Can Failing to File Taxes Lead to a Security Clearance Denial?

You probably know that if you’re busted for DUI or DWI or if you have a criminal record, a problem holding down a job, substance abuse issues, or a bankruptcy on your record, you could be denied a security clearance. The same goes for serious mental illness, domestic violence, or a problem taking orders from employers. But not filing your state and federal income tax returns? Maybe you didn’t know your security clearance could be denied for that.

Suppose you are applying for security clearance and you end up disclosing to an investigator that you have old state and federal tax returns you have not yet filed. It seems innocent enough, right? If you have unfiled tax returns and you apply for security clearance, you could receive a notice that your failure to file your taxes raised substantial doubts about your eligibility for security clearance. Your next step would likely be to ask for a hearing.

Failure to Meet Financial Obligations

Anyone in your situation may think that the failure to file taxes has nothing to do with holding a security clearance, but that is not how investigators see it. In the government’s view, an applicant’s failure to live within their means, satisfy their debts, and meet their financial obligations is an indication of poor self-control, poor judgment, and the unwillingness to follow the rules.

What do the above concerns have to do with security clearance? They cause investigators to question the applicant’s reliability, trustworthiness, and ability to protect classified information. If the individual requests a hearing, they should produce evidence that they have tackled the problem and filed all of their state and federal tax returns that are late. Better yet, if they have any balance owed, they should pay it off in full or at least make a good faith effort to enter into a payment arrangement. If the applicant does not act fast enough, it may be too little too late in the judge’s view. Thus, it is possible for the judge to deny access to security clearance. This is why it’s wise to be represented by an attorney.

Next: Delinquent Debt & Security Clearance Denials

Don’t Ignore Pressing Financial Issues

If you intend to apply for security clearance, don’t ignore pressing financial issues that are fixable. If you have a problem, the best solution is to deal with it right away and not let it linger. File your taxes on time and if you can’t afford to pay what you owe, call the state or the IRS promptly and enter into a payment plan.

If you’re concerned that your application will be denied due to financial issues or if you need to request a hearing, contact our security clearance attorneys today.