Defense workers with security clearance owed millions in back taxes, GAO finds

More than 80,000 Defense Department employees and contractors with security clearances owed $730 million in unpaid federal taxes as of June 2012, according to Congress’s nonpartisan watchdog agency.

The Government Accountability Office said in a report on Monday that about 31 percent of the tax-
delinquent workers already owed money when the government issued their security clearances.

“DOD officials stated that individuals having access to classified information pose a greater risk because they have more opportunity to actually compromise classified information than a person who is only eligible to access classified information,” the report said.

The GAO found that about 26,000 of the tax-delinquent employees and contractors had access to classified information.

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

Among all the workers who owed taxes, 40 percent had a repayment plan with the Internal Revenue Service, the report said.

The GAO said the Office of the Director of National Intelligence, the Treasury Department and the Office of Personnel Management, which oversees federal background checks, are exploring options for detecting whether applicants owe taxes. Federal law prevents the Internal Revenue Service from disclosing private taxpayer information to other agencies, meaning an exception would be needed for workers seeking security clearances.

The Defense Department is not alone among federal agencies in employing workers who are delinquent on their taxes. In April, the Treasury Department’s inspector general for tax administration issued a report saying that the IRS doled out more than $1 million in bonuses to about 1,100 employees with federal tax-compliance problems.

IRS records show that about 3.2 percent of the federal government’s civilian employees owed back taxes in 2013. The rate among the general public that year was significantly higher, with 8.7 percent of U.S. taxpayers being delinquent.

The nation’s security-clearance system has been under intense scrutiny because of two recent high-profile cases involving workers who had received clearances: Edward Snowden, the National Security Agency contractor who leaked thousands of classified documents, and Aaron Alexis, the contractor who killed 12 people in a shooting rampage at the Navy Yard last September.

Earlier this year, the Justice Department filed a complaint in a whistleblower’s lawsuit against USIS, the Fall Church-based company that performs many of the background checks used in the clearance process. The suit alleges that the company “dumped,” or did not fully perform, at least 665,000 background checks.

The company has said that it has since tightened controls and put new leadership in place, and that the conduct outlined in the allegations is contrary to its “values and commitment to exceptional service.”

The Pentagon has vowed to overhaul the way it screens personnel. And officials have said they plan to reduce the number of people who hold clearances by at least 10 percent.

Most clearance holders are reinvestigated every five to 10 years. But some have called for continuous monitoring of individuals. A recent pilot program that looked into clearances for 3,370 soldiers, civilians and contractors found problems with 731 of them. In nearly 100 cases there was “serious derogatory information,” including financial issues, domestic abuse, drug use and prostitution.

As a result of the review, the Pentagon pulled 55 people’s clearances and access to military facilities for another 44.

Another lapse in the program was highlighted earlier this year by a congressional committee that found that law enforcement agencies in more than 450 jurisdictions, including the D.C. police, do not cooperate with investigators doing the background checks.

“Without any enforcement mechanism against local law enforcement agencies that refuse to comply, federal security clearance investigators are unable to obtain pivotal information pertaining to their cases,” the report said. It said that access to raw police data could have made a difference in the security-clearance review of Alexis, the Navy Yard gunman, who had failed to disclose a 2004 arrest for malicious mischief.

In its report, the GAO noted that unpaid taxes do not automatically disqualify someone from gaining a clearance. But it said that “delinquent tax debt does pose a potential vulnerability” that should be part of the review process.

“An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds,” it said.

Ernesto Londoño contributed to this report.

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
Christian Davenport covers federal contracting for The Post's Financial desk. He joined The Post in 2000 and has served as an editor on the Metro desk and as a reporter covering military affairs. He is the author of "As You Were: To War and Back with the Black Hawk Battalion of the Virginia National Guard."
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