GAO: 83,000 DOD Employees and Contractors with Security Clearances Owe $730 million in Federal Taxes

(WASHINGTON, D.C.) – A new Government Accountability Office (GAO) investigation, “Security Clearances: Tax Debts Owed by DOD Employees and Contractors,” has discovered that 83,000 DOD employees and contractors eligible for a security clearance owed $730 million in unpaid federal taxes. 

“It is vital that the Administration and Congress work diligently to eliminate potential threats that compromise the integrity of the federal workforce and the privileged information they safeguard,” Dr. Coburn said. “Giving security clearances to individuals who fail to follow the law is unwise and risky. Federal tax cheats with security clearances jeopardize both our national and economic security, and could unnecessarily put our nation’s classified information at risk. We must take prudent precautions not only to enhance our security, but also to encourage federal employees to pay their share of taxes and live by the same rules that so many hard working Americans do.”

According to the report, approximately 5.1 million employees and contractors have a security clearance. GAO conducted its analysis between January 2006 and December 31, 2011. During that time, GAO found that approximately 83,000 Department of Defense military and civilians employees and contractors that held or were approved for security clearances, owed $730 million in unpaid federal taxes. According to the IRS, the tax debt of individuals and businesses owed to the U.S. government was about $374 billion as of September 30, 2013.

Key findings include:

  • Of the 83,000 individuals found to owe backed taxes, 40% (34,000) had a repayment plan with the IRS to pay back their debt.  These individuals with repayment plans owed approximately $262 million (meaning that 60% did not have a repayment plan owed $468 million).
  • Of the 83,000 individuals, 44,500 were federal employees and owed $363 million.
  • Of the 83,000 individuals, 20,400 were given a top-secret clearance owed $249 million.
  • Approximately 76 percent (63,000 individuals) accrued tax debts only after the issuance of the security clearance.
  • Of the 83,000 individuals, 26,000 (31%) with unpaid federal tax debts were granted access to secret, top secret, or SCI information and owed $229 million.

Because OPM’s systems do not maintain information on the denial of security clearances on the basis of an individual’s nonpayment of federal taxes, it is unknown how many individuals were denied a clearance for having unpaid federal taxes.