SECURITY 

CLEARANCES 

Additional 

Mechanisms May Aid 

Federal Tax-Debt 

Detection 

Report to Congressional Requesters

September 2013

GAO-13-733

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-733, a report to 

congressional requesters

September 2013

SECURITY CLEARANCES

Additional Mechanisms May Aid Federal Tax-Debt 

Detection

Why GAO Did This Study

As of October 2012, about 4.9 million 

civilian and military employees and 

contractors held a security clearance. 

Federal laws do not prohibit an 

individual with unpaid federal taxes 

from holding a security clearance, but 

tax debt poses a potential vulnerability. 

GAO was requested to review tax-debt 

detection during the clearance 

process. GAO examined (1) the 

number of individuals with unpaid 

federal taxes, if any, in the OPM 

security-clearance database and the 

magnitude of any federal tax debt, and 

(2) the extent to which federal 

agencies have mechanisms to detect 

unpaid tax debt during the securityclearance-approval process. 

GAO compared OPM’s securityclearance information to the IRS’s 

known tax debts. To provide examples, 

GAO conducted a detailed review of 

IRS and security adjudication files of 

13 individuals selected, in part, on the 

basis of tax debt amount and type of 

security clearance. GAO also reviewed 

relevant laws and regulations and 

interviewed officials from the Office of 

the Director of National Intelligence 

(ODNI), Treasury, OPM, and three 

selected federal agencies that 

represented more than half of the

clearance holders in OPM’s database.

What GAO Recommends

GAO recommends that ODNI study the 

feasibility of federal agencies routinely

obtaining federal debt information from 

Treasury for the purposes of 

investigating and adjudicating 

clearance applicants, as well as for 

monitoring current clearance holders’ 

tax-debt status. ODNI agreed with 

GAO’s recommendation.

What GAO Found

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. This represents about 3.4 percent of the civilian executivebranch employees and contractors who were favorably adjudicated during that 

period. GAO found that about 4,700 of the approximately 8,400 individuals were 

federal employees while the remainder was largely federal contractors. 

Additionally, about 4,200 of these individuals had a repayment plan with the 

Internal Revenue Service (IRS) to pay back their debt. For this review, GAO used 

clearance data from the Office of Personnel Management (OPM) Central 

Verification System (CVS) database. The CVS database does not maintain 

information on the denial of security clearances on the basis of an individual’s 

nonpayment of federal taxes. Thus, GAO was not able to determine the number 

of individuals who were denied security clearances for this reason.

Federal agencies have established mechanisms aimed at identifying unpaid 

federal tax debt of security-clearance applicants; however, these mechanisms 

have limitations. To detect federal tax debt for clearance applicants, federal 

investigators primarily rely on two methods: (1) applicants self-reporting tax 

debts; and (2) validation techniques, such as the use of credit reports or inperson interviews. Each of these methods has shortcomings in detecting unpaid 

federal tax debts of clearance applicants. For example, credit reports are the 

primary method for identifying tax debt that was not self-reported, but these 

reports only contain information on tax debts for which the IRS filed a lien on the 

debtor’s property. According to GAO’s analysis, 5 percent of the 8,400 delinquent 

taxpayers who were favorably adjudicated as eligible for security clearances had 

a tax lien filed on them. Additionally, federal agencies generally do not routinely 

review federal tax compliance of clearance holders. There is no process to detect 

unpaid federal tax debts accrued after an individual has been favorably 

adjudicated unless it is self-reported, reported by a security manager due to 

garnishment of wages, or discovered during a clearance renewal or upgrade.

GAO’s analysis found that 6,300 individuals (approximately 75 percent) accrued 

their tax debt after approval of the security clearance. 

Additional mechanisms that provide large-scale, routine detection of federal tax 

debt could improve federal agencies’ ability to detect tax debts owed by securityclearance applicants and current clearance holders, but statutory privacy 

protections limit access to this information. Federal agencies may obtain 

information on federal tax debts directly from the IRS if the applicant provides 

consent. In addition, federal agencies do not have a mechanism, such as one 

that the Department of the Treasury (Treasury) uses, to collect delinquent federal 

debts. Such information could help federal agencies perform routine, automated 

checks of security-clearance applicants to determine whether they have unpaid 

federal debts, without compromising statutory privacy protections. Such a 

mechanism could also be used to help monitor current clearance holders’ taxdebt status. Gaining routine access to this federal debt information, if feasible, 

would better position federal agencies to identify relevant financial and personalconduct information to make objective assessments of eligibility for securityclearance applicants and continued eligibility of current clearance holders.

View GAO-13-733. For more information, 

contact Stephen M. Lord at (202) 512-6722 or 

lords@gao.gov.
Page i GAO-13-733 Security Clearances and Federal Tax Debt

Letter 1

Background 7

More Than 8,000 Individuals Eligible for Security Clearances Owe 

about $85 Million in Federal Taxes; About Half Are on Payment 

Plans with the IRS 15

Federal Agencies Have Mechanisms to Detect Tax Debt, but 

Opportunities Exist to Strengthen Detection Capabilities 17

Conclusions 27

Recommendation for Executive Action 28

Agency Comments and Our Evaluation 28

Appendix I Federal Investigative Standards 30

Appendix II Revised Adjudicative Guidelines for Determining Eligibility 

for Access to Classified Information 32

Appendix III Scope and Methodology 34

Appendix IV Comments from the Department of Homeland Security 38

Appendix V Comments from the Office of the Director of National 

Intelligence 39

Appendix VI Comments from the Office of Personnel Management 40

Related GAO Products 41

Contents
Page ii GAO-13-733 Security Clearances and Federal Tax Debt

Table

Table 1: Information Gathered in Conducting a Typical 

Investigation to Determine Suitability and Eligibility for a 

Security Clearance 30

Figures

Figure 1: Overview of the Federal Security-Clearance Process 11

Figure 2: Excerpt of Office of Personnel Management (OPM) Form 

SF-86 18
Page iii GAO-13-733 Security Clearances and Federal Tax Debt

Abbreviations

BMF Business Master File

COSO Committee of Sponsoring Organizations of the

Treadway Commission

CVS Central Verification System

DHS Department of Homeland Security

DOD Department of Defense

DOE Department of Energy

e-QIP Electronic Questionnaires for Investigations

Processing

FERDI Federal Employee/Retiree Delinquency

Initiative

FHA Federal Housing Administration

Fiscal Service Bureau of the Fiscal Service

FPLP Federal Payment Levy Program

IMF Individual Master File

IRS Internal Revenue Service

IRTPA Intelligence Reform and Terrorism Prevention 

Act of 2004

JPAS Joint Personnel Adjudication System

NMF Non-Master File

ODNI Office of the Director of National Intelligence 

OPM Office of Personnel Management

Performance

 Accountability Council Suitability and Security Clearance

Performance Accountability Council

SAM System for Award Management

SSN Social Security number

State Department of State

TIN Taxpayer Identification Number

TOP Treasury Offset Program

Treasury Department of the Treasury

VA Department of Veterans Affairs

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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Page 1 GAO-13-733 Security Clearances and Federal Tax Debt

441 G St. N.W.

Washington, DC 20548

September 10, 2013

The Honorable Orrin Hatch

Ranking Member

Committee on Finance

United States Senate

The Honorable Tom Coburn

Ranking Member

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Susan M. Collins

United States Senate

The Honorable Dave Camp

Chairman

Committee on Ways and Means

House of Representatives

The Office of the Director of National Intelligence (ODNI) reported that, as

of October 2012, over 4.9 million federal employees (civilian and military) 

and contractors held—or were individuals eligible to hold—a security 

clearance due to a favorable adjudication.1

 1

Office of the Director of National Intelligence, 2012 Report on Security Clearance 

Determinations (January 2013).

The number of personnel 

holding clearances underscores the need for security-clearance 

adjudicators to conduct thorough vulnerability assessments of securityclearance applicants as these clearances may allow government 

personnel to gain access to classified information that, through 

unauthorized disclosure, can in some cases cause exceptionally grave 

damage to U.S. national security. Promulgated under the authority of 

Executive Order 12968, adjudicative guidelines establish the criteria by 

which an individual is evaluated for a security clearance determination. 

The guidelines state that assessments should consider available, reliable 

information about the person, past and present, favorable and 

unfavorable, and carefully weigh a number of variables, including 

whether the applicant has shown an inability or unwillingness to satisfy 
Page 2 GAO-13-733 Security Clearances and Federal Tax Debt

debts or financial obligations or has failed to file annual required tax 

returns.

2

ODNI is the Security Executive Agent for the federal government. In this 

role, ODNI is now responsible for developing uniform and consistent 

policies related to the security-clearance process. The security-clearance 

process begins with a determination by executive agencies regarding 

which of their civilian and contractor positions require access to classified 

information. The individuals identified in those positions must then apply 

for a security clearance and undergo an investigation. The Office of 

Personnel Management (OPM) conducts background investigations of 

security-clearance applicants for most executive agencies. Following the 

investigation, federal agencies are to determine whether an applicant is 

eligible for a personnel security-clearance on the basis, in part, of the 

results of the background investigation. OPM maintains a database of 

federal employees and contractors adjudicated as eligible for clearances. 

Individuals approved to hold secret security clearances must undergo a 

reinvestigation every 10 years, and those approved for top-secret 

clearances must undergo a reinvestigation every 5 years.

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. 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 securityclearance determination.

3

 2

Exec. Order No. 12968, 60 Fed. Reg. 40245 (Aug. 7, 2005) and Revised Adjudicative 

Guidelines for Determining Eligibility for Access to Classified Information (Dec. 29, 2005). 

We have 

issued several reports and testimonies on the U.S. government security3

OPM officials noted that under the new standards issued in December 2012, it is a 5-year 

cycle for both types of investigations, with reinvestigations conducted of a random sample of 

clearance holders. However, these standards have not yet been implemented.
Page 3 GAO-13-733 Security Clearances and Federal Tax Debt

clearance process over the last several years, and highlighted progress 

being made to improve the timeliness of the clearance process.4

You asked us to review the security-clearance process and mechanisms 

used to identify unpaid federal tax-debt information of applicants, 

employees, and contractors. For this review, we focused on civilian 

employees and contractors in the executive branch. We excluded 

Department of Defense (DOD) employees and contractors and known 

employees of intelligence agencies from this review.5

To determine the number of individuals with unpaid taxes in the OPM 

security-clearance database, as well as determine the magnitude of 

unpaid federal tax debt, we obtained and analyzed OPM data on 

individuals eligible for a secret or top-secret security clearance due to a 

favorable adjudication, either during an initial investigation or a 

This report answers 

the following questions: (1) How many individuals with unpaid federal 

taxes, if any, are in the OPM security-clearance database and what is the 

magnitude of any unpaid federal tax debt; and (2) To what extent do 

federal agencies have mechanisms to detect unpaid tax debt during the 

security-clearance approval process? As part of this work, we are also 

providing case-study examples of individuals with security clearances 

with unpaid tax debt to highlight whether the tax debt was revealed during 

the investigative or adjudicative processes, and, if so, how it was handled 

during the adjudication. In addition, as agreed with your staff, we are 

conducting a separate review of DOD security-clearance holders who 

owe federal taxes and will issue a report on our results next year.

 4

For example, see GAO, Security Clearances: Agencies Need Clearly Defined Policy for 

Determining Civilian Position Requirements, GAO-12-800 (Washington, D.C.: July 12, 

2012); and Personnel Security Clearances: Continuing Leadership and Attention Can 

Enhance Momentum Gained from Reform Effort, GAO-12-815T (Washington, D.C.: June 

21, 2012).

5

Security-clearance information from civilian agencies is maintained in OPM’s Central 

Verification System (CVS). Security-clearance information from DOD employees and 

contractors is maintained in the Joint Personnel Adjudication System (JPAS). Securityclearance information from the intelligence community is maintained in the Scattered 

Castles database. CVS is capable of providing a bridge or link to JPAS security-clearance 

data, but the DOD data are not maintained in CVS. For our review, we did not study 

legislative-branch agencies in the OPM CVS database.
Page 4 GAO-13-733 Security Clearances and Federal Tax Debt

reinvestigation, from April 1, 2006, through December 31, 2011.6 We 

used this time frame for the OPM Central Verification System (CVS) data 

because prior to April 1, 2006, the provision of the date a clearance was 

granted was not required and was therefore not consistently available for 

analysis. We electronically matched federal tax-debt data from the 

Internal Revenue Service (IRS) Unpaid Assessment database to these 

individuals using Social Security numbers (SSN). The OPM CVS 

database does not maintain information on the denial of security 

clearances on the basis of an individual’s nonpayment of federal taxes. 

Thus, we were not able to determine the number of individuals who were 

denied security clearances for this reason. We included only those 

individuals with legally enforceable tax debts of $100 or more.7 All 

individuals in the IRS tax-debt data had unpaid federal taxes as of June 

30, 2012. The June 30, 2012, Unpaid Assessment file was used because 

it contained the most-recent unpaid-assessment information at the time 

we conducted our analysis. We assessed the reliability of the OPM data 

by performing electronic testing on the data and interviewing OPM 

officials regarding the quality and accuracy of the data. To assess the 

reliability of IRS unpaid-assessments data, we relied on the work we 

performed during our annual audit of the IRS’s financial statements and 

discussions with the audit team. We also interviewed knowledgeable IRS 

officials about any data-reliability issues.8

 6

Our review did not include the review of confidential clearance holders or public-trust 

positions. Department of Energy (DOE) and U.S. Nuclear Regulatory Commission (NRC)

“Q” and “L” clearances are equivalent to the top-secret and secret clearances. Thus, for 

the purposes of our report, we considered “Q” and “L” clearances issued by DOE and 

NRC to be treated as top-secret and secret clearances, respectively.

We determined that both the 

OPM and IRS data were sufficiently reliable to identify the individuals 

eligible for clearances with unpaid federal tax debt, provide an 

approximate overall amount of tax debt owed by these individuals, and 

select our case studies. Our final estimate of tax debt does include some 

debt that is covered under an active IRS installment plan or is beyond 

normal statutory time limits for debt collection. Our analysis determined

the magnitude of known unpaid federal taxes owed by selected 

individuals in the OPM database and cannot be generalized to individuals 

7

This threshold is defined by the IRS as a de minimis amount, below which any amount is 

so small as to make accounting for it unreasonable or impractical.

8

See: GAO, Financial Audit: IRS’s Financial Audit Fiscal Years 2012 and 2011 Financial 

Statements, GAO-13-120 (Washington, D.C.: Nov. 9, 2012).
Page 5 GAO-13-733 Security Clearances and Federal Tax Debt

that were granted eligibility for security clearances by DOD, the legislative 

branch, or the intelligence community.

To determine to what extent federal agencies have mechanisms to detect 

unpaid tax debt during the security-clearance approval process, we held 

meetings with knowledgeable officials from OPM, ODNI, the IRS, 

Department of Homeland Security (DHS), Department of Energy (DOE) 

and Department of State (State). We selected DHS, DOE, and State 

because these agencies had the highest number of security clearances, 

collectively representing over 50 percent of clearances granted in OPM’s 

CVS database, and also represented over 50 percent of the tax debt 

owed. OPM conducts security-clearance investigations for most federal 

agencies. ODNI serves as Security Executive Agent for the federal 

government and has authority and responsibility over many aspects of the 

security-clearance program. As such, we also reviewed and analyzed 

applicable laws, regulations, and ODNI guidance, as well as applicable 

policies and procedures for OPM, DHS, DOE, and State regarding the 

investigation and adjudication of security clearances.9 Finally, we

conducted interviews with the Department of the Treasury’s Bureau of the 

Fiscal Service (Fiscal Service) and the IRS on any initiatives and 

challenges in sharing tax debt information. We compared verification 

mechanisms with the fraud control framework we developed in our past 

work and other fraud-control best practices.10

 9

A review of materials provided by OPM and ODNI, as well as federal regulations, 

provided an outline of the security-clearance process for the overall federal government. A 

review of materials provided by DOE, DHS, and State provided an outline of specific 

security-clearance processes employed by each agency.

We also used Federal 

Investigative Standards (see app. I) and the Revised Adjudicative 

Guidelines for Determining Eligibility for Access to Classified Information 

(see app. II) to evaluate the current mechanisms used to identify and 

evaluate unpaid federal tax debt as part of the security-clearance 

process.

10The fraud-prevention framework was developed on the basis of findings from GAO 

audits of Hurricanes Katrina and Rita relief efforts, and the internal control standards from 

the Standards for Internal Control in the Federal Government. For more detail, see GAO, 

Hurricanes Katrina and Rita Disaster Relief: Prevention Is the Key to Minimizing Fraud, 

Waste, and Abuse in Recovery Efforts, GAO-07-418T (Washington, D.C.: Jan. 29, 2007); 

GAO, Government Operations: Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1, 1999), and the Committee of 

Sponsoring Organizations of the Treadway Commission (COSO), Internal Control—

Integrated Framework.
Page 6 GAO-13-733 Security Clearances and Federal Tax Debt

To develop case-study examples, we identified a nonprobability sample of 

13 individuals for detailed reviews from the above analyses of securityclearance holders from DHS, DOE, and State who had federal tax debt. 

These three agencies were selected because they had the largest 

number of individuals who were adjudicated as eligible for a security 

clearance from April 1, 2006, to December 31, 2011. We stratified our 

data matches using the following characteristics: (1) adjudicating agency; 

(2) amounts of unpaid federal taxes in the IRS Unpaid Assessment 

database as of June 30, 2012; (3) type of security clearance granted or 

approved, clearance date, and dollar amount of unpaid tax debt; and (4) 

whether tax debt was recorded prior to or after the security-clearance 

grant date. We then randomly selected 12 cases on the basis of these 

criteria. Additionally, we randomly selected one individual for whom IRS 

records show the taxpayer was assessed a penalty. We requested and 

obtained IRS notes, detailed account transcripts, and other records from 

the IRS as well as background investigation and adjudicative record files 

from DHS, DOE, and State for these 13 individuals. For 11 of the 13 

individuals that had accrued debt before the adjudication, we reviewed 

the background investigation and adjudicative record files and IRS 

paperwork to determine whether the tax debt was revealed during the 

investigative or adjudicative processes, and, if so, how it was handled 

during the adjudication. For 2 of the 13 individuals that had accrued debt 

only after favorable adjudication, we reviewed the adjudicative files to 

determine whether the agency was aware of the federal tax debt through 

its reinvestigation. These cases were selected to illustrate individuals with 

unpaid federal tax debt that had been determined eligible for security 

clearances but cannot be generalized beyond the cases presented. A 

more-detailed description of the scope and methodology can be found in 

appendix III.

We conducted this performance audit from November 2011 to September 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our audit findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.
Page 7 GAO-13-733 Security Clearances and Federal Tax Debt

As of September 30, 2012, the tax debt of individuals and businesses that 

owed the U.S. government was about $364 billion, according to the IRS.11

Given the many challenges that the IRS faces in the enforcement of U.S. 

tax laws, this area continues to be on our list of high-risk areas.

The tax-debt inventory is the sum of all taxes owed to the IRS at a 

particular point in time, including debts from the current year and debts 

from previous years that fall within the 10-year statute of limitations on 

collections. The inventory of tax debts comprises tax assessments that 

are not collected along with related penalty and interest charges. Federal 

taxes that are owed become tax debts when the tax is assessed but not 

paid. Millions of individual and business taxpayers owe billions of dollars 

in unpaid federal tax debts, and the IRS expends substantial resources 

trying to collect these debts.

12 We 

have previously reported that many individuals with tax debt take 

advantage of government programs, such as federal contracts, grants, 

Medicare, Medicaid, and loan insurance, thereby reaping benefits from 

these programs while failing to pay their own taxes.13 In addition, the IRS 

issues an annual report on the Federal Employee/Retiree Delinquency 

Initiative (FERDI) to promote federal tax compliance among current and 

retired federal employees.14

 11The tax debt inventory contains known unpaid taxes, penalties, and interest, see GAO, 

Federal Tax Debts: Factors for Considering a Proposal to Report Tax Debts to Credit 

Bureaus.

The most-recent report states that federal 

employees represented about 3 percent of all delinquent taxpayers in the 

GAO-12-939 (Washington, D.C.: Sept. 10, 2012). This figure includes all U.S. 

taxpayers, including federal employees and federal contractors.

12GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013). 

13See Related GAO Products section at the end of this report for a listing of our previous 

work in this area.

14The annual report includes civilian employees of the executive, legislative, and judicial 

branches, U.S. Postal Service employees, civilian retirees, active-duty military, National 

Guard and reservist personnel, as well as military retirees.

Background

Unpaid Federal Tax Debt 

Owed
Page 8 GAO-13-733 Security Clearances and Federal Tax Debt

workforce (approximately 312,000 individuals).15 The report does not 

contain a comparison of the delinquency rates of federal employees with 

the general population.

Passed in 2004, the Intelligence Reform and Terrorism Prevention Act 

(IRTPA) mandates the President to identify a single entity responsible for, 

among other things, directing the day-to-day oversight of investigations 

and adjudications for personnel security clearances throughout the U.S. 

government.16 Additionally, agencies may not establish additional 

investigative or adjudicative requirements without approval from the 

selected entity, nor may they conduct an investigation where an 

investigation or adjudicative determination of equal level exists.17

Executive Order 13467 (June 30, 2008) designates ODNI as the Security 

Executive Agent and assigns responsibility for developing uniform and 

consistent policies and procedures to ensure the effective, efficient, and 

timely completion of investigations and adjudications related to 

determinations of eligibility for access to classified information or eligibility 

to hold a sensitive position. Executive Order 13467 also designates the 

Director of OPM as the Suitability Executive Agent responsible for 

developing and implementing uniform and consistent policies and 

procedures for investigations and adjudications related to determinations 

of suitability for federal employment, as well as eligibility for electronic and 

 15According to the IRS, an employee is considered delinquent if he or she has an 

unresolved federal income-tax delinquency in the form of a balance owed or an unfiled tax 

return, or both. Accounts in the status of currently not collectible, combat zone, offer in 

compromise, or bankruptcy/litigation are included in the analysis. Federal employees in 

repayment plans are excluded.

16Pub. L. No. 108-458, § 3001 (Dec. 17, 2004).

17Pursuant to IRTPA, the Office of Management and Budget designated OPM as the 

single agency of the executive branch to conduct, to the maximum extent practicable, 

security-clearance investigations. According to OPM officials, OPM conducts background

investigations for DOD, including for defense contract employment and military service; 

OPM conducts personnel security, suitability, and qualifications-related investigations for 

employment in the competitive civil service. Individual agencies are responsible for 

conducting investigations for excepted service and contract employment that does not 

require clearances, but they may utilize OPM for this purpose.

Laws and Regulations 

Governing the SecurityClearance Process
Page 9 GAO-13-733 Security Clearances and Federal Tax Debt

physical access to secure facilities.18 Additionally, Executive Order 13467 

outlines a process for continuous evaluation of individuals that are 

determined to be eligible or currently have access to classified 

information. Continuous evaluation means reviewing the background of 

an individual who has been determined to be eligible for access to 

classified information (including additional or new checks of commercial 

databases, government databases, and other information lawfully 

available to security officials) at any time during the period of eligibility to 

determine whether that individual continues to meet the requirements for 

eligibility for access to classified information. Executive Order 12968 

(August 4, 1995) authorized establishment of uniform security policies, 

procedures, and practices, including the Federal Investigative Standards 

used by investigators conducting security-clearance investigations. In 

December 2012, the Security and Suitability Executive Agents (ODNI and 

OPM) jointly issued a revised version of Federal Investigative Standards 

for the conduct of background investigations for individuals that work for 

or on behalf of the federal government.

Personnel security clearances are required for access to classified 

national-security information, which may be classified at one of three 

levels: confidential, secret, or top secret. A top-secret clearance is 

generally also required for access to Sensitive Compartmented 

Information or Special Access Programs.19 The level of classification 

denotes the degree of protection required for information and the amount 

of damage that unauthorized disclosure could reasonably be expected to 

cause to national security. Unauthorized disclosure could reasonably be 

expected to cause (1) “damage,” in the case of confidential information; 

(2) “serious damage,” in the case of secret information; and (3) 

“exceptionally grave damage,” in the case of top-secret information.20

 18The executive branch uses suitability determinations to ensure individuals are suitable, 

on the basis of character and conduct, for federal employment in certain positions.

Suitability determinations are separate from security-clearance determinations that are 

used for access to national-security information.

19 Sensitive Compartmented Information relates to positions that require access to unique 

or uniquely productive intelligence sources or methods vital to the U.S. security. 

20Exec. Order No. 13526, 75 Fed. Reg. 707 (Dec. 29, 2009).

Security-Clearance 

Process
Page 10 GAO-13-733 Security Clearances and Federal Tax Debt

As shown in figure 1, to ensure the trustworthiness and reliability of 

personnel in positions with access to classified information, government 

agencies rely on a personnel security-clearance process that includes 

multiple phases: application, investigation, adjudication, and 

reinvestigation (where applicable, for renewal or upgrade of an existing 

clearance).
Page 11 GAO-13-733 Security Clearances and Federal Tax Debt

Figure 1: Overview of the Federal Security-Clearance Process

Note: Data are from agencies’ clearance-processing protocols and this process does not apply to 

agencies in the intelligence community.
Page 12 GAO-13-733 Security Clearances and Federal Tax Debt

The application phase. To determine whether an investigation would be 

required, the agency requesting a security-clearance investigation is to 

first conduct a check of existing personnel-security databases to 

determine whether there is an existing security-clearance investigation 

underway or whether the individual has already been favorably 

adjudicated for a clearance in accordance with current standards. If such 

a security clearance does not exist for that individual, a security officer 

from an agency is to (1) request an investigation of an individual requiring 

a clearance; (2) forward a personnel-security questionnaire (SF-86) to the 

individual to complete using OPM’s Electronic Questionnaires for 

Investigations Processing (e-QIP) system; (3) review the completed 

questionnaire; and (4) send the questionnaire and supporting 

documentation, such as fingerprints, to OPM or another designated 

investigative service provider.21

The investigation phase. OPM conducts a majority of the government’s 

background investigations; however, some agencies, such as State, are 

delegated to conduct their own background investigations. Federal 

investigative standards and agencies’ internal guidance are used to 

conduct and document the investigation of the applicant (see app. II). The 

scope of information gathered during an investigation depends on the 

level of clearance needed. For example, federal standards require that 

investigators collect information from national agencies, such as the 

Federal Bureau of Investigation, for all initial and renewal clearances. For 

an investigation for a confidential or secret clearance, investigators gather 

much of the information electronically. For an investigation for a topsecret clearance, investigators gather additional information through 

more-time-consuming efforts, such as traveling to conduct in-person 

interviews to corroborate information about an applicant’s employment 

and education. After the investigation is complete, the resulting 

investigative report is provided to the agency.

The adjudication phase. Adjudicators from an agency use the 

information from the investigative report to determine whether an 

applicant is eligible for a security clearance. To make clearance-eligibility 

decisions, national policy requires adjudicators to consider the information 

against the 2005 Revised Adjudicative Guidelines for Determining 

 21The e-QIP system is a web-based automated system that was designed to facilitate the 

processing of standard investigative forms used when conducting background 

investigations for federal security, suitability, fitness, and credentialing purposes.
Page 13 GAO-13-733 Security Clearances and Federal Tax Debt

Eligibility for Access to Classified Information. The adjudication process 

is a careful weighing of a number of variables, to include disqualifying and 

mitigating factors, known as the “whole-person” concept. When a 

person’s life history shows evidence of unreliability or untrustworthiness, 

questions can arise as to whether the person can be relied on and trusted 

to exercise the responsibility necessary for working in a secure 

environment where protecting national security is paramount. As part of 

the adjudication process, the adjudicative guidelines require agencies to 

determine whether a prospective individual meets the adjudicative criteria 

for determining eligibility, including personal conduct and financial 

considerations. If an individual has conditions that raise a security 

concern or may be disqualifying, the adjudicator must evaluate whether 

there are other factors that mitigate such risks (such as a good-faith effort 

to repay a federal tax debt). On the basis of this assessment, the agency 

may make a risk-management decision to grant the security-clearance 

eligibility determination, possibly with a warning that future incidents of a 

similar nature may result in revocation of access.

The reinvestigation phase. Personnel cleared for access to classified 

information may have their clearance renewed or upgraded if determined 

necessary to the performance of job requirements. Reinvestigation covers 

the period since the previous investigation. Renewal of a clearance at the 

same level currently undergoes the above process every 10 years for 

secret or 5 years for top secret.22 Applicants for clearance upgrades 

undergo additional steps necessary to obtain the higher clearance level 

(such as a subject interview for a top-secret clearance).

We have previously reported on issues related to the federal securityclearance process. For example, in 2005, we designated DOD’s 

personnel security-clearance program—which comprises the vast 

majority of government wide clearances—as a high-risk area. This 

designation continued through 2011 because of concerns regarding 

continued delays in the clearance process and security-clearance 

documentation, among other things.23

 22Once implemented, the revised Federal Investigative Standards approved in December 

2012 will require 5-year reinvestigations for all clearances.

Since we first identified the DOD 

personnel security-clearance program as a high-risk area, DOD, in 

23GAO-12-815T.

Improvements to the 

Federal Security-Clearance 

Process
Page 14 GAO-13-733 Security Clearances and Federal Tax Debt

conjunction with Congress and executive-agency leadership, took actions 

that resulted in significant progress toward improving the processing of 

security clearances. Congress held more than 14 oversight hearings to 

help oversee key legislation, such as the Intelligence Reform and 

Terrorism Prevention Act of 2004 (IRTPA), which helped focus attention 

and sustain momentum of the government-wide reform effort. In 2011, we 

removed DOD’s personnel-security clearance program from our high-risk 

list because of the agency’s progress in improving timeliness, 

development of tools and metrics to assess quality, and commitment to 

sustaining progress.

In 2012, we found that OPM’s reported costs to conduct background 

investigations increased by about 80 percent, from about $600 million in 

fiscal year 2005 to almost $1.1 billion in 2011 (in fiscal year 2011 

dollars).24 OPM’s background investigation program has several cost 

drivers, including investigation fieldwork and personnel compensation for 

OPM’s background-investigation federal workforce. OPM attributed cost 

increases to, in part, an increase in the number of top-secret clearance 

investigations, which involve additional field work and more 

comprehensive subject interviews and compliance with investigation 

timeliness requirements.

 24See GAO, Background Investigations: Office of Personnel Management Needs to 

Improve Transparency of Its Pricing and Seek Cost Savings, GAO-12-197 (Washington, 

D.C.: Feb. 28, 2012).
Page 15 GAO-13-733 Security Clearances and Federal Tax Debt

About 240,000 employees and contractors of civilian executive-branch 

agencies, excluding known employees and contractors of DOD and 

intelligence agencies, had a federal security clearance or were approved 

for secret and top-secret clearances due to a favorable adjudication from 

April 1, 2006, through December 31, 2011.25

• About half of the individuals are in a repayment plan with the 

IRS. According to IRS data, about 4,200 of these 8,400 individuals 

with tax debt had a repayment plan with the IRS to pay back their debt 

as of June 30, 2012.

These consist of both initial 

investigations when an individual is applying for a clearance and 

reinvestigations when an individual is upgrading to a higher clearance 

level or renewing an existing clearance. About 8,400 of the 240,000 

people (approximately 3.5 percent) had unpaid federal tax debt as of 

June 30, 2012, totaling about $85 million. The characteristics and nature 

of these 8,400 individuals with tax debt are discussed below.

26

• About half of individuals with tax debt were federal employees.

About 4,700 of the approximately 8,400 individuals with tax debt were 

federal employees, while the remainder were employees of federal 

contractors or had an “other” designation used to identify other 

categories of individuals.

The tax debt owed by those on a repayment

plan was approximately $35 million.

27

• About half of the individuals with tax debt were eligible for a topsecret clearance. About 4,200 of these 8,400 individuals were 

favorably adjudicated as eligible for a top-secret clearance during our 

 25There were approximately 280,000 unique clearances in the OPM CVS database. 

These numbers exclude DOD, legislative-branch, and intelligence-agency employees. 

About 240,000 individuals held or were approved for these 280,000 clearances. Our 

review did not include the review of confidential clearance holders or public-trust positions.

DOE and NRC “Q” and “L” clearances are equivalent to the top-secret and secret 

clearances. Thus, for the purposes of our report, we considered “Q” and “L” clearances 

issued by DOE and NRC to be treated as top-secret and secret clearances, respectively.

26Repayment plans, or installment agreements, are monthly payments made to the IRS 

that allow individuals or entities to repay their federal tax debt over an extended period. 

27According to ODNI, the “other” category consists of individuals who held or were 

approved for security clearances but could not be categorized as either a federal 

employee or a contractor. Therefore, all CVS data that could not be categorized by 

employee type are captured in this category.

More Than 8,000 

Individuals Eligible 

for Security 

Clearances Owe 

about $85 Million in 

Federal Taxes; About 

Half Are on Payment 

Plans with the IRS
Page 16 GAO-13-733 Security Clearances and Federal Tax Debt

time frame (April 1, 2006, to December 31, 2011), while the others 

were favorably adjudicated as eligible for a secret clearance.28

• Most individuals accrued tax debt after clearance adjudication.

Approximately 6,300 individuals (about 76 percent) accrued tax debts 

only after the issuance of the security clearance. Approximately 2,000 

individuals (about 25 percent) accrued their tax debt before the 

approval for the security clearance.

• Age and amount of tax debt ranges widely. About 16 percent of the 

$85 million in unpaid federal taxes were delinquent more than 3 years, 

and approximately 6 percent of the unpaid federal taxes were 

delinquent more than 5 years. Further, the unpaid tax debt of each 

individual ranged from approximately $100 to over $2 million, and the 

median tax-debt amount owed by these individuals was approximately 

$3,800.

In addition, we analyzed 13 nongeneralizable case examples—7 federal 

contractors and 6 federal employees from the DOE, DHS, and State—to 

determine whether existing investigative and adjudication mechanisms 

detected unpaid tax debt during the security-clearance process. In 8 of 

these 13 cases, the individual had a top-secret clearance, with the 

remaining 5 having secret clearances. In 5 of the 13 cases, the individual 

had a reinvestigation of the security clearance after the period of our 

analysis (April 1, 2006, to December 31, 2011). In 11 of these 13 cases, 

the individual’s tax debt accrued before the favorable adjudication of the 

security clearance. For all 11 of these cases, the tax debt was identified 

either through the initial investigation or through the reinvestigation. In 2 

of the 13 cases, the individual’s tax debt accrued after the favorable 

adjudication of the security clearance, and no indication of the federal tax 

debt was found in the security clearance files. On the basis of our review 

of IRS records, our analysis found that 12 of the 13 individuals filed their 

tax returns late for at least 1 tax year, and 6 of the 13 individuals did not 

file at least one annual tax return.29 These specific case studies are 

discussed throughout the report.

 28Certain individuals may have both top-secret and secret clearances during this period. 

ODNI, 2012 Report on Security Clearance Determinations (January 2013).

29The IRS database does not reflect amounts owed by businesses and individuals that 

have not filed tax returns and for which the IRS has not assessed tax amounts due. Our 

analysis did not attempt to account for businesses or individuals that underreported taxes 

owed or were not specifically identified by the IRS as owing additional federal taxes.
Page 17 GAO-13-733 Security Clearances and Federal Tax Debt

To detect federal tax debt for clearance applicants, consistent with federal 

law, federal investigators rely primarily on two methods: (1) applicants 

self-reporting tax debts, and (2) validation techniques, such as the use of 

credit reports or in-person interviews. Each of these methods has 

shortcomings in detecting unpaid federal tax debts for clearance 

applicants. Moreover, federal agencies do not routinely monitor 

individuals after the security clearance is favorably adjudicated to identify 

tax debt accrued subsequent to the clearance approval. Additional 

mechanisms that provide large-scale, routine detection of federal tax debt 

could improve federal agencies’ ability to detect tax debts owed by 

security-clearance applicants and current clearance holders.

As part of the application-submission phase of the security-clearance 

process, applicants must submit various background and biographical 

information using OPM form SF-86. In addition, new federal employees 

typically complete the Declaration for Federal Employment form (OF306). Both of these forms require applicants to disclose if they are 

delinquent on any federal debt, including tax debts. The SF-86 is used in 

conducting background investigations, reinvestigations, and continuous 

evaluations of federal employees and contractors. The SF-86 requires 

that applicants declare if they did not file or pay any federal taxes within 

the past 7 years. The SF-86 also requires applicants to disclose whether 

any liens were placed on their property for failure to pay tax debts and 

whether they are currently delinquent on any federal debts (including tax 

debts). Similar to the SF-86, the Declaration for Federal Employment 

requires applicants to disclose if they are delinquent on any federal debt, 

including tax debts. If the applicant is delinquent, the applicant is required 

to disclose, among other things, the type and amount of debt and any 

steps taken to repay the debt. An excerpt of the SF-86 where applicants 

are required to disclose any tax issues are illustrated in figure 2.

Federal Agencies 

Have Mechanisms to 

Detect Tax Debt, but 

Opportunities Exist to 

Strengthen Detection 

Capabilities

Investigation Mechanisms 

Include Self-Reporting and 

Validation Techniques

Self-Reporting
Page 18 GAO-13-733 Security Clearances and Federal Tax Debt

Figure 2: Excerpt of Office of Personnel Management (OPM) Form SF-86

Of the 13 individuals we examined from our nongeneralizable sample, 11 

had accrued debt prior to the clearance being granted. Our review of the 

SF-86 documentation for this sample of 11 selected cases found that 5 

individuals did not properly disclose their tax debts. Each of these 

individuals owed at least $12,000 at the time of our review. As discussed 

later in this report, our past work has focused on the inadequacies of 

relying on self-reported information without independent verification and 

review.

During the investigative phase, the investigative agency can perform 

several activities in an effort to validate applicants’ certifications about the 

Validation Techniques
Page 19 GAO-13-733 Security Clearances and Federal Tax Debt

nature and extent of their tax debts, but each of the techniques has 

limitations, as discussed below.

Obtaining credit reports of the applicants. According to OPM officials, 

credit reports, which contain public records including federal tax liens, are 

the primary method of identifying federal tax debts that were not selfreported.30 However, credit reports only contain information on tax debts 

for which the IRS filed a lien on the debtor’s property, both real and 

personal, for the amount of the unpaid tax. Circumstances do not warrant 

a lien being filed in all cases, such as when the amount of the debt is in 

dispute or when the IRS determines that filing a lien would hamper 

collection of the debt because the debtor is trying to obtain a loan to pay it 

off.31 In addition, the IRS generally does not file liens until after the debt 

has moved out of the notice status and there is property on which a lien

can be placed.32

 30If a tax debtor does not pay after the IRS’s initial contact to collect an assessed tax debt, 

the IRS has the authority to protect the government’s interests by filing a Notice of Federal 

Tax Lien. A taxpayer must be given notice and an opportunity for a hearing when a federal 

tax lien is filed. Such a lien attaches a claim to all of the debtor’s property, both real and 

personal, for the amount of unpaid tax, including any interest and penalties. Unlike the 

IRS’s authority to levy or seize assets, a lien does not authorize the IRS to take 

possession of an asset or deprive the taxpayer of use of an asset. Instead, a lien publicly 

records the debt owed by the taxpayer as a notice to possible future creditors and to 

establish priority rights against certain other creditors that may also hold liens or secured 

rights against a taxpayer’s assets.

The amount owed can increase with interest and 

penalties or can decrease as the debtor makes payments, but neither 

change is reflected in the recorded tax lien amount. Our analysis found 

that about 450 of the approximately 8,400 delinquent taxpayers (about 5 

percent) who were favorably adjudicated as eligible for security 

clearances had a tax lien filed on them. For the 13 cases that we 

reviewed, 4 of the cases identified during the investigative process had 

tax liens filed against the individuals.

31For cases in which the IRS has not filed a lien, the government’s interest in the tax 

debtor’s property is not protected.

32The IRS has a complex process to attempt the collection of tax debts. As a first stage, 

the IRS sends a series of notices to notify the debtor of the debt owed and to prompt 

payment or other debtor response, such as to dispute the debt or request to enter into an 

installment payment agreement. If the debt is not resolved by notices, the IRS may then 

initiate contact with the taxpayer by telephone or in person. After the notice phase, the IRS 

can also take enforcement action, such as placing liens, or levying or seizing assets.
Page 20 GAO-13-733 Security Clearances and Federal Tax Debt

Conducting in-person interviews. As part of the investigation, 

investigators may conduct interviews with the applicant and his or her 

friends, former spouses, neighbors, and other individuals associated with 

the applicant. According to OPM, during the course of the in-person 

interviews, the tax debt could be disclosed, but there is no systematic way 

to identify tax debt during the interviews. For example, according to State 

officials, state tax debt is usually an indicator that the individual also owes 

federal taxes. Thus, during the course of their in-person interviews, 

investigators will often inquire with the applicant whether he or she owes 

federal taxes when a state tax debt is discovered. However the in-person 

interviews can be a time-consuming and resource-intensive process, and 

OPM does not have assurance that it identifies all tax debt information 

through the interview process.

Federal agencies generally do not have routine mechanisms to review 

federal tax compliance for individuals who hold security clearances. 

Specifically, there is no process to detect unpaid federal tax debts 

accrued after an individual has been favorably adjudicated as eligible for 

a security clearance unless it is self-reported, reported by a security 

manager due to garnishment of wages, or discovered during a clearance 

reinvestigation (renewal) or upgrade. Given that individuals who hold 

security clearances are reinvestigated every 10 years for secret 

clearances and every 5 years for top-secret clearances, if an individual 

accrues tax debt after a security clearance is granted, the unpaid federal 

tax debt may not be detected for up to 5-10 years. As previously 

discussed, in 2 of our 13 case studies, the individuals’ tax debt accrued 

after the favorable adjudication of the security clearance, and we found 

no indication that the federal tax debt was identified in the securityclearance file. In addition, if the tax debt is not found in the initial 

investigation, the federal agency may not detect the tax debt until the next 

security clearance reinvestigation. In 5 of the cases that we reviewed, 

existing federal tax debt was not identified in the original adjudication of 

the security clearance but through the subsequent reinvestigation of the 

security clearance, meaning the individuals had tax debt unknown to the 

federal agency while holding a clearance for some period of time. This 

gap represents a risk that could be mitigated by a mechanism to routinely 

obtain tax-debt information, as discussed later in this report.

Agencies Do Not Routinely 

Monitor Current Clearance 

Holders for Tax Debt
Page 21 GAO-13-733 Security Clearances and Federal Tax Debt

Additional mechanisms that provide large-scale detection of federal tax 

debt could improve federal agencies’ ability to detect tax debts owed by 

security-clearance applicants and security-clearance holders, but 

statutory privacy protections limit access to this information. Specifically, 

access to the federal tax information needed to obtain the tax payment 

status of applicants is restricted under section 6103 of the Internal 

Revenue Code, which generally prohibits disclosure of taxpayer data to 

federal agencies and others, including disclosures to help validate an 

applicant’s certifications about the nature and extent of his or her tax 

debt.33 During our interviews, ODNI, DHS, DOE, and State officials 

expressed interest in establishing additional mechanisms to provide 

large-scale detection of unpaid tax debt owed by security-clearance 

applicants. ODNI officials stated that they formed a working group in 

2012, in collaboration with OPM and other federal agencies, to, among 

other things, explore whether an automated process for reviewing federal 

tax compliance can be established.34

Federal agencies may obtain information on federal tax debts directly 

from the IRS if the applicant provides consent. For example, agencies 

can use IRS form 4506-T, Request for Transcript of Tax Return, to obtain 

tax transcripts that provide basic taxpayer information, including marital 

status, type of return filed, adjusted gross income, taxable income, and 

later adjustments, if any, if the individual provides written consent. 

However, this form may not be useful in conducting routine checks with 

the IRS during the initial investigation and reinvestigation processes for 

three reasons. First, the use of the IRS form 4506-T is a manual process 

and thus it is not conducive to the large-scale detection of unpaid federal 

taxes owed by security-clearance applicants, according to OPM, DHS, 

and State officials. Instead, this method is typically performed when a 

However, restrictions to taxpayer 

information under section 6103 may present challenges to their efforts.

For example, in 2011 and 2012, State requested the IRS to provide it a 

listing of State employees who owed federal taxes. The IRS did not 

formally respond in writing to the State letters, according to State officials, 

but stated that the IRS could not provide them this list due to section 6103 

restrictions. According to IRS officials, based on their analysis of the 

applicable tax laws, IRS cannot disclose tax information of federal 

employees without taxpayer consent request.

 3326 U.S.C. § 6103.

34ODNI officials stated that they do not have a time frame for the completion of their work.

Opportunities Exist to 

Improve Detection of Tax 

Debt Owed by SecurityClearance Applicants and 

Clearance Holders
Page 22 GAO-13-733 Security Clearances and Federal Tax Debt

federal tax debt is disclosed by the applicant or discovered during the 

investigation. Second, the IRS form 4506-T generally provides limited 

visibility into an applicant’s overall tax debt status because the form 

requires the requesting agency to identify the specific tax modules 

(generally, time periods) that the agencies are requesting to be disclosed, 

and, as such, agencies may not obtain the complete tax debt history of 

the individual. Finally, the IRS form 4506-T has a 120-day time limit from 

date of the applicant’s signature providing consent to process the form 

with the IRS. Officials from State stated that this limited time frame could 

hinder their ability to obtain the requested tax information if this form was 

provided at the time the security-clearance application was completed. As 

highlighted in our past work, it is important that the establishment of any 

federal tax-compliance check not delay the timeliness of securityclearance decisions. Specifically, timeliness concerns were one of the 

reasons that we designated the security-clearance process as high risk 

from 2005 to 2011.35 As we concluded in July 2012, delays in the 

security-clearance process could pose risks to national security, impede 

the start of classified work and hiring the best-qualified workers, and 

increase the government’s cost of national-security-related contracts.36

The Department of the Treasury’s Offset Program (TOP), or a similar 

mechanism, may provide an opportunity for federal agencies to perform 

an automated check of both security-clearance applicants and current 

clearance holders to determine whether they have unpaid federal debts 

that would include tax debts, while not violating IRS section 6103 

requirements.37

 35GAO, High-Risk Series: An Update, 

TOP is an automated process administered by the 

Department of the Treasury in which certain federal payments, such as 

contractor and federal salary payments, are reduced to collect certain 

delinquent tax and nontax debts owed to federal agencies, including the 

GAO-11-278 (Washington, D.C.: Feb. 16, 2011).

36GAO-12-800.

37The Federal Payment Levy Program (FPLP) is the continuous levy program that uses 

TOP to levy federal payments against federal tax debts. In 2011, the IRS reported that it 

collected over $600 million through FPLP.
Page 23 GAO-13-733 Security Clearances and Federal Tax Debt

IRS.38 Each week, the IRS sends the Department of the Treasury’s 

Bureau of the Fiscal Service office (Fiscal Service) an extract of its taxdebt files, which are uploaded into TOP and matched against Fiscal 

Service payment data (such as federal contractor payments, federal 

salary payments, and Social Security Administration retirement 

payments). If there is a match and the IRS has completed all statutory 

notifications, any federal payment owed to the debtor is reduced (levied) 

to help satisfy the unpaid federal taxes.39

As we concluded in our past work, since TOP comingles information 

regarding tax debt and nontax debt, the existence of an employee’s name 

in TOP would generally not be considered taxpayer information subject to 

section 6103 of the tax code.40 Thus, TOP could be used to identify 

individuals who may owe federal debts, which includes federal taxes, 

without compromising privacy protections provided by section 6103. TOP 

currently reports a federal debt indicator (comprising both federal tax and 

nontax debts) to the System for Award Management (SAM) on whether a 

federal contractor or grant recipient has federal debts.41

 38Payment agencies prepare and certify payment vouchers to the Bureau of the Fiscal 

Service (Fiscal Service) and disbursing officials at other federal agencies that are non–

Department of the Treasury–disbursed, who then disburse payments. The payment 

vouchers contain information about the payment, including the name and Tax 

Identification Number (TIN) of the recipient. Before an eligible federal payment is 

disbursed to a payee, disbursing officials compare the payment information with debtor 

information, which has been supplied by the creditor agency, in the Fiscal Service 

delinquent-debtor database. If the payee’s name and TIN match the name and TIN of a 

debtor, the disbursing official offsets the payment, in whole or in part, to satisfy the debt, to 

the extent legally allowed. The TOP also has state debts that payments may offset. These 

state debts include certain child-support debts, tax debts, and unemployment-insurance 

compensation debts.

SAM is a 

39For more information on TOP process for tax debts, see GAO, Financial Management: 

Thousands of Civilian Agency Contractors Abuse the Federal Tax System with Little 

Consequence, GAO-05-637 (Washington, D.C.: June, 2005).

40GAO, Taxpayer Confidentiality: Federal, State, and Local Agencies Receiving Taxpayer 

Information, GAO/GGD-99-164 (Washington, D.C.: Aug. 30, 1999).

41Federal agencies are required to review this field when they are making federal 

payments to the contractor or grant recipient. If a federal agency finds that a contractor 

owes federal debt, the federal agency should pay the contractor through the disbursing 

office, and not an agency purchase card, so that the federal payment can be offset or 

levied against the federal debt. The federal debt indicator does not distinguish between 

federal tax debt and federal nontax debt. As such, there is not an unlawful disclosure of 

taxpayer information.
Page 24 GAO-13-733 Security Clearances and Federal Tax Debt

government-wide database used to track the status of agency 

procurements.

As of September 2012, the IRS had referred approximately $167 billion 

(approximately 44 percent) of the $373 billion of the total unpaid tax 

assessment inventory in tax debts to TOP; thus, this program is an 

important repository of tax-debt data for federal workers and contractors.

The IRS typically sends the tax debts to TOP except in cases where

(1) the IRS has not completed its notification process,42

(2) tax debtors have filed for bankruptcy protection or other litigation,

(3) tax debtors have agreed to pay their tax debt through monthly 

installment payments or have requested to pay less than the full 

amount owed through an offer in compromise,

(4) the IRS determined that the tax debtors are in financial hardship,

(5) tax debtors are filing an amended return, or

(6) the IRS determined that specific circumstances (such as a criminal 

investigation) exist that warrant special exclusion from FPLP.43

Thus, debts that are typically sent to TOP are those where the taxpayer 

has not shown a willingness to resolve his or her tax debts. As such, it is 

important that these individuals are identified because it can be an 

important factor in determining whether an individual should be eligible for 

a security clearance, as inability or unwillingness to satisfy debts is a 

potentially disqualifying factor according to the adjudicative guidelines. 

Our analysis found that 1,600 (approximately 20 percent) of the 8,400 

taxpayers that had been granted security clearances during this 5-year 

period had tax debts that were referred to TOP.

A mechanism similar to or using TOP could be useful in identifying 

individuals who have not shown a willingness to resolve their tax debts 

 42During this process, IRS sends a series of up to four separate notices to tax debtors 

demanding payment of their taxes. The IRS must send two notices—a Notice and 

Demand for Payment and a Final Notice of Intent to Levy—before the debts can be sent to 

TOP.

43For more details, see GAO, Internal Revenue Service: Procedural Changes Could 

Enhance Tax Collections, GAO-07-26 (Washington, D.C.: Nov. 15, 2006).
Page 25 GAO-13-733 Security Clearances and Federal Tax Debt

and who are applying for a security clearance or already have one.44 This 

type of mechanism can be especially advantageous in monitoring 

clearance holders to identify circumstances (such as the nonpayment of 

federal taxes) that might warrant a reevaluation of an individual’s securityclearance eligibility.45

While ODNI officials reported forming a working group with OPM and 

other federal agencies to explore an automated process for reviewing 

federal tax compliance, ODNI, IRS, and Fiscal Service officials stated that 

they have not explored the use of TOP for identifying individuals who owe 

federal debts, including tax debts.

As discussed earlier, our analysis found that 6,375 

individuals (approximately 76 percent) had their tax debt accrued after the 

approval for the security clearance.

46

Separate from TOP, agencies may determine that a change in law is 

required to access taxpayer information without having to get consent 

from the individual. If it is determined that a change in law would be 

required, the IRS and federal agencies could consider various factors in 

determining whether they should seek legislative action for disclosing 

taxpayer information as part of the security-clearance process. 

Specifically, as we concluded in December 2011, it is important that 

Congress consider both the benefits expected from a disclosure of federal 

tax information and the expected costs, including reduced taxpayer 

ODNI officials stated that they would 

be supportive of processes that automatically checked security-clearance 

applicants for federal tax debts. Fiscal Service officials stated that they 

did not foresee any potential operational issues with using TOP more 

broadly for these purposes. However, IRS and Fiscal Service officials 

stated that a legal analysis would need to be performed to determine if 

the TOP information could be used for the purpose of performing 

background investigations.

 44Fiscal Service officials noted that a similar program “Do Not Pay” already exists for the 

purpose of identifying federal debt. However, this program does not contain federal tax 

debts. 

45Executive Order 13467 (2008) amended Executive Order 12968 (1995) by inserting 

Section 3.5, which authorizes continuous evaluation of cleared personnel according to 

standards to be established by ODNI. These standards have not yet been implemented.

46In December 2012, ODNI and OPM jointly issued new investigative standards requiring 

tax-compliance checks as part of any security-clearance investigation or reinvestigation. 

OPM believes that this change will accommodate the addition of any new tax checks that 

are authorized.
Page 26 GAO-13-733 Security Clearances and Federal Tax Debt

privacy, risk of inappropriate disclosure, and negative effects on tax 

compliance and tax-system administration.47

While knowingly making false statements on federal security-clearance 

forms is a federal crime and may deter some from lying about their tax 

debt, much of our prior work has focused on the inadequacies of using 

voluntary, self-reported information without independent verification and 

review.48 In our past work, we found that independent verification is a key 

detection and monitoring component of our agency’s fraud-prevention 

framework and is a fraud-control best practice.49

In addition, as previously discussed, currently there is no method to 

monitor clearance holders to detect unpaid federal tax debts accrued after 

an individual has been favorably adjudicated as eligible for a security 

clearance, unless it is self-reported, reported by a security manager due 

to garnishment of wages, or discovered during a clearance 

reinvestigation. This is especially important as about 76 percent of the 

individuals in our review accrued tax debts only after the issuance of the 

security clearance. While security-clearance investigators identified tax 

debt in the majority of our case studies, in some cases they did not 

identify the debt in the course of the initial clearance investigation, but 

during the subsequent reinvestigation. Given that clearance holders are 

only subject to reinvestigations every 5-10 years, an automated 

mechanism would allow federal agencies to routinely monitor clearance 

Routinely obtaining 

federal debt information from the Department of the Treasury would allow 

investigative agencies to conduct this independent validation.

 47GAO, Taxpayer Privacy: A Guide for Screening and Assessing Proposals to Disclose 

Confidential Tax Information to Specific Parties for Specific Purposes, GAO-12-231SP 

(Washington, D.C.: Dec. 14, 2011).

48See, for example, GAO, Recovery Act Tax Debtors Have Received FHA Mortgage 

Insurance and First-Time Homebuyer Credits, GAO-12-592 (Washington, D.C.: May 29, 

2012); Service-Disabled Veteran-Owned Small Business Program: Governmentwide 

Fraud Prevention Control Weaknesses Leave Program Vulnerable to Fraud and Abuse, 

but VA Has Made Progress in Improving Its Verification Process, GAO-12-443T 

(Washington, D.C.: Feb. 7, 2012); and Energy Star Program: Covert Testing Shows the 

Energy Star Program Certification Process Is Vulnerable to Fraud and Abuse, 

GAO-10-470 (Washington, D.C.: Mar. 5, 2010).

49The fraud-prevention framework was developed on the basis of findings from GAO 

audits of Hurricanes Katrina and Rita relief efforts and the internal control standards from 

the Standards for Internal Controls in the Federal Government in our prior work. See 

GAO-07-418T and GAO/AIMD-00-21.3.1.
Page 27 GAO-13-733 Security Clearances and Federal Tax Debt

holders to identify tax debt accrued after the initial clearance has been 

approved without having to wait until the reinvestigation.50 Additionally, 

we found that some individuals misrepresented the nature of their tax 

debt to investigators and adjudicators. Reliance on self-reporting and the 

relatively time-consuming and resource-intensive investigative 

interviewing process presents vulnerabilities that may be mitigated by 

additional mechanisms to expedite the security-clearance process. A 

mechanism such as TOP may provide an opportunity for federal agencies 

to improve their identification of federal debts, including tax debts, owed 

by security-clearance applicants.51 Enhancing federal agencies’ access to 

tax-debt information for the purpose of both investigating and adjudicating 

security-clearance applicants, as well as ongoing monitoring of current 

clearance holders’ tax-debt status, would better position agencies to 

make fully informed decisions about eligibility. This could include further 

exploration, through the existing working group, of routinely accessing 

TOP, or otherwise developing a legislative proposal, in consultation with 

Congress, to authorize access to tax-debt information.

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. Additional mechanisms to help 

investigative agencies access this information could help federal agencies 

apply the adjudicative guidelines, which call for weighing an individual’s 

federal tax debt as it relates to an individual’s financial and personal 

conduct when making security-clearance determinations. OPM and ODNI 

are currently overseeing several efforts to improve the investigative and 

adjudication process, including the development of a working group to 

explore options for establishing an automated process for reviewing 

federal tax compliance. As part of this effort, exploring the feasibility of 

investigative agencies routinely obtaining tax-debt information from the 

Department of the Treasury, for the purposes of investigating and 

adjudicating clearance applicants, as well as to conduct ongoing 

 50OPM officials stated that agencies will conduct continuous monitoring under Executive 

Order 13467 once it is fully implemented.

51Because TOP also contains other debt information, including delinquent child-support 

payments and state income-tax debts, it could also be used in determining whether the 

applicant accurately disclosed these other types of debts on the SF-86.

Conclusions
Page 28 GAO-13-733 Security Clearances and Federal Tax Debt

monitoring of current clearance holders’ tax-debt status, could help 

determine how, if at all, mechanisms such as TOP could be leveraged to 

gain access to this information and enhance OPM’s ability to conduct 

investigations and federal agencies’ ability to assess clearance eligibility. 

If these methods are found to be impractical, developing a legislative 

proposal, in consultation with Congress, to authorize access to tax-debt 

information could address existing legal barriers to such information.

We recommend that, as part of its working group, the Director of National 

Intelligence, as the Security Executive Agent, in consultation with OPM 

and the Department of the Treasury, evaluate the feasibility of federal 

agencies routinely obtaining federal debt information from the Department 

of the Treasury’s TOP system, or a similar automated mechanism that 

includes federal taxes, for the purposes of investigating and adjudicating 

clearance applicants, as well as for ongoing monitoring of current 

clearance holders’ tax-debt status. If this is found to be impractical, ODNI 

should consider whether an exception to section 6103 is advisable and, if 

so, develop a legislative proposal, in consultation with Congress, to 

authorize access to tax-debt information.

We provided a draft copy of this report to DHS, DOE, the IRS, ODNI, 

OPM, State, and the Department of the Treasury’s Fiscal Service for their 

review. Letters from DHS, ODNI, and OPM are reprinted in appendixes

IV, V, and VI. Both ODNI and OPM concurred with our recommendation. 

In its response, ODNI stated that it will recommend that the working group 

consider routine access of TOP for purposes of investigating, 

adjudicating, and monitoring security-clearance holders and applicants. 

This action will likely address the recommendation we proposed. If the 

working group determines this action is not feasible, ODNI may want to 

consider drafting a legislative proposal to authorize access to tax-debt 

information. In addition, DHS, the IRS, and OPM provided technical

comments on our draft, which we incorporated as appropriate. In e-mails 

received on August 12, 2013, August 9, 2013, and August 8, 2013, 

officials from DOE, State, and the Department of the Treasury’s Fiscal 

Service, respectively, said that they did not have any comments on the 

draft report.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the appropriate

Recommendation for 

Executive Action

Agency Comments 

and Our Evaluation
Page 29 GAO-13-733 Security Clearances and Federal Tax Debt

congressional committees, the Secretary of Homeland Security, the 

Secretary of Energy, the Director of National Intelligence, the Director of 

OPM, the Secretary of State, and the Secretary of the Treasury. In 

addition, the report will be available at no charge on the GAO website at 

http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-6722 or LordS@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. 

Stephen M. Lord

Director

Forensic Audits and Investigative Service
Appendix I: Federal Investigative Standards

Page 30 GAO-13-733 Security Clearances and Federal Tax Debt

The Office of Personnel Management (OPM), federal, or contract 

investigators conduct security-clearance investigations by using 

government-wide standards. OPM conducts background investigations 

for the majority of federal employees to determine their suitability for 

federal employment. OPM also conducts background investigations as 

part of the security-clearance process. For all these investigations, 

information that applicants provide on electronic applications is checked 

against numerous databases. Many investigation types contain credit and 

criminal-history checks, while top-secret investigations also contain 

citizenship, public-record, and spouse checks, as well as reference 

interviews and an in-person, Enhanced Subject Interview to gain insight 

into an applicant’s character. Although it is not standard, the Enhanced 

Subject Interview can also be triggered for lower-level investigations if an 

investigation contains issues that need to be resolved in accordance with 

the Federal Investigative Standards. Table 1 highlights the investigative 

components generally associated with the suitability, and with the secret 

and top-secret clearance levels.

Table 1: Information Gathered in Conducting a Typical Investigation to Determine Suitability and Eligibility for a Security 

Clearance

Type of background investigation

Type of information gathered by component Suitability Secret Top secret

1. Personnel security questionnaire: The reported answers on an electronic SF-85P or 

SF-86 form

X X X

2. Fingerprints: Fingerprints submitted electronically or manually X X X

3. National agency check: Data from Federal Bureau of Investigation, military records, and 

other agencies as required

X X X

4. Credit check: Data from credit bureaus where the subject lived/worked/attended school 

for at least 6 months

X X X

5. Local agency checks: Data from law-enforcement agencies where the subject 

lived/worked/attended school during the past 10 years or—in the case of reinvestigations—

since the last security-clearance investigation

V X X

6. Date and place of birth: Corroboration of information supplied on the personnel security 

questionnaire

X

7. Citizenship: For individuals born outside of the United States, verification of U.S. 

citizenship directly from the appropriate registration authority

X

8. Education: Verification of most-recent or significant claimed attendance, degree, or 

diploma

V V X

9. Employment: Review of employment records and interviews with workplace references, 

such as supervisors and coworkers

V V X

10. References: Data from interviews with subject-identified and investigator-developed 

leads

V V X

Appendix I: Federal Investigative Standards
Appendix I: Federal Investigative Standards

Page 31 GAO-13-733 Security Clearances and Federal Tax Debt

Type of background investigation

Type of information gathered by component Suitability Secret Top secret

11. National agency check for spouse or cohabitant: National agency check without 

fingerprint

X

12. Former spouse: Data from interview(s) conducted with spouse(s) divorced within the 

last 10 years or since the last investigation or reinvestigation

X

13. Neighborhoods: Interviews with neighbors and verification of residence through 

records check

V V X

14. Public records: Verification of issues, such as bankruptcy, divorce, and criminal and 

civil court cases

X

15. Enhanced Subject Interview: Collection of relevant data, resolution of significant 

issues or inconsistencies

a a X

Source: Department of Defense and OPM.

Legend

V = Components with this notation are checked through a mail voucher sent by OPM’s Federal 

Investigative Services.

Notes: The content and amount of information collected as part of a personnel security-clearance 

investigation is dependent on a variety of case-specific factors, including the history of the applicant; 

however, items 1-15 are typically collected for the types of investigations indicated.

a

The Enhanced Subject Interview was developed by the Joint Reform Team and implemented by 

OPM in 2011 and serves as an in-depth discussion between the interviewer and the subject to ensure 

a full understanding of the applicant’s information, potential issues, and mitigating factors. It is 

included in a Moderate Risk Background Investigation, one type of suitability investigation, and can 

be triggered by the presence of issues in a secret-level investigation.
Appendix II: Revised Adjudicative Guidelines 

for Determining Eligibility for Access to 

Classified Information

Page 32 GAO-13-733 Security Clearances and Federal Tax Debt

In making determinations of eligibility for security clearances, the nationalsecurity adjudicative guidelines require adjudicators to consider (1) 

guidelines covering 13 specific areas of concern; (2) adverse conditions 

or conduct that could raise a security concern and factors that may 

mitigate (alleviate) the condition for each guideline; and (3) general 

factors related to the whole person.1

First, the guidelines state that eligibility determinations require an overall 

common-sense judgment based upon careful consideration of the 

following 13 guidelines in the context of the whole person:

• allegiance to the United States;

• foreign influence, such as having a family member who is a citizen of 

a foreign country;

• foreign preference, such as performing military service for a foreign 

country;

• sexual behavior;

• personal conduct, such as deliberately concealing or falsifying 

relevant facts when completing a security questionnaire;

• financial considerations;

• alcohol consumption;

• drug involvement;

• emotional, mental, and personality disorders;

• criminal conduct;

• security violations;

• outside activities, such as providing service to or being employed by a 

foreign country; and

• misuse of information-technology systems.

Second, for each of these 13 areas of concern, the guidelines specify (1) 

numerous significant adverse conditions or conduct that could raise a 

security concern that may disqualify an individual from obtaining a 

security clearance; and (2) mitigating factors that could allay those 

security concerns, even when serious, and permit granting a clearance. 

For example, the financial consideration guideline states that individuals 

 1

These guidelines were established for all U.S. government civilian and military personnel, 

consultants, contractors, employees of contractors, licensees, certificate holders, 

grantees, and their employees and other individuals who require access to classified 

information. They apply to persons being considered for initial or continued eligibility for 

access to classified information, to include sensitive compartmented information and 

special access programs, and are to be used by government departments and agencies in 

all final clearance determinations.

Appendix II: Revised Adjudicative Guidelines 

for Determining Eligibility for Access to 

Classified Information
Appendix II: Revised Adjudicative Guidelines 

for Determining Eligibility for Access to 

Classified Information

Page 33 GAO-13-733 Security Clearances and Federal Tax Debt

could be denied security clearances on the basis of having a history of 

not meeting financial obligations. However, this security concern could be 

mitigated if one or more of the following factors were present: the 

behavior was not recent, resulted from factors largely beyond the 

person’s control (such as loss of employment), or was addressed through 

counseling.

Third, the adjudicator should evaluate the relevance of an individual’s 

overall conduct by considering the following general factors:

• the nature, extent, and seriousness of the conduct;

• the circumstances surrounding the conduct, to include knowledgeable 

participation;

• the frequency and recency of the conduct;

• the individual’s age and maturity at the time of the conduct;

• the voluntariness of participation;

• the presence or absence of rehabilitation and other pertinent 

behavioral changes;

• the motivation for the conduct;

• the potential for pressure, coercion, exploitation, or duress; and

• the likelihood of continuation or recurrence.

When the personnel-security investigation uncovers no adverse security 

conditions, the adjudicator’s task is fairly straightforward because there is 

no security condition to consider.
Appendix III: Scope and Methodology

Page 34 GAO-13-733 Security Clearances and Federal Tax Debt

Our objectives were to determine: (1) how many individuals with unpaid 

federal taxes, if any, are in the Office of Personnel Management (OPM) 

security-clearance database and what is the magnitude of any unpaid 

federal tax debt? and (2) to what extent do federal agencies have 

mechanisms to detect unpaid tax debt during the security-clearance 

approval process?

To determine the magnitude of unpaid federal taxes owed by individuals 

approved for a security clearance, we obtained and analyzed OPM data 

of individuals eligible for a secret or top-secret security clearance due to a 

favorable adjudication, either during an initial investigation or a 

reinvestigation, from April 1, 2006, to December 31, 2011. Our review did 

not include the review of confidential clearance holders or public-trust 

positions. Department of Energy (DOE) and U.S. Nuclear Regulatory 

Commission (NRC) “Q” and “L” clearances are equivalent to the topsecret and secret clearances. Thus, for the purposes of our report, we 

considered “Q” and “L” clearances issued by DOE and NRC to be treated 

as top-secret and secret clearances, respectively. We identified the OPM 

Central Verification System (CVS) database as the appropriate data for 

our analysis after meeting with OPM officials and discussing the types of 

data available. We used this time frame because prior to April 1, 2006, 

the provision of the date a clearance was granted was not required and 

was therefore not consistently available for analysis. OPM provided us 

with an extract of the OPM database that included information only on 

executive-branch, non–Department of Defense (DOD), and nonintelligence-community employees and contractors who were eligible for a 

clearance during our time frame. The OPM CVS database does not 

maintain information on the denial of security clearances on the basis of 

an individual’s nonpayment of federal taxes. Thus, we were not able to 

determine the number of individuals who were denied security clearances 

for this reason.To determine the extent to which individuals eligible for a 

security clearance had unpaid federal taxes, we used the taxpayer 

identification number (TIN) as a unique identifier and electronically 

matched the Internal Revenue Service’s (IRS) tax-debt data to the OPM 

data of individuals eligible for a security clearance. Specifically, we used 

the IRS Unpaid Assessment file as of June 30, 2012, to match against the 

OPM CVS data. The IRS Unpaid Assessment file used for our analysis 

contains all tax modules that are unpaid as of June 30, 2012. The June 

30, 2012, file was used because it contained the most-recent unpaid 

assessment information at the time we conducted our analysis. To avoid 

overestimating the amount owed and to capture only significant unpaid 

federal taxes, we excluded from our analysis tax debts meeting specific 

Appendix III: Scope and Methodology
Appendix III: Scope and Methodology

Page 35 GAO-13-733 Security Clearances and Federal Tax Debt

criteria to establish a minimum threshold in the amount of tax debt to be 

considered when determining whether a tax debt is significant.

The criteria we used to exclude tax debts are as follows: (1) unpaid 

federal taxes the IRS classified as compliance assessments or memo 

accounts for financial reporting, and (2) recipients with total unpaid 

federal taxes of $100 or less. Specifically, compliance assessments or 

memo accounts were excluded because these taxes have neither been 

agreed to by the taxpayers nor affirmed by the court, or these taxes could 

be invalid or duplicative of other taxes already reported. We excluded tax 

debts of $100 or less because the IRS considers it a de minimis amount.

Additionally, for the purposes of our engagement, we included individuals 

from the Business Master File (BMF) and Non-Master File (NMF), who 

were an exact Social Security number (SSN)/TIN match, as well as an 

exact name match with the OPM CVS data. We only included exact 

matches so we would be able to match and use the information from the 

OPM CVS database. Additionally, the Spouse Individual Master File (IMF) 

was not used in the magnitude analysis. This is because we were unable 

to determine which agency each spouse was affiliated with on the basis 

of the information available in both the IRS and OPM data. Additionally, 

the debt of a spouse may not have any effect on the security-clearance 

adjudication determination. As a result, the results reported may be 

understated.

Using these criteria, we identified about 8,400 of these individuals who 

had unpaid federal tax debt as of June 30, 2012. Our final estimate of tax 

debt does include some debt that is covered under an active IRS 

installment plan or beyond normal statutory time limits for debt collection. 

Our analysis determined the magnitude of known unpaid federal taxes 

owed by individuals in the OPM database and cannot be generalized to 

individuals that were granted eligibility for security clearances by DOD, 

the legislative branch, or the intelligence community.

To determine whether existing investigative and adjudication mechanisms 

detect unpaid tax debt during the security-clearance process and possible 

additional improvements to federal tax-debt detection mechanisms, we 

interviewed knowledgeable officials from the Office of the Director of 

National Intelligence (ODNI), which serves as Security Executive Agent 

for the federal government and has authority and responsibility over 

security-clearance protocols, and from OPM, which conducts securityclearance investigations for most federal agencies. In addition, we 

conducted interviews with officials from the Department of Homeland and 

Security (DHS), Department of Energy (DOE), and Department of State 
Appendix III: Scope and Methodology

Page 36 GAO-13-733 Security Clearances and Federal Tax Debt

(State). DHS, DOE, and State were selected because these agencies had 

the highest number of security clearances adjudicated from April 1, 2006, 

to December 31, 2011, collectively representing over 50 percent of 

clearances granted in OPM’s CVS database, and also represented over 

50 percent of the tax debt owed. In addition, we also reviewed and 

analyzed applicable laws, regulations, and ODNI guidance, as well as 

applicable policies and procedures for OPM, DHS, DOE, and State 

regarding the investigation and adjudication of security clearances.

Finally, we conducted interviews with the Department of the Treasury’s 

Bureau of the Fiscal Service (Fiscal Service) and the IRS to obtain their 

views on any initiatives and barriers in sharing tax-debt information. We 

compared verification mechanisms with the fraud control framework we 

developed in our past work and other fraud control best practices. We 

also used Federal Investigative Standards (see app. I) and the 

Adjudicative Guidelines for Determining Eligibility for Access to Classified 

Information (see app. II) to evaluate the current mechanisms used to 

identify and evaluate unpaid federal tax debt as part of the securityclearance process.

To develop case-study examples, we identified a nonprobability sample of 

13 individuals for detailed reviews from the above analyses of securityclearance holders from DHS, DOE, and State who had federal tax debt. 

We stratified our matches using the following characteristics: (1) 

adjudicating agency; (2) amounts of unpaid federal taxes in the IRS 

Unpaid Assessment database as of June 30, 2012; (3) type of security 

clearance granted or approved, clearance date, and dollar amount of 

unpaid tax debt; and (4) whether tax debt was recorded prior to or after 

the security-clearance grant date. We selected 12 cases from these four 

strata. Additionally, we randomly selected one case with indications that 

IRS was assessing a trust-fund recovery penalty. Once the nonprobability 

sample was selected, we requested all investigative and adjudicative 

case-file notes from the adjudicating agency; IRS notes, detailed account 

transcripts, and other records from the IRS; and security-clearance files 

from DHS, DOE, and State for these 13 individuals. For 2 of the 13 

individuals that had accrued debt only after favorable adjudication, we 

reviewed the adjudicative files to determine whether the agency was 

aware of the federal tax debt through its reinvestigation. The clearance 

files and IRS paperwork were systematically reviewed using a structured 

data-collection instrument, looking at whether the tax debt was revealed 

in the investigative or adjudicative processes, and, if so, how it was 

handled in the adjudication. Each case file was independently reviewed 

by two analysts. After completion of each case review, the files were 

compared to identify discrepancies. Potential discrepancies between 
Appendix III: Scope and Methodology

Page 37 GAO-13-733 Security Clearances and Federal Tax Debt

case-file reviews were resolved by a third-party reviewer. These cases 

were selected to illustrate individuals with unpaid federal tax debt that had 

security clearances but the results cannot be generalized beyond the 

cases presented.

To assess the reliability of record-level IRS unpaid assessments data, we 

used the work we perform during our annual audit of the IRS’s financial 

statements and interviewed knowledgeable IRS officials about any datareliability issues. While our financial-statement audits have identified 

some data-reliability problems associated with tracing the IRS’s tax 

records to source records and including errors and delays in recording 

taxpayer information and payments, we determined that the data were 

sufficiently reliable to address this report’s objectives.

To assess the reliability of record-level OPM security-clearance data, we 

reviewed documentation from OPM, interviewed OPM officials who 

administer these information systems, and performed electronic testing of 

required elements. We determined that the data were sufficiently reliable 

to identify the individuals eligible for clearances with unpaid federal tax 

debt and select cases to illustrate potential vulnerabilities.

We conducted this performance audit from November 2011 to September 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our audit findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

Data-Reliability 

Assessment
Appendix IV: Comments from the Department 

of Homeland Security

Page 38 GAO-13-733 Security Clearances and Federal Tax Debt

Appendix IV: Comments from the 

Department of Homeland Security
Appendix V: Comments from the Office of the 

Director of National Intelligence

Page 39 GAO-13-733 Security Clearances and Federal Tax Debt

Appendix V: Comments from the Office of the 

Director of National Intelligence
Appendix VI: Comments from the Office of 

Personnel Management

Page 40 GAO-13-733 Security Clearances and Federal Tax Debt

Appendix VI: Comments from the Office of 

Personnel Management 
Related GAO Products

Page 41 GAO-13-733 Security Clearances and Federal Tax Debt

Personnel Security Clearances: Further Actions Needed to Improve the 

Process and Realize Efficiencies. GAO-13-728T. Washington, D.C.: June 

20, 2013.

Medicaid: Providers in Three States with Unpaid Federal Taxes Received 

over $6 Billion in Medicaid Reimbursements. GAO-12-857. Washington, 

D.C.: July 27, 2012.

Security Clearances: Agencies Need Clearly Defined Policy for 

Determining Civilian Position Requirements. GAO-12-800. Washington, 

D.C.: July 12, 2012.

Personnel Security Clearances: Continuing Leadership and Attention Can 

Enhance Momentum Gained from Reform Effort. GAO-12-815T. 

Washington, D.C.: June 21, 2012.

Recovery Act: Tax Debtors Have Received FHA Mortgage Insurance and 

First-Time Homebuyer Credits. GAO-12-592. Washington, D.C.: May 29, 

2012.

Recovery Act: Thousands of Recovery Act Contract and Grant Recipients 

Owe Hundreds of Millions in Federal Taxes. GAO-11-485. Washington, 

D.C.: April 28, 2011.

Federal Tax Collection: Potential for Using Passport Issuance to Increase 

Collection of Unpaid Taxes. GAO-11-272. Washington, D.C.: March 10, 

2011.

Medicare: Thousands of Medicare Providers Abuse the Federal Tax 

System. GAO-08-618. Washington, D.C.: June 13, 2008.

Tax Compliance: Federal Grant and Direct Assistance Recipients Who 

Abuse the Federal Tax System. GAO-08-31. Washington, D.C.: 

November 16, 2007.

Medicaid: Thousands of Medicaid Providers Abuse the Federal Tax 

System. GAO-08-17. Washington, D.C.: November 14, 2007.

Tax Compliance: Thousands of Organizations Exempt from Federal 

Income Tax Owe Nearly $1 Billion in Payroll and Other Taxes. 

GAO-07-1090T. Washington, D.C.: July 24, 2007.

Related GAO Products
Related GAO Products

Page 42 GAO-13-733 Security Clearances and Federal Tax Debt

Tax Compliance: Thousands of Organizations Exempt from Federal 

Income Tax Owe Nearly $1 Billion in Payroll and Other Taxes. 

GAO-07-563. Washington, D.C.: June 29, 2007.

Tax Compliance: Thousands of Federal Contractors Abuse the Federal 

Tax System. GAO-07-742T. Washington, D.C.: April 19, 2007.

Medicare: Thousands of Medicare Part B Providers Abuse the Federal 

Tax System. GAO-07-587T. Washington, D.C.: March 20, 2007.

(192392)
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