Tax Issues and Security Clearances

By John V. Berry,

We have had an increase in security clearance cases arising over the last 5 years involving the issue of taxes and security clearances. This article discusses some of the issues that security clearance holders with tax issues have been affected.

It is quite often the case that we represent security clearance holders or applicants who have had trouble timely filing taxes or with the payment of their state, federal or local taxes.  The security concern most often falls under Adjudicative Guideline F, Financial Considerations, but could also fall under Adjudicative Guideline E, Personal Conduct. These guidelines govern security clearance holders, whether they are federal employees or government contractors. 

Specifically, Guideline F, Paragraph 18(f) provides the security concern that the government has with respect to taxes: “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.” 

Most Common Tax Issues Affecting Security Clearance Holders

The most common issues for security clearance holders or applicants when it comes to taxes is twofold: (1) the timely filing of tax returns; and (2) paying one’s owed taxes. Over the years, the timely filing of tax returns has almost been more important to security clearance adjudicators than actually being current on tax payments.  The good news for security clearance holders is that tax issues are becoming slightly easier to mitigate if one can demonstrate the effort under Security Executive Agent Directive 4 (SEAD 4). It used to be that untimely filings of returns would result in almost an automatic denial, but the newer clearance guidelines and the mitigation of such types of cases has become a bit easier.  

Mitigation of Tax Concerns – Steps to Take

The most important step for a security clearance holder or clearance applicant with tax issues is to engage the tax authorities at issue and start to try to resolve the issues.  If a resolution is obtained from the Internal Revenue Service (IRS) or other tax authorities, then mitigating the security clearance concerns can become easier.  

The new focus by security clearance adjudication authorities has been on resolving the underlying tax issues. There is still an issue that may have to be dealt with regarding the timeliness of the filing of past returns, but the focus has shifted, primarily, to how the individual has resolved their tax issues.  The new Guideline F, Paragraph 20 (g) at page 16 states that mitigation can be shown where “the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.” This is a new addition to the security clearance guidelines for Guideline F, involving taxes.

Demonstrating Mitigation

To show mitigation for tax issues under Guideline F, individuals should obtain copies of their tax transcripts, where possible, but also obtain other potential information about payments and receipts.  Additionally, any correspondence with tax authorities is helpful. The goal is to show security clearance adjudication authorities that the individual has attempted to rectify the tax situation.  

Other issues that could mitigate the failure to file tax returns properly or on time include: (1) individual maturity or knowledge when filing returns; (2) the uniqueness of the tax situation or issues that could have affecting tax filings; (3) a more recent record of filing taxes on time; (4) classes or other guidance received from tax professionals that illustrate how the individual has learned from the deficient filings; and (5) the amount of time that has passed since the late tax filing issue. It is also not a bad idea for individuals facing this issue to retain an accountant to oversee the tax filing process which can potentially be used to mitigate these issues as well. I have attached a link to a case that is helpful in explaining the new approach to reviewing tax issues.  That case is attached here

Additionally, it can be helpful in these types of cases for a review of the Whole-Person Concept, which can demonstrate the overall trustworthiness of the individual. Oftentimes, former military service members and others with a dedicated background with the government can receive additional consideration when attempting to mitigate tax issues that have arisen in the security clearance process


If you are in need of assistance in the security clearance process please contact our office at (703) 668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook or Twitter.

Marijuana and Security Clearances Don’t Mix

By John V. Berry, Esq.,

There have been a number of states that have legalized marijuana over the past 10 years. This has led to a great deal of confusion by security clearance holders about the legality of marijuana usage while holding or seeking a security clearance. Many states like Colorado or California have legalized marijuana, but it remains illegal under federal law.  This can cause problems for security clearance applicants or holders. This article discusses these issues.



Image from Wikipedia, By Oren neu dag,


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How Do Psychological Conditions Affect Security Clearances?

By John V. Berry, Esq., 

Psychological concerns can become an issue in security clearance cases for government contractors and federal employees. A mental health diagnosis can enter an individual’s life at any time. When a psychological issue arises in the context of applying for or attempting to retain a security clearance it is very important for the individual to seek legal advice and potential legal representation in order to enable the person the best opportunity to maintain or obtain their security clearance. The individual should retain a security clearance lawyer for this purpose.


Courtesy – Wikipedia by By Paget Michael Creelman

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Drug Use Issues in Security Clearance Cases

By John V. Berry, Esq.,

One of the more common issues that arise in the context of security clearance investigations is the issue of illegal drug usage and prescription drug usage (by other than the intended recipient) for federal employees and government contractors. This is regulated by Adjudicative Guideline H for those holding or seeking a security clearance. We represent federal employees and government contractors before all federal, intelligence and military agencies. This article discusses the issues that many individuals face with respect to drug usage and their security clearance.

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Hiring a Security Clearance Lawyer

By John V. Berry, Esq., 

We typically meet with many federal employees and/or government contractors who are faced with security concerns or potential security concerns in obtaining, retaining or applying for a security clearance. These individuals often ask our attorneys at what point they should retain a security clearance attorney to assist, advise or represent them. This article discusses this topic.

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DOE Security Clearance Appeals


By John V. Berry, Esq.,

Both the Department of Energy (DoE) and the Nuclear Regulatory Commission (NRC) maintain their own security clearance procedures, as enacted into law by the Atomic Energy Act of 1954. This security clearance process for DoE employees is similar to the security clearance process for other federal employees and government contractors and is administered by the DoE Office of Hearings and Appeals.  This article discusses the issues in responding to DoE security clearance issues and clearance appeals. Continue reading

Self-Reporting Security Clearance Issues


By John V. Berry, Esq.,

Our law firm represents security clearance holders in security clearance investigations
and appeals. We also represent individuals that need to determine how and what to report involving new security concerns. One of the frequently misunderstood issues is a security clearance holder’s continuing duty to report on themselves for newly arising security concerns. In other words, self-reporting usually involves reporting a security incident in between the 5-10 year period for re-investigation. Federal agencies are slowly moving towards a system of continuous evaluation for clearance holders, but there is still a major duty for a clearance holder to self-report significant security concerns that arise between investigations. This can pose a problem where a person is essentially told to report on themselves. It causes many conflicts for clients.


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