File and Pay Your Taxes or Risk Clearance Denial

For those that find themselves deployed to a combat zone, take heed in regards to filing and paying state taxes. In a recent Defense Office of Hearing and Appeals case involving state tax delinquencies, the board denied the applicant’s appeal. Here are the particulars of the case:

This applicant was deployed to unnamed locations first while in the military, and then later as a contractor. In accordance with IRS statues, Federal taxes may be held in abeyance while working in a combat designated area. This does not, however, apply to any state taxes owed. The $19,000 owed by the applicant resulted in an SOR and clearance denial. He tried to argue that his spouse was partly to blame, having become overwhelmed with household responsibilities while he was gone. However, when the big picture was painted by the government defense it was quite easy to see his pattern of financial irresponsibility involving overpayments received for a housing allowance, bankruptcy, and other miscellaneous debts.

Along those same lines, the central issues in another case resulting in a clearance denial stemmed from the applicant’s failure to timely file Federal and state taxes for owed and was delinquent in payments, child support payments that were in arrears, and on top it all off, he filed for Chapter 7 Bankruptcy that was discharged in 2016. This was a pretty easy decision for the board, as the applicant did not provide any mitigation to show that he had taken proactive steps to resolve his financial woes.