When Immigration Matters

What is the EB5 Visa?

Posted by Karen-Lee Pollak on Mon, Jul 03, 2017 @ 11:00 AM

Managing Partner Page image (1).jpgInvestment - Business Background. Golden Compass Needle on a Black Field Pointing to the Word "Investment". 3D Render.-633865-edited.jpegInvestment - Business Background. Golden Compass Needle on a Black Field Pointing to the Word "Investment". 3D Render.-633865-edited.jpegInvestment - Business Background. Golden Compass Needle on a Black Field Pointing to the Word "Investment". 3D Render.-633865-edited.jpegThe EB5 visa was launched by Congress in 1990 and is administered by U.S. Citizenship and Immigration Services (USCIS). The fundamental purpose of the program is to stimulate economic activity, capital investment and job creation through investments by foreign investors who want to live in the U.S.  

Qualifying for an EB5 Visa
A foreign investor may potentially qualify for an EB5 visa in three different ways:
  • Investing $1,000,000 and hiring 10 full-time employees anywhere in the U.S.
  • Investing $500,000 and hiring 10 full-time employees in a high unemployment area or a rural area.
  • Investing either $1,000,000 or $500,000 (if the investment is made in a high unemployment area or rural area) in a designated Regional Center, and creating 10 full-time indirect or induced jobs.

Investment Requirements

All EB5 investors must invest in what USCIS designates as a new commercial enterprise. This is a business that meets either of the following requirements:

  • It was established on or before November 29, 1990, and the investment will fund restructuring and/or reorganizing such that the enterprise effectively becomes new again; or the investment will result in at least a 40 percent increase in the business’s net worth or employee headcount.
  • It was established on or after November 30, 1990.

The investment itself does not necessarily have to be in cash. It can partly or wholly take the form of inventory, equipment, tangible property, cash equivalents or secured indebtedness.  

Job Creation Requirements

As noted, job creation is one of the pillars of the EB5 visa program. Foreign investors who invest $1,000,000 must create 10 full-time positions anywhere in the U.S. Those who make their investment in a high unemployment area or a rural area (which USCIS refers to as a Targeted Employment Area or TEA) can reduce their commitment to $500,000.

A high unemployment area is defined as one where the unemployment rate is at least 150% that of the national average. A rural area is defined as an area that is outside a metropolitan statistical area (MSA) and has a population of less than 20,000 (based on the most recent census data).

Foreign investors who allocate their $1,000,000 or $500,000 investment to a USCIS-approved Regional Center do not have to create 10 full-time jobs. Instead, they must prove that their investment creates (at least) 10 indirect jobs or 10 induced jobs.

Indirect jobs are defined as jobs within the community that are created to provide goods or services to the Regional Center project. Induced jobs are defined as jobs within the community that are or will be created as a result of income spent by employees working on the Regional Center project.  

Investing in Troubled Businesses

In some cases, a foreign investor may also be allowed to invest in what USCIS deems a “troubled business,” and satisfy the job creation requirements by preventing job loss (i.e. maintaining 10 full time jobs that would otherwise be in jeopardy of being eliminated). A troubled business meets all of the following requirements:

  • The business has been operating for at least 24 months.
  • The business has experienced a net loss in the 12 or 24-month period immediately preceding the priority date on the EB5 investor’s Form I-526.
  • The loss for the period in question was at least 20% of the business’s net worth.
  • The business employs at least 10 full-time employees, and is expected to maintain at least this level of employment for the next 36-42 months.

It is important to note that the process of designating a business as troubled for the purposes of EB5 investment is complex and time consuming. This is because USCIS conducts extensive diligence to ensure that such businesses are indeed facing imminent workforce terminations or layoffs.  

Additional Details

Investors are not obligated to provide day-to-day management in any business that is associated with their EB5 visa. They are also not obligated to be the majority owner or the sole investor, and they can live anywhere within the U.S. They can also petition to have their spouse and children (under 21 years of age) join them in the U.S. as part of the EB5 visa.

Learn More

The EB5 visa program is complicated and requires extensive documentation. To learn more, contact the Pollak Immigration team today. We will learn about your unique situation and immigration objectives, clearly answer your questions regarding the EB5 visa program — as well as other programs that may be an option for you or your family members — and help you create a solid, complete, timely and impressive application.

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Karen-Lee Pollak is the Managing Attorney at Pollak PLLC located in Dallas, Texas. She is a frequent speaker, author and blogger on immigration issues. She can be reached at [email protected] or under her twitter handle law_immigration.

FATCA Tax Reporting for US. Residents with Foreign Bank Accounts

Posted by Karen-Lee Pollak on Thu, Apr 23, 2015 @ 5:48 PM

permanent resident, H1BToday I asked my colleague and friend International Tax Attorney Richard Rubin to explain in an article the new FATCA tax reporting rules that goes into effect on June 30, 2015.  FATCA impact US citizens, Green Card holders and other US tax resident individuals who have accounts with non-US banks or financial institutions.

"Bank accounts in countries outside the US can cause headaches when owned by US taxpayers. While owning foreign accounts has always entailed a reporting headache for US taxpayers, the problem has recently heightened as a result of the FATCA legislation that is being implemented in a number of countries outside the US.   

FATCA is a set of US tax reporting rules that impact US citizens, Green Card holders and other US tax resident individuals who have accounts with non-US banks or financial institutions.

An acronym for the Foreign Account Transactions Compliance Act, FATCA requires banks and financial institutions in countries outside the US to provide the IRS with details of accounts that are owned by US taxpayers. Although the mechanism varies slightly by country, in most countries where FATCA has been implemented banks and financial institutions are required to report these details to the Revenue Authority of that country, and the Revenue Authority is required to pass this information along to the IRS.

Foreign banks are generally required to report accounts known to be owned by US citizens and Green Card holders, as well as accounts owned by anyone who is potentially US tax resident, as indicated for example, by an associated US address, US telephone number, or US person with signing power or other authority over the account. 

For those US tax residents who have duly reported their non-US bank and other accounts on their US tax returns (and on their Foreign Bank Account Reports or “FBAR’s”), FATCA has little practical significance. Conversely, FATCA is directly relevant to US tax residents who have not reported their non-US accounts.  FATCA is also potentially relevant to individuals living outside the US if they intend immigrating to the US or otherwise becoming US tax resident.

Compared to the Revenue Authorities of most other countries, the IRS tends to take non-compliance far more seriously, as is evident from the IRS penalties that are generally imposed for non-compliance, especially non-reporting of foreign bank accounts.  As a result, individuals who are required to report their non-US bank accounts, but have not done so, typically face heavy penalties and in some cases criminal prosecution when the IRS discovers their foreign accounts through FATCA reporting.

FATCA is at varying stages of implementation in a number of countries.  Take for example South Africa:  in June 2014 South Africa signed an agreement with the US (a so-called Intergovernmental Agreement or “IGA”), in terms of which South Africa undertook to implement FATCA according to a timetable. Although the dates originally agreed have been extended, in February 2015 South Africa enacted legislation giving effect to FATCA.  As things currently stand, South African banks and institutions are obliged to commence reporting client account details with effect from June 2015. While certain implementation issues and dates remain to be clarified, one thing is clear; that in time to come South African banks and institutions will routinely be rendering details of accounts held by US taxpayers.

As with most other jurisdictions, South African institutions are required to provide details of accounts known to be owned by US citizens or Green Card holders, as well as accounts owned by anyone who is potentially US tax resident, as indicated for example, by an associated US address, US telephone number, or US person with signing power or other authority over the account.  In some cases, an “in-care-of” or “hold mail” address is sufficient to require reporting, if this is the sole address on file with the South African bank. 

Individuals who obtain Green Cards are often unaware that if they spend even a short period in the US they typically become US taxpayers; and being unaware of their US taxpayer status, they generally don’t file US tax returns or FBAR’s, with the result they also fail to report their non-US accounts. In cases such as these, FATCA reporting may cause the individual’s foreign bank to render their account details to the IRS before the individual gets to file the necessary returns and make the necessary disclosures.

In most cases the headache of unreported foreign accounts can be relieved - and generally cured - by taking appropriate corrective measures.  This often includes some form of Voluntary Disclosure to the IRS, and in certain cases may include other forms of disclosure.  There are a number of categories of Voluntary Disclosure, and the various options entail different qualifying criteria as well as different consequences. In certain cases, the risk of criminal prosecution may favor a solution that focuses on reducing the chances of criminal indictment; while in others, the risk of criminal prosecution is sufficiently low allowing focus on a solution that reduces or eliminates civil penalties.

While the remedy always depends on the specific facts, one principal is almost universally true; that doing nothing about foreign unreported accounts is not a solution". 

If you have international tax questions call Richard

RUBIN LAW ASSOC. PC

International Tax Attorneys

USA - SA Tax & FATCA Advisors

 www.rubinlaw.us

www.fatcasouthafrica.com

 

USCIS: Backlog in Processing of EB5-I526 Immigrant Investor Petitions

Posted by Michael Pollak on Wed, Sep 18, 2013 @ 2:51 PM

Eb-5 visa, investment visa, I526USCIS has released an update on the processing times for I 526 Investor Petitions also known as the Immigration Petition for Alien Entrepeneurs.  Petitioners have grown accustomed to adjudication of these Petitions taking 6-9 months.  The latest update provided by USCIS is that Petitioners can expect these Petitions to take 16 months to approve.  As of July 31, 2013, USCIS is working on I526 petitions filed in March 2012.  

This delay in processing can have a significant impact where the Petitioner has invested $500 000 to $1 million dollars in a business but would have to conceivable wait 16 months for I526 approval and then a minimum of an additional 6 months for consular processing to be able to come to the United States to manage their investment. 

How to Qualify for an EB-5 Investor Visa

Posted by Michael Pollak on Sun, Jan 13, 2013 @ 7:14 AM

Immigration attorney Karen-Lee Pollak explains how to get a green card by investing in the United States. 

eb-5 visaThe EB-5 or Investor visa is a United States visa created by the Immigration Act of 1990. This visa provides a method of obtaining a green card for foreign nationals who invest money in the United States and may be attained in three ways.

 Thanks for your comments, questions, and suggestions regarding immigration topics.

EB-5 Investor Visa Program May Undergo Significant Changes

Posted by Karen Pollak on Thu, May 19, 2011 @ 8:41 PM
immigration lawyer dallasU.S. Citizenship and Immigration Services (USCIS) today proposed significant enhancements to the administration of the USCIS Immigrant Investor Program, commonly referred to as the EB-5 Program—transforming the intake and review process for immigrant investors as part of the Obama administration’s continued commitment to improve the legal immigration system and meet our economic and national security needs for the 21st century.

The EB-5 Program makes 10,000 visas available annually to immigrant investors who invest in commercial enterprises that create at least 10 U.S. jobs. EB-5 investors may petition independently or as part of a USCIS-designated Regional Center.

“Congress created the EB-5 Program in 1990 to attract investors and entrepreneurs from around the globe to create jobs in America,” said USCIS Director Alejandro Mayorkas. “We are dedicated to enhancing this program to ensure that it achieves that goal to the fullest extent possible.”

United States Citizenship and Immigration Service (“USCIS”) proposed three fundamental changes to the way it processes EB-5 Regional Center filings. First, USCIS proposes to accelerate its processing of applications for job-creating projects that are fully developed and ready to be implemented. USCIS will also give these EB-5 applicants and petitioners the option to request Premium Processing Service, which guarantees processing within 15 calendar days for an additional fee.

Second, USCIS proposes the creation of new specialized intake teams with expertise in economic analysis and the EB-5 Program requirements. EB-5 Regional Center applicants will be able to communicate directly with the specialized intake teams via e-mail to streamline the resolution of issues and quickly address questions or needs related to their applications.

Third, USCIS proposes to convene an expert Decision Board to render decisions regarding EB-5 Regional Center applications. The Decision Board will be composed of an economist and adjudicators and will be supported by legal counsel.

This proposal will be online until June 17, 2011, for public comment—providing stakeholders an opportunity to offer feedback on the proposed changes to the administration of the EB-5 Program

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