Impact of Tax Liens on Security Clearance


Every year, hundreds of thousands of applicants submit for security clearance approval or renewal.  Simply completing the Form SF86 – all 127-pages – is a daunting task itself.  Applicants do not need any additional hurdles interfering with receiving their successful approval.  Yet, the existence of an outstanding tax debt is a frequent basis for security clearance denial.  If an applicant has a tax lien, follow these steps to increase your likelihood of a favorable outcome.

Resolve Your Delinquent Taxes Prior to Submitting Your Application

Many applicants believe that they can submit their security clearance application and then resolve their tax delinquency afterward.  They mistakenly assume that they need only resolve the tax lien prior to a decision being issued on the application.  Wrong!  Once the application is submitted, the research into the applicant’s background can commence promptly and any outstanding tax debts may quickly result in a negative assessment.

While this requires advance planning, applicants must do everything in their power to resolve all outstanding tax debt prior to submitting the application.  Doing so will give a person a much better chance of having the application approved.

After a security clearance application is denied, you are typically issued a “statement of reasons” advising as to the basis for the decision.  From there, the applicant typically has appeal rights.  However, once you are this far along, you are way behind the curve.  You want to start out this process as a “Winner”; not forced into filing an appeal with the hope of mounting a come-from-behind rally.  To put yourself in the best place position, resolve your delinquent tax issues prior to submitting your application or renewal.

Mitigation, Mitigation, Mitigation!

The reality is, most applicants simply are not in a position to quickly resolve their tax lien prior to the due date for their application or renewal.  Fortunately, the laws that govern security clearance issuances allow tax liens and other debts to be viewed less critically when the applicant has initiated good-faith efforts to repay the debt or when there are clear indications that the problem is being resolved or is under control.  So, take action immediately to show your efforts to resolve your tax lien. 

Equally important – document your actions!  Be sure to keep records of all the steps you have taken so that, if the time comes, you can demonstrate your efforts to mitigate and responsibly resolve the debt.

Tax Liens Are Treated Just As Any Other Debt.

Many applicants make the mistaken assumption that a tax lien will be viewed more favorably than other debts, such as a repossessed car or outstanding credit card debt.  No so.  The government views tax debt in a very similar manner to how it views many other forms of debt.  Ultimately, the guidelines under which applications and renewals are decided look for debts that demonstrate the failure to live within one’s means.  From the Government’s perspective, failure to live within your means reflect poor self-control, lack of judgment, or unwillingness to abide by rules and regulations.  Not attributes associated with a person handling Classified Information.  Accordingly, a tax debt, like most other forms of debt, will have a similar negative impact upon a clearance determination. 

BONUS – Don’t Go At Alone!

If you have already been denied and are now at the appeal stage, you have the option to proceed pro se, which means to represent yourself.  This is often a very bad idea.  Application appeals are viewed through the prism of a specialized legal analysis, and it is critical that you have an attorney on your side who understands the legal issues being advanced. 

When an application or renewal has been denied, your career is often in jeopardy.  Approach this issue with the seriousness it deserves and consult with an attorney who has experience in security clearance issues to help you through the process.

Maryland's Non-Compete Ban

On May 25, 2019, Maryland enacted Senate Bill 328, “Labor & Employment – Non-compete and Conflict of Interest Clauses”. The bill essentially prohibits employers from entering into non-compete agreements with employees earning equal to or less than $31,200 annually or $15 per hour. The new bill makes Maryland the latest state to revise its non-compete laws. 

The statute language is vague in certain areas.  It fails to clarify if the law encompasses non-solicitation agreements and other restrictive covenants. However, it should be noted that the statute expressly excludes any employment contracts with respect to taking and using a client list or other private client-related information from its coverage. It also fails to indicate if the statute is applicable only post-employment. Accordingly, by its simple language, the statute would prohibit employers from forming anti-moonlighting agreements with lower wage employees.

The non-compete ban will go into effect on October 1, 2019.  Employers who employ minimum wage and low-income employees will primarily be affected.  Employers with workers earning at or near the minimum wage should pay close attention to Maryland’s new laws and contact Luchansky Millman for consultation to assist in amending policies.

The Maryland Commission on Civil Rights - The Basics

​​The Maryland Commission on Civil Rights ("MCCR") enforces Maryland's employment law that guarantees equal opportunity regardless of race, color, religion, ancestry or national origin, sex, age, marital status, sexual orientation, gender identity, disability, or genetic information.

Therefore, it is illegal for employers to discriminate in recruiting, interviewing, hiring, setting work conditions, or discharging, based on the above protected categories.

Only employers with 15 or more employees are subject to the law.

Harassment on the basis of one the protected categories listed above, and retaliation for filing a complaint or being involved in the investigation, are also prohibited under law and enforced by MCCR.

A charge of discrimination must be filed with the MCCR within six months of the date the alleged discriminatory act occurred.

If you believe that actions have been taken against you based on discrimination in violation of Maryland law, it is imperative that you contact the MCCR immediately to initiate the process of determining whether you have been a victim of illegal employment discrimination.

Our experienced employment attorneys can guide you through the MCCR process and help you analyze your situation to determine if the actions taken against you meet the threshold of being considered illegal discrimination.


MCCR and EEOC "Work-Sharing Agreement"

The Maryland Commission on Civil Rights ("MCCR") is the Maryland state agency equivalent to the United States Equal Employment Opportunity Commission ("EEOC").

Although the MCCR was created to enforce Maryland’s laws against discrimination in employment, the MCCR has a "work-sharing agreement" with the EEOC, which means that, although the EEOC is a federal agency and the MCCR is a state agency, they work together to handle each other's cases.

While some are of the opinion that complaints filed with the MCCR are automatically filed with the EEOC, we believe it is a prudent practice, when filing a claim with either agency, to indicate that you want to "cross-file" the claim with the other agency.

The work-sharing agreement means that cases are shared or transferred among the agencies. Sometimes the MCCR transfers cases to the EEOC, such as when the allegation is against a federal agency or the complaint is filed after 180 days of the alleged incident. Additionally, the EEOC will often transfer complaints to MCCR where the agency has jurisdiction in order to conduct the investigation. The MCCR also has the ability to request cases for investigation from the EEOC, and that is a practice the agency engages in, in order to process every allegation of unlawful discrimination in Maryland in a timely manner. 

Often, the EEOC or MCCR are backlogged with a heavy load of cases and they may enlist the help of another local agency, such as a county office of human rights, to process claims and investigations.  This can be very helpful for your case as we have experienced tremendous success with this option.

If you are pursuing a discrimination case in Maryland and would like guidance on how to navigate the process, contact our firm to schedule a consultation.


The Test for Classifying Workers as Independent Contractors Just “Evolved” Backward

                One of the most confusing areas of labor and employment law is the decision regarding whether a worker may be classified as an independent contractor, or whether the worker must be recognized as an employee.  The stakes are high.  Employees are entitled to all sorts of protections that independent contractors don’t get – unemployment benefits, leave rights (in Maryland), overtime pay (if non-exempt), protection against unlawful discrimination to name a few.  Which explains why employers lean toward misclassifying workers as independent contractors.

                What makes the issue so confusing is that each of the laws affected by a misclassification decision has a different test for determining whether the worker was properly or improperly classified as an independent contractor.  The IRS has its test for income tax purposes.  The DLLR has its test for unemployment benefits purposes.  The Department of Labor has its test for overtime purposes.

                And now, the National Labor Relations Board just changed its test for purposes of filing an unfair labor charge (a ULP) with the NLRB – something that employees may do, but which independent contractors may not.  Employees can file a ULP against their employer, for example, if they believe they were fired simply for joining with other employees to complain about their working conditions – something called, “concerted activity.”

                On January 25, 2019, the NLRB decided to go back to a standard that favors independent contractors – and, therefore, favors employers.  Under President Obama, the NLRB had changed the test to be stacked against independent contractor classification – a move that favored employees.  That decision now has been rejected.

                The thought of navigating this quagmire makes most attorneys go weak in the knees.  At Luchansky Millman, we deal with these issues every day.  If you are facing a classification issue, give us a call at 410.522.1020.