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GAO: 86,000 DOD Employees Have Federal Tax Debt

Security clearances were granted or approved for roughly 83,000 Department of Defense (DOD) employees and contractors who together owe more than $730 million in federal tax debt, according to a report by the Government Accountability Office.

The study was conducted at the request of Rep. Dave Camp, Sen. Tom Coburn, Sen. Susan Collins, and Sen. Orrin Hatch, all Republicans, as part of a review of the security-clearance process. The cumulative tax debt was as of June 30, 2012.

Just over half (about 44,500 individuals, with roughly $363 million in tax debt) were federal employees, while the remainder were “employees of federal contractors or had an ‘other’ designation.”

The report also found that roughly 26,000 of those employees, with a combined total of $229 million in tax debt, had access to classified information, as well. In order to gain classified access, defined as “physical proximity to property, assets, or knowledge of controlled or national security information,” an individual must first be determined eligible for clearance, then also be able to demonstrate a “need-to-know.” (RELATED: Author: Obama Would Have Trouble Getting Security Clearance For an Entry-Level Government Job)

With more than 5.1 million employees holding, or eligible to hold, security clearances as of October 2013, it is imperative that the government conduct “thorough vulnerability assessments of security-clearance applicants.” This is particularly important, the report explains, because federal taxes do not automatically disqualify an individual from being granted a security clearance, even though federal regulations specifically state that, “an individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.” (RELATED: Defense Department: Signing Secession Petitions Won’t Affect Your Security Clearance)

Previously, in a September 2013 analysis, the GAO had suggested that the Treasury Offset Program (TOP), an automated process that identifies federal employees and contractors with tax debt, “may provide an opportunity for federal agencies to perform an automated check of both security-clearance applicants and current clearance holders.”

Unfortunately, an interagency working group determined in June 2014 that the IRS “cannot provide investigators and adjudicators the specific federal taxpayer information they require without violating restrictions set in … the Internal Revenue Code.”

Currently, officials at the Office of the Director of National Intelligence and at the IRS are working to develop “an automated process for providing investigators and adjudicators more detailed information on tax payment and tax filing.” Although still in the initial planning stages, their goal is to have such a system in place by 2017.

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