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If my five years of income tax returns show that I have insufficient income for the investment, could I get approved for I-526 petition?

Common inadmissibility grounds for EB-5 applicants

Proof of source of funds through retained earnings of applicant’s business

Proof of source of funds through a property sale or loan

Proof of source of funds through gift or inheritance

How much of my assets do I need in order to prove lawful source of income?

Proof of source through life-time income

Using intermediaries to lawfully avoid money transferring limitations.  

Do I have to provide five years of income tax returns in order to get approved for I-526 petition?


If my five years of income tax returns show that I have insufficient income for the investment, could I get approved for I-526 petition?

Yes. If the last five years of income tax return does not show that the applicant has the necessary level of income to invest, the applicant could nevertheless prove her lawful source of income through various ways, including sale of assets, secured or unsecured loan, life-time earnings, a gift or inheritance, or retained earnings from applicant’s business.


Common inadmissibility grounds for EB-5 applicants

The following are the most common grounds for inadmissibility, i.e. denial of an immigrant or non-immigrant visa. Even if an investor otherwise qualifies for an investor visa under the EB-5 program, if the applicant falls under any of these or other grounds for inadmissibility, he would be denied entry to the U.S. Fortunately, most categories of inadmissibility are irrelevant to EB-5 investors. The one possible exception is membership in the Communist party, which often is the case for investors coming from emerging markets such as China, Vietnam, or even Russia. Contact us to discuss in more detail the consequences of Communist party membership and the means of avoiding this possible hurdle in acquiring permanent residency.

Affiliation with a totalitarian party, e.g. Communist party membership

A person may be denied entry into the US if he is or has been a member of a totalitarian party, including, for example, the Communist party. Some applicants chose not to report their party affiliation. This is risky as the US government did ask for proof of lack of affiliation in some cases. In addition, willful misrepresentation of a material fact for the purpose of entering into the US is itself a ground for exclusion, and thus the failure to disclose party affiliation risks exclusion. The better approach is to report the affiliation and explain the situation into an exception with the assistance of an experienced immigration attorney. There are two major exceptions for inadmissibility based on party affiliation. The applicant could obtain entry into the US despite his previous affiliation if (1) the applicant’s party membership?was involuntary, or (2) the applicant terminated his?party?membership?in the past 2 years, or in the case that he worked as a party employee, the past 5 years.

Below are some of the other inadmissibility grounds that could potentially apply to EB-5 applicants:

Crimes

A person may be denied entry into the US if he was (1) convicted of a crime involving moral turpitude (including violent crimes and crimes reflecting on honesty, but excluding purely political offenses); (2) convicted of a crime relating to controlled substance; (3) convicted of multiple crimes (other than purely political offenses); or (4) engaged in prostitution or commercialized vice.

Previous violation of US immigration law

A person may be denied entry into the US if he was (1) previously deported or excluded and deported from the United States; or (2) previously unlawfully present in the United States for continuous or cumulative periods in excess of 180 days.

Public charge

A person may be denied entry into the US if she is likely to become a public charge at any time after entry. However, an applicant usually will not be denied entry on this ground if she was of working age and in healthy condition with no disabled dependents, or she has sufficient deposits for her living. Therefore, an EB-5 applicant may not be denied entry on this ground even if she has no English language skill or education background, because she has sufficient fund to support herself and her family.


Proof of source of funds through retained earnings of applicant’s business

An applicant can use the retained earnings of his or her own business to invest. To do this, the retained earnings must have been distributed to the applicant either as a salary or a dividend. The applicant should not directly transfer the funds from her company to the regional center. The applicant must also demonstrate that she can lawfully access the funds of her company and that she had the authority to make distributions to herself.


Proof of source of funds through a property sale or loan

If the applicant’s funds are from a loan secured by, or from the sale of, capital assets such as real estate, then as long as the applicant can provide evidence of the loan or sale transaction and can explain how and when they acquired the assets, she could likely prove her lawful source of income despite deficient income in her tax returns. This is useful for those applicants who own appreciated assets or real estate.

If the assets were acquired less than 7 years ago, USCIS usually requires extensive documentations about its acquisition. Applicant is expected to provide sales contracts, deeds and bank statements and other proof if needed. On the other hand, USCIS has relaxed the documentation requirements for assets acquired more than 7 years ago as long as a reasonable explanation for insufficient documentation is provided.

It should be noted that if the lender of the fund is not a bank or lending institute, the applicant must also prove the lender’s lawful source of funds. Also, the applicant may be able to use unsecured loans to invest, but that requires more proof of the general financial means of the applicant and might attract more scrutiny. If the lender is applicant’s company, then applicant should provide a proof that her company’s board of directors has approved the loan.

In addition, in the case of loan, applicant must be able to prove that she is able to pay it back using lawful income.


Proof of source of funds through gift or inheritance

Yet another option is that the applicant could invest using a gift or inheritance, even though her recent income return does not show a sufficient level of income. The applicant may need to prove to some extent how the predecessor in interest obtained the property or fund, and in case of gift, that the giftor does not expect repayment. In addition, compliance with gift or inheritance taxes in your country may be requested by USCIS.


How much of my assets do I need in order to prove lawful source of income?

An applicant does not need to prove his net worth and all income over his working career. He needs to only prove the amount that was used to invest in the EB-5 project. An emerging trend is that USCIS is requiring that the applicant may also need to prove the lawful source of funds for the regional center administrative fees as well.


Proof of source through life-time income

Another means of doing this is having an applicant use her life-time earnings as investment funds, which means that an applicant could accumulate her investment fund from relatively small amount of annual income for a long period of time. The applicant needs not provide the tax returns of each year during which she accumulated her investment fund, but she must provide some evidence that her employment or trade has enabled her to lawfully accumulate the fund. Sometimes, proof of applicant’s annual living expenses would be requested by USCIS.


Using intermediaries to lawfully avoid money transferring limitations.  

In mainland China, and several other countries, individuals are restricted in the amount of money they can transfer abroad each year.?Chinese regulations also limit the amount of foreign currency an individual can exchange in a year. Thus, applicants must use intermediaries, i.e. friends or family members, to help exchange the foreign currency and transfer the amount to the regional center in the US.

In order to prove that it is the applicant that invests the amount, the applicant must trace its fund to the satisfaction of the USCIS. To do this, he must prove that he transferred his fund to his friends or family members; the friends or family members transferred the same to the applicant’s oversea bank account; and the applicant transferred the amount to the regional center from the oversea bank account.

Bank statements, wire receipts, applicant’s instructions and currency exchange receipts are often required to prove the above transactions. If not available, declarations may be used as a substitute. However, applicants must be able to show the USCIS that the process is transparent and prove that the funds are under his direction and control at all times.


Do I have to provide five years of income tax returns in order to get approved for I-526 petition?

Yes. Although the USCIS does not have the authority to require foreign applicants to prove that the applicant has complied with foreign tax law, in practice, every applicant is expected to present five years of income tax return for herself and any businesses. Income tax returns serve as a reliable indication of the income level of the applicant. Some countries do not require annual tax filings, in which case we work with the client to provide the required documentation to attest to this fact.

If the applicant does not have income tax returns or was not required to file them, the applicant needs to work together with her attorney, local accountants and other specialists to provide convincing evidence as to why they are not available and provide alternative documents to prove the investor’s source of funds and financial standing. It could be sufficient to provide the relevant foreign laws that explain the tax filing requirements, along with the declaration and evidence from independent accountants.