Tester targets tax-delinquent Defense contractors

Sen. Jon Tester (D-Mont.) is setting his sights on tax-delinquent Defense contractors who hold security clearances.

Sen. Jon Tester (D-Mont.)
Tester sent a letter to National Security Director James Clapper asking him to take action against the tax- delinquents and to inform them that failure to pay taxes not only is an insult to law-abiding citizens who pay their taxes on time, but their actions put the nation’s security at risk.

The senator was inspired to act after a recent Government Accountability Office (GAO) report revealed thousands of contract employees eligible for secret, top secret or sensitive compartmented information (SCI) clearances owed thousands in back taxes.

“This unacceptable situation raises national security concerns and sends the message to taxpayers that some folks don’t have to play by the rules, but can still be trusted with access to our nation’s most sensitive information,” Tester wrote Clapper. “Given the scope of this problem and the amount of debt involved, I urge you to address this matter comprehensively and promptly.”

At the end of July, GAO released a report entitled “Security Clearances: Tax Debts Owed by DOD Employees and Contractors”, which said that approximately 83,000 DoD employees and contractors who were deemed eligible for security clearances or interim clearances owed more than $730 million in unpaid taxes as of June 30, 2012. According to Internal Revenue Service data, 34,000 of the 83,000 with tax debt — about 40 percent of the total — had a tax pay-back plan in place as of the same date.

Tester, who leads the Homeland Security and Governmental Affairs subcommittee, asked Clapper to ensure that a thorough review of a clearance applicant’s financial history is part of the background check process. He also asked Clapper to explain how the government plans to recover the $730 million and restrict the access of employees or contractors who have unpaid taxes in the future.

“Some of these individuals with delinquent tax debt are jeopardizing our national security because of poor judgment and decision-making,” he said in a release. “Potentially harmful financial behaviors should not be ignored after an individual is granted or deemed eligible to have a security clearance.”

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

Tester has a history of supporting the reform of the security clearance process. President Barack Obama signed his Security Clearance Oversight Reform (SCORE) Act into law on Feb. 12. That law allows the Office of Personnel Management’s inspector general to investigate cases in which the integrity of a security clearance investigation may have been called into question.

Tester is also the sponsor of S.1744 – Security Clearance Accountability, Reform, and Enhancement Act, which seeks greater transparency and accountability in the security clearance review process.


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