Degree or an Alien of Exceptional Ability Pursuant to Section 203(b )(2) of the Immigration and Nationality Act, 8 U.S.C. § 1153(b)(2)
ON BEHALF OF PETITIONER:
INSTRUCTIONS:
Enclosed please find the decision of the Administrative Appeals Office (AAO) in your case. This is a non-precedent decision. The AAO does not announce new constructions of law nor establish agency policy through non-precedent decisions. If you believe the AAO incorrectly applied current law or policy to your case or if you seek to present new facts for consideration, you may file a motion to reconsider or a motion to reopen, respectively. Any motion must be filed on a Notice of Appeal or Motion (Form I-290B) within 33 days of the date of this decision. Please review the Form I-290B instructions at http:Uwww.uscis.gov/forms for the latest information on fee, filing location, and other requirements. See also 8 C.P.R. § 103.5. Do not file a motion directly with the AAO.
Ron Rosenberg
Acting Chief, Administrative Appeals Office www.uscis.gov
DISCUSSION: The preference visa petition was denied by the Director, Texas Service Center, and is now before the Administrative Appeals Office (AAO) on appeal. The appeal will be dismissed. The petitioner is a software development firm. It seeks to employ the beneficiary permanently in the United States as a technical project manager. As required by statute, the petition is accompanied by ETA Form 9089, Application for Permanent Employment Certification, approved by the United States Department of Labor (DOL). The director determined that the petitioner had not established that it had the continuing ability to pay the beneficiary the proffered wage beginning on the priority date of the visa petition. The director denied the petition accordingly.
The record shows that the appeal is properly filed, timely and makes a specific allegation of error in law or fact. The procedural history in this case is documented by the record and incorporated into the decision. Further elaboration of the procedural history will be made only as necessary. As set forth in the director's February 6, 2013 denial, the single issue in this case is whether or not the petitioner has the ability to pay the proffered wage as of the priority date and continuing until the beneficiary obtains lawful permanent residence.
Section 203(b )(2) of the Act, 8 U.S.C. § 1153(b )(2), provides immigrant classification to members of the professions holding advanced degrees. See also 8 C.P.R.§ 204.5(k)(1).
The regulation 8 C.P.R. § 204.5(g)(2) states in pertinent part:
Ability of prospective employer to pay wage. Any petitiOn filed by or for an employment-based immigrant which requires an offer of employment must be accompanied by evidence that the prospective United States employer has the ability to pay the proffered wage. The petitioner must demonstrate this ability at the time the priority date is established and continuing until the beneficiary obtains lawful permanent residence. Evidence of this ability shall be either in the form of copies of annual reports, federal tax returns, or audited financial statements.
The petitioner must demonstrate the continuing ability to pay the proffered wage beginning on the priority date, which is the date the ETA Form 9089, Application for Permanent Employment Certification, was accepted for processing by any office within the employment system of the DOL. See 8 C.P.R. § 204.5( d). The petitioner must also demonstrate that, on the priority date, the beneficiary had the qualifications stated on its ETA Form 9089, Application for Permanent Employment Certification, as certified by the DOL and submitted with the instant petition. Matter of Wing's Tea House, 16 I&N Dec. 158 (Acting Reg'l Comm'r 1977).
Here, the ETA Form 9089 was accepted on July 5, 2012. The proffered wage as stated on the ETA Form 9089 is $120,000 per year. The ETA Form 9089 states that the position requires a Master's degree in Computer Science plus two years of experience in the proffered position or in large scale software development.
The AAO conducts appellate review on a de novo basis. See Soltane v. DOl, 381 F.3d 143, 145 (3d Cir. 2004). The AAO considers all pertinent evidence in the record, including new evidence properly submitted upon appeal.1
The evidence in the record of proceeding shows that the petitioner is structured as a C corporation. On the petition, the petitioner claimed to have been established in 1982, to have a gross annual income of $911,935, and to currently employ nine workers. According to the tax returns in the record, the petitioner's fiscal year runs from October 1 through September 30. On the ETA Form 9089, signed by the beneficiary on October 8, 2012, the beneficiary claimed to have begun working for the petitioner on May 16, 2008.
The petitioner must establish that its job offer to the beneficiary is a realistic one. Because the filing of an ETA Form 9089 labor certification application establishes a priority date for any immigrant petition later based on the ETA Form 9089, the petitioner must establish that the job offer was realistic as of the priority date and that the offer remained realistic for each year thereafter, until the beneficiary obtains lawful permanent residence. The petitioner's ability to pay the proffered wage is an essential element in evaluating whether a job offer is realistic. See Matter of Great Wall, 16 I&N Dec. 142 (Acting Reg'l Comm'r 1977); see also 8 C.P.R. § 204.5(g)(2). In evaluating whether a job offer is realistic, United States Citizenship and Immigration Services (USCIS) requires the petitioner to demonstrate financial resources sufficient to pay the beneficiary's proffered wages, although the totality of the circumstances affecting the petitioning business will be considered if the evidence warrants such consideration. See Matter ofSonegawa, 12 I&N Dec. 612 (Reg'l Comm'r 1967).
In determining the petitioner's ability to pay the proffered wage during a given period, USCIS will first examine whether the petitioner employed and paid the beneficiary during that period. If the petitioner establishes by documentary evidence that it employed the beneficiary at a salary equal to or greater than the proffered wage, the evidence will be considered prima facie proof of the petitioner's ability to pay the proffered wage. In the instant case, the petitioner submitted a 2012 Internal Revenue Service (IRS) Form W-2 stating that it paid the beneficiary $89,496.00 in that year. 2 As the amount is less than the proffered wage, the petitioner must demonstrate its ability to pay the difference between the actual wage paid and the proffered wage, which is $30,504. If the petitioner does not establish that it employed and paid the beneficiary an amount at least equal to the proffered wage during that period, USCIS will next examine the net income figure reflected on the petitioner's federal income tax return, without consideration of depreciation or other expenses. River Street Donuts, LLC v. Napolitano, 558 F.3d 111 (1st Cir. 2009); Taco Especial v. 1 The submission of additional evidence on appeal is allowed by the instructions to the Form I-290B, which are incorporated into the regulations by the regulation at 8 C.P.R. § 103.2(a)(l). The record in the instant case provides no reason to preclude consideration of any of the documents newly submitted on appeal. See Matter of Soriano, 19 I&N Dec. 764 (BIA 1988).
The petitioner also submitted IRS Forms W-2 for 2010 and 2011, however, as those documents cover a period prior to the priority date, they will be considered only generally under the totality of the circumstances analysis below.
Napolitano, 696 F. Supp. 2d 873 (E.D. Mich. 2010), aff'd, No. 10-1517 (6th Cir. filed Nov. 10, 2011). Reliance on federal income tax returns as a basis for determining a petitioner's ability to pay the proffered wage is well established by judicial precedent. Elatos Restaurant Corp. v. Sava, 632 F. Supp. 1049, 1054 (S.D.N.Y. 1986) (citing Tongatapu Woodcraft Hawaii, Ltd. v. Feldman, 736 F.2d 1305 (9th Cir. 1984)); see also Chi-Feng Chang v. Thornburgh, 719 F. Supp. 532 (N.D. Texas 1989); K.C.P. Food Co., Inc. v. Sava, 623 F. Supp. 1080 (S.D.N.Y. 1985); Ubeda v. Palmer , 539 F. Supp. 647 (N.D. Ill. 1982), aff'd, 703 F.2d 571 (7th Cir. 1983). Reliance on the petitioner 's gross sales and profits and wage expense is misplaced. Showing that the petitioner's gross sales and profits exceeded the proffered wage is insufficient. Similarly, showing that the petitioner paid wages in excess of the proffered wage is insufficient.
In K.C.P. Food Co., Inc. v. Sava, 623 F. Supp. at 1084, the court held that the Immigration and Naturalization Service, now USCIS, had properly relied on the petitioner 's net income figure, as stated on the petitioner's corporate income tax returns, rather than the petitioner's gross income. The court specifically rejected the argument that the Service should have considered income before expenses were paid rather than net income. See Taco Especial v. Napolitano, 696 F. Supp. 2d at 881 (gross profits overstate an employer's ability to pay because it ignores other necessary expenses). With respect to depreciation , the court in River Street Donuts noted:
The AAO recognized that a depreciation deduction is a systematic allocation of the cost of a tangible long-term asset and does not represent a specific cash expenditure during the year claimed. Furthermore, the AAO indicated that the allocation of the depreciation of a long-term asset could be spread out over the years or concentrated into a few depending on the petitioner's choice of accounting and depreciation methods. Nonetheless , the AAO explained that depreciation represents an actual cost of doing business, which could represent either the diminution in value of buildings and equipment or the accumulation of funds necessary to replace perishable equipment and buildings. Accordingly, the AAO stressed that even though amounts deducted for depreciation do not represent current use of cash, neither does it represent amounts available to pay wages.
We find that the AAO has a rational explanation for its policy of not adding depreciation back to net income. Namely, that the amount spent on a long term tangible asset is a "real" expense.
River Street Donuts, 558 F.3d at 118. "[USCIS] and judicial precedent support the use of tax returns and the net income figures in determining petitioner's ability to pay. Plaintiffs ' argument that these figures should be revised by the court by adding back depreciation is without support." Chi-Feng Chang, 719 F.Supp. at 537 (emphasis added).
For a
C corporation, USCIS considers net income to be the figure shown on Line 28 of the Form 1120, U.S. Corporation Income Tax Return. The record before the director closed on January 28, p. 5 2013 with the receipt by the director of the petitioner's submissions in response to the director's request for evidence. As of that date, the petitioner's 2012 federal income tax return was not yet due. Therefore, the petitioner's income tax return for 2011 is the most recent return available.3 The petitioner's 2011 tax return demonstrates its net income for October 1, 2011 through September 30, 2012, a period that includes the priority date of July 5, 2012, and thus is relevant to determine the petitioner's ability to pay the proffered wage as of the priority date. The 2011 Form 1120 states net income of $16,601 for that fiscal year. This amount is insufficient to demonstrate the ability to pay the difference between the actual wage paid and the proffered wage in 2012.
If the net income the petitioner demonstrates it had available during that period, if any, added to the wages paid to the beneficiary during the period, if any, do not equal the amount of the proffered wage or more, USCIS will review the petitioner's net current assets. Net current assets are the difference between the petitioner's current assets and current liabilities.4 A corporation's year-end current assets are shown on Schedule L, lines 1 through 6 and include cash-on-hand. Its year-end current liabilities are shown on lines 16 through 18. If the total of a corporation's end-of-year net current assets and the wages paid to the beneficiary (if any) are equal to or greater than the proffered wage, the petitioner is expected to be able to pay the proffered wage using those net current assets. The petitioner's tax returns state its end-of-year net current assets for October 1, 2011 through Setpember 30, 2012 as -$27,516. Negative net current assets are insufficient to demonstrate the petitioner's ability to pay the proffered wage.
Therefore, from the date the ETA Form 9089 was accepted for processing by the DOL, the petitioner had not established that it had the continuing ability to pay the beneficiary the proffered wage as of the priority date through an examination of wages paid to the beneficiary, or its net income or net current assets.
The petitioner submitted its bank statements covering 2012. First, bank statements are not among the three types of evidence, enumerated in 8 C.P.R. § 204.5(g)(2), required to illustrate a petitioner's ability to pay a proffered wage. While this regulation allows additional material "in appropriate cases," the petitioner in this case has not demonstrated why the documentation specified at 8 C.P.R. § 204.5(g)(2) is inapplicable or otherwise paints an inaccurate financial picture of the petitioner. Second, bank statements show the amount in an account on a given date, and cannot show the sustainable ability to pay a proffered wage. Third, no evidence was submitted to demonstrate that the funds reported on the petitioner's bank statements somehow reflect additional available funds that were not reflected on its tax return(s), such as the petitioner's taxable income (income minus 3 The petitioner submitted its 2002 through 2010 tax returns, but as those returns cover a period prior to the priority date, they will be considered only generally.
According to Barron's Dictionary of Accounting Terms 117 (3rd ed. 2000), "current assets" consist of items having (in most cases) a life of one year or less, such as cash, marketable securities, inventory and prepaid expenses. "Current liabilities" are obligations payable (in most cases) within one year, such accounts payable, short-term notes payable, and accrued expenses (such as taxes and salaries). !d. at 118. p. 6 deductions) or the cash specified on Schedule L considered in determining the petitioner's net current assets.
In response to the director's Request for Evidence (RFE), counsel explained that the petitioner "intentionally keeps its taxable income as low as possible to avoid paying corporate income tax" and instead pays out any potential profit as bonuses to its employees and sole shareholder. In support, the petitioner submitted a statement from its president and sole shareholder, stating that the petitioner pays out extra cash on hand to him and as bonuses and makes loans to the petitioner as necessary to regulate cash flow.
The sole shareholder of a corporation has the authority to allocate expenses of the corporation for various legitimate business purposes, including for the purpose of reducing the corporation's taxable income. Compensation of officers is an expense category explicitly stated on the IRS Form 1120. The Form 1120 states that owns 90% of the common stock and devotes 100% of his time to the business. Although the IRS Form 1120 indicates that received $186,474 in officer compensation in fiscal year 2011, no evidence was submitted to demonstrate that was willing or able to forego part of his compensation to pay the proffered wage for fiscal year 2011 and continuing until the beneficiary receives permanent residence status. He also indicated in the letter that he routinely makes loans to his company to cover cash shortfalls and it is unclear whether those loans would impact the amount available from the amount paid in officer compensation. In addition, no evidence was submitted to demonstrate that other employees were willing or able to forego any bonuses paid to them during the year.
Counsel asserts in his brief accompanying the appeal that there is another way to determine the petitioner 's continuing ability to pay the proffered wage from the priority date. Specifically, counsel states that the totality of the circumstances should be considered. users may consider the overall magnitude of the petitioner's business activities in its determination of the petitioner's ability to pay the proffered wage. See Matter of Sonegawa, 12 I&N Dec. 612 (Reg'l Comm'r 1967). The petitioning entity in Sonegawa had been in business for over 11 years and routinely earned a gross annual income of about $100,000. During the year in which the petition was filed in that case, the petitioner changed business locations and paid rent on both the old and new locations for five months. There were large moving costs and also a period of time when the petitioner was unable to do regular business. The Regional Commissioner determined that the petitioner's prospects for a resumption of successful business operations were well established. The petitioner was a fashion designer whose work had been featured in Time and Look magazines. Her clients included Miss Universe, movie actresses, and society matrons. The petitioner's clients had been included in the lists of the best-dressed California women. The petitioner lectured on fashion design at design and fashion shows throughout the United States and at colleges and universities in California. The Regional Commissioner's determination in Sonegawa was based in part on the petitioner's sound business reputation and outstanding reputation as a couturiere. As in Sonegawa, users may, at its discretion, consider evidence relevant to the petitioner's financial ability that falls outside of a petitioner's net income and net current assets. USCIS may consider such factors as the number of years the petitioner has been doing business, the established historical growth of the p. 7 petitioner's business, the overall number of employees, the occurrence of any uncharacteristic business expenditures or losses, the petitioner's reputation within its industry, whether the beneficiary is replacing a former employee or an outsourced service, or any other evidence that users deems relevant to the petitioner's ability to pay the proffered wage.
In the instant case, the petitioner submitted its tax returns from fiscal years 2002 through 2011. In those ten years, only one year (fiscal year 2003 with net income of $175,869) had net income or net current assets that exceeded the proffered wage. As discussed above, received a high amount of officer compensation in fiscal year 2011, however, there was no statement that he was able or willing to forego all or part of this compensaton from the priority date onwards. The petitioner did not submit any evidence of its reputation or standing within the community, so although it has been in existence for over 30 years, it did not submit evidence to liken its situation to the one presented in Sonegawa. Thus, assessing the totality of the circumstances in this individual case, it is concluded that the petitioner has not established that it had the continuing ability to pay the proffered wage.
The evidence submitted does not establish that the petitioner had the continuing ability to pay the proffered wage beginning on the priority date.
The burden of proof in these proceedings rests solely with the petitioner. Section 291 of the Act, 8 U.S.C. § 1361. The petitioner has not met that burden.
ORDER: The appeal is dismissed.