse than his situation. The judge still recorded that he “did not have a good reason for his delay in conducting the research.” Both DOE cases run under 10 C.F.R. Part 710. Same guidelines, different agency, different procedure.

Is a denial permanent?

No, but the conditions differ by track, and neither track rewards passive waiting.

In the DoD industrial program a final DOHA denial or revocation bars reapplication for one year from the initial unfavorable decision. Appendix A to part 155 then splits the work. The employer makes the reapplication, and “the applicant shall thereafter be advised he is responsible for providing the Director, DOHA, with a copy of any adverse clearance decision together with evidence that circumstances or conditions previously found against the applicant have been rectified or sufficiently mitigated.” Your employer opens the file; you carry the evidence. Reapplication is “subject to the same processing requirements as those for a new security clearance application,” and if the Director finds reconsideration unwarranted, that decision “is final and bars further reapplication for an additional one year period.”

DOE runs its own rule. Under 10 C.F.R. 710.31(b), eligibility after a denial or revocation “may be reconsidered only when the individual so requests in writing, when there is a bona fide offer of employment requiring access authorization,” and when there is either material new evidence the individual was without fault in failing to present earlier, or convincing evidence of rehabilitation or reformation. A request is accepted once a minimum of one year has elapsed, and a denial of reconsideration “is final and not subject to review or appeal.” Reapplying after a denial covers the sequence; our guide to answering an SOR covers the step before it.

Frequently Asked Questions

Can you get a security clearance with unfiled taxes?

Unfiled returns are a disqualifying condition under SEAD 4 paragraph 19(f), not an automatic disqualification. The weighing takes in all reliable information, favorable and unfavorable; doubt is resolved in favor of national security. A DOE case decided in January 2025 ended in a grant, but the applicant proved his income had been below the filing threshold, so no return had ever been required of him.

Does filing the missing returns fix it?

Filing is necessary and not automatically sufficient. In DOE PSH-25-0122, decided 20 October 2025, the individual filed every delinquent return at issue, documented receipt and had overpaid, and the judge still found the filing “insufficient to resolve the security concerns.”

Do I have to owe money for this to be a problem?

No. Paragraph 19(f) is triggered by the failure to file itself, and question 26.3 asks whether you failed to file, failed to pay, or both. The PSH-25-0122 applicant owed nothing and still lost his access authorization.

Will continuous vetting catch an unfiled return?

Neither DCSA document read for this article says it can. The April 2022 NBIS one-sheet describes alerts drawn from criminal, terrorism and financial databases and public records; the FY25 and FY26 billing schedule prices automated checks against seven data categories it never names. See continuous vetting versus continuous evaluation and what a suspension does to your pay.

What the record rewards

The pattern has little to do with tax. Two lost because the record showed thinking that had not changed and documents that never arrived. One won because he researched and brought proof. What counts is the paper you can hand someone: returns filed and acknowledged, an arrangement in writing, payments visible on a transcript rather than described in a sentence. Build that record with a tax professional, and bring in a clearance attorney if a Statement of Reasons is already in your hands; this page substitutes for neither. As the judge who denied 22-01925 wrote, that 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.”