DoD gave security clearances to thousands of ‘federal tax cheats’

About 83,000 Defense Department employees and contractors, who held or were determined eligible for a security clearance, owed more than $730 million in unpaid ...

By Stephanie Wasko
Special to Federal News Radio

About 83,000 Defense Department employees and contractors, who held or were determined eligible for a security clearance, owed more than $730 million in unpaid taxes as of June 2012, according to a new report from the Government Accountability Office.

Per GAO’s recommendations, the Office of Personnel Management, Office of the Director of National Intelligence (ODNI) and DoD are now working to include tax-compliance checks to enhance security clearance processes, according to the report released Monday.

“Giving security clearances to individuals who fail to follow the law is unwise and risky. Federal tax cheats with security clearances jeopardize both our national and economic security, and could unnecessarily put our nation’s classified information at risk,” said Sen. Tom Coburn (R-Okla.) in a press release.

GAO’s analysis looked at security clearances from January 2006 to Dec. 31, 2011. Federal employees made up 44,500 of the individuals who owed taxes. Individuals with top secret or sensitive compartmented information (SCI) access owed approximately $83 million. GAO found 60 percent of the total number of cleared workers and contractors who owed taxes did not have a repayment plan. Seventy-six percent fell into tax debt after being issued a security clearance.

“The GAO findings should raise the alarms within the OPM, DoD, and intel agencies. As government scrambles to find the next insider threat, history tells us that security-cleared individuals in financial trouble are the most vulnerable to coercion,” Evan Lesser, founder and managing director of, said in an email statement.

The report follows a previous GAO investigation of non-DoD employees and contractors with security clearances and outstanding federal taxes.

In this earlier report, GAO recommended that ODNI look into using federal debt information from the Department of the Treasury’s Treasury Offset Program (TOP) system. But an ODNI working group found legal and logistical challenges impeding the use of information from the TOP system since tax code restricts giving tax information to federal agencies. ODNI is now looking at whether an exception to this part of the IRS code would help enhance security clearance processes, GAO stated.

Because of the challenges with using data from the TOP system, GAO stated in its latest report, ODNI’s working group is “exploring additional sources of information to provide automated federal tax-compliance checks for the purposes of investigating and adjudicating clearance applicants, as well as for ongoing monitoring of current clearance holders’ tax-debt status.”

The report gave no new recommendations for DoD as ODNI continues its efforts in obtaining tax compliance information for agency security clearance purposes.

“We believe these efforts, if implemented, can help to detect the tax debts of DoD employees and contractors who hold or apply for a national security clearance,” GAO stated.

The IRS assigned a program manager in January to oversee integrating automated tax compliance checks into the IRS system. ODNI officials said the agencies are still in the early processes of developing this automated check system, but it is planned to be ready along with the revised investigative standards by 2017, according to the GAO report.

The Office of Personnel Management currently runs background checks for personnel applying for security clearances within the DoD. The Pentagon then uses OPM’s results in making its final decision to provide a clearance.

“Federal law does not expressly prohibit an individual with unpaid federal taxes from being granted a security clearance; however, delinquent tax debt does pose a potential vulnerability that is to be considered in making a broader determination of whether an applicant should be granted a security clearance,” the report stated.

Stephanie Wasko is an intern with Federal News Radio.


Special Report: Questioning Clearances

Security clearance process in need of makeover, expert says

Congress eyeing legislative fix for security clearances

Security clearance process ready for, in need of its next makeover

Taxes: pay them now or pay them later

Copyright © 2024 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.

    Eric White/Federal News NetworkDavid Berteau

    Some highlights of provisions in this year’s NDAA that could affect contractors

    Read more
    Congress, budget, budget cut, spending cuts, Capitol, Congress, federal budget

    Congress tackles spending, policy and candidate protections on the road to the August recess

    Read more

    Congressional regulators want to know why a top official at the FCC was able to support what appears to be a Trump campaign initiative

    Read more