Security Clearance Denial

Blowing Off Debts or Taxes Will Cost You Your Security Career

As noted in previous articles and blog posts, it is well established that financial issues remain the number one reason for a security clearance denial. Why? Common sense and historical experience have shown that financial difficulties may increase temptation to commit illegal or unethical acts as a means of gaining funds to meet financial obligations. This makes financial difficulties a significant security concern. Candidates for security clearance are evaluated under the “whole person” concept which provides a balanced assessment of affirmative or positive qualities as well as potentially disqualifying behaviors.

For an adjudicator, the amount of debt is not as important as what caused the debt and what steps the applicant has taken to resolve it. With these thoughts in mind, take a read on the below security clearance denial scenario based upon financial issues. I think you would probably have come to the same decision as the judge.

The applicant is a Department of Defense contractor who was initially denied a security clearance by the DoD CAF. He failed to file his taxes for tax years 2010, 2012, and 2013 because he knew he owed money and decided to “blow it off” until a later time. It was not until 2017 that he filed the missing years and now owes the IRS $30,000. The applicant also filed a joint Chapter 13 bankruptcy with his father because the business they had opened ended up failing with losses. On top of that, the applicant owed $12,000 in child support to his first wife which is now being paid through the monthly bankruptcy payments. Mitigating factors applied to the issues were his honorable military service, positive character references, and the fact that he has now taken steps to address all of the debts. However, the DOHA judge also noted that the applicant “blew off” addressing the tax issues until he started working for his current company and needed a clearance, and that the bankruptcy and child support debts are still in the beginning stages of resolution – clearance denial upheld!


  1. Interesting . . . I know of a PR case where the applicant had not filed federal taxes in ten years. The situation was blamed on their spouse and they filed before their hearing. But, I find it difficult to believe that the applicant went ten years without filing and didn’t know. The spouse did contracting work and I don’t know if he was receiving 1099 all those years but the applicant was receiving W-2 wages and those would have been reported to the IRS each year. It seems likely that their mailbox was filled with IRS notices.

    The applicant in that case, retained clearance after a hearing.