Tax refund offset due to spouse's defaulted student loan

I’ve just accepted a job offer to work for a DOE contractor and will soon be starting the process to get a security clearance. This will be my first time through the security clearance process. I have an item in my financial history that I can’t figure out how to handle.

My wife brought a defaulted student loan debt into our marriage. I knew about the debt before we got married, but did not know the debt had fallen into delinquency.
Upon filing our first tax return as a married couple, we discovered the debt had been turned over to the IRS and our tax refund was seized (this is officially called a tax refund offset, I believe) to pay down the debt. After discussing the issue with my wife, we decided to let the IRS continue to seize our refunds each year until the debt was paid. In total, four refunds were seized in full or in part, with the debt being paid off in Mar 2017.

Do I need to disclose this information during the security clearance application process? The debt is solely in my wife’s name and was created before we married, which makes me think I can omit this (based upon my googling of this issue so far). However, my name is on the tax refunds that were seized to pay off the debt. I’m worried this might be discovered during a background check and I do not want to appear as though I was trying to hide it.

I’m leaning towards mentioning the issue in the application just to avoid any appearance of covering it up, but I also don’t want to create any unnecessary reason for deeper scrutiny. Any better informed opinions on this issue would be greatly appreciated.


This is not an unusual situation. Knowing DOE’s sensitivity to financial issues, I would mention the past debt as being a delinquent debt in the last 7 years, provide all the requested information on the SF 86 (SCA or eQip) then have documents showing the debt was paid off so you can give the adjudicator a copy.

Many in here will tell you that this is too much work — on the other hand, many in here don’t know why their cases are taking so long. Be upfront, proactive, and you will do okay with this specific issue.


While I don’t disagree with the advice above, I DO question whether or not this is even reportable.

You weren’t delinquent on the debt and you weren’t delinquent on your taxes. It’s not the IRS that kept your refunds, it was the FMS, which is the agency that issues checks for refunds. Do either show on your credit report?

None of this shows up on my credit history. My wife and I have kept our finances separate (no joint accounts of any kind). My credit report is clean. No past delinquencies, no late payments, “Very Good” credit score.

Here’s what I would do: I don’t think that there is anyplace to report this on an SF86. But, I would write up the entire issue in great detail. If you are called to meet with an investigator, give this to them before they ask you any questions. This way, if the investigator has found anything, you are still reporting it before being confronted with it. You also have a reasonable explanation about why it wasn’t on your SF86.

This is a small issue.

I agree with these responses. My 2cents is to answer the questions honestly in Section 26 (Financial), then, if everything is answered ‘No’, there should be no issue.
However, the ‘extra special safe’ side of me says that you can use the last section Additional Comments to state anything you want. Sometimes I see statements that summarize an issue and then say that more information is available upon request. The main thing is to read the questions carefully, and answer to the best of your knowledge and belief. You could just take your 2nd paragraph and copy/paste into the Additional Comments section. I would also include the part about being solely in your spouse’s name, before you were married; and your name being on the tax paperwork. The main thing is being honest & open. Good Luck!