8,400 Security Clearance Holders Owe IRS $85 Million in Unpaid Taxes

Report: Clearance holders with debt could be a security risk

• October 31, 2013 5:47 pm


More than 8,000 federal workers and contractors with security clearances owe $85 million in unpaid taxes to the IRS, according to the Government Accountability Office (GAO).

The GAO warned that individuals who have significant debt and access to classified documents pose potential security risks.

"About 8,400 individuals adjudicated as eligible for a security clearance from April 2006 to December 2011 owed approximately $85 million in unpaid federal taxes, as of June 2012," according to a report released Thursday.

The GAO examined individuals who have been approved for security clearances in the Department of Homeland Security (DHS), Department of Energy (DOE), and the State Department. Those in the intelligence community and the Defense Department have yet to be reviewed.

The security clearance process has been under scrutiny since the leaks by NSA contractor Edward Snowden, which have been called the "most serious" in U.S. intelligence history. Snowden’s background check, carried out by US Investigations Services LLC, has been faulted for failing to interview enough character witnesses and not checking a past security violation.

The GAO now says indebted security clearance holders could make secrets in the executive branch vulnerable. At least one worker owes as much as $2 million to the IRS.

"Federal law does not expressly prohibit an individual with unpaid federal taxes from being granted a security clearance; however, tax debt does pose a potential vulnerability that must be considered in making a broader determination of whether an applicant should be granted a security clearance," the GAO said.

"Specifically, federal adjudicative guidelines for determining eligibility for access to classified information state that an individual who is financially overextended is at risk of having to engage in illegal acts to generate funds, and provide that adjudicating officials weigh an individual’s debts, such as federal tax debts, as they relate to an individual’s financial and personal conduct when making the security- clearance determination," they said.

Half of the workers cited by GAO were approved for top-secret security clearances, and the debt of each individual ranged from $100 to over $2 million.

On average, the 8,400 government employees and contractors owed approximately $10,119.05 each. Five percent had a tax lien imposed on them.

The majority (76 percent) accrued their debt after they were issued a security clearance. The GAO said the government does not have an adequate system in place to monitor a clearance holder’s debt situation once they are approved.

Currently, an individual is only reinvestigated every five or 10 years, depending on the level of clearance.

"Complete and accurate information on the tax-debt status of those applying for federal security clearances is important in helping limit potential vulnerabilities associated with granting clearances to those who might represent a security risk," the GAO concluded.

The agency recommended that the Office of the Director of National Intelligence explore monitoring federal debt information of security clearances holders, in order to mitigate the risk involved.