FAQ Articles

PROVING EMPLOYERS ABILITY TO PAY

(Thomas J. Stefanski is an experienced Immigration Law Attorney  and a member of the law firm of ASK LAW GROUP)

QUESTION: I filed my combined processing application for adjustment of status through the petition of my employer.  The INS denied the petition for immigrant visa and my adjustment of status because it says that my employer’s taxes show that it does not make enough money to pay my salary.  I am working for the employer now so I do not understand why it was denied.  What can I do?

Answer:    Immigration regulations have, for a long time, required that employers who petition alien workers for permanent residence, prove that they have sufficient income to pay the salary offered in the petition and labor certification.  Proof of the employer’s ability to pay the offered salary must run from the date the labor certification is filed, or priority date is established, all the way up until a decision is rendered on the immigrant visa petition.  For years, the former INS did not interpret this regulation very strictly and most petitions were approved. However, in the last couple of years, the USCIS has taken a much firmer stance on interpreting this regulation and as a result a higher percentage of visa petitions are facing denial for inability to pay.
          The regulation in issue is one that states that when petitioning  a foreign worker for permanent residence, the employer shall prove the ability to pay the salary stated on the immigrant visa petition from the date the priority date is established up until the time of adjustment of status or immigration.  This means that the employer must prove sufficient income to pay the foreign worker the wages stated on the labor certification from the time the labor certification is first filed with the Dept of Labor up until the time the petition is finally adjudicated.  Often this time period can stretch to three years or more.   The regulation also states that the employer shall prove ability to pay the salary by submitting federal tax returns or audited financial statements.  Where the employer has more than 100 employees the USCIS, can, in its discretion, waive the requirement of tax returns or audited financial statements.
         The problem that arises is that often the employer’s tax returns reflect little income which may be insufficient to justify the salary offered to the alien worker.  The cause often is competing interests: the employer wants to show as little income on its tax returns to avoid a large tax bill whereas the alien worker wants the employer to show the most income on its tax returns to have the highest chance of success on the visa petition.  With liberal depreciation, deductions for business expenses, lost accounts receivable and the like, tax returns frequently do not adequately depict the true financial health of the petitioning company.  In some cases, in fact, the USCIS, does not even discount depreciation although it is a paper-loss, non cash flow item that reduces an employer’s taxable income.  As a result the USCIS at times denies visa petitions claiming employers lack sufficient income to pay the offered salary.  The denial rate appears to be rising.
          The problem that arises is that often the employer’s tax returns reflect little income which may be insufficient to justify the salary offered to the alien worker.  The cause often is competing interests: the employer wants to show as little income on its tax returns to avoid a large tax bill whereas the alien worker wants the employer to show the most income on its tax returns to have the highest chance of success on the visa petition.  With liberal depreciation, deductions for business expenses, lost accounts receivable and the like, tax returns frequently do not adequately depict the true financial health of the petitioning company.  In some cases, in fact, the USCIS, does not even discount depreciation although it is a paper-loss, non cash flow item that reduces an employer’s taxable income.  As a result the USCIS at times denies visa petitions claiming employers lack sufficient income to pay the offered salary.  The denial rate appears to be rising.
           There are alternative ways to support a petition for immigrant visa for a worker. In addition to a tax return, the employer may also wish to prove ability to pay by showing that the foreign worker is already working for the petitioner and earning the proffered salary.  Obviously, if the employer is already paying the worker, he has the ability to pay the offered salary. Secondly, the employer could show proof of its assets to prove that it has enough available funds to pay the salary.  Quite often businesses have substantial hard assets such as real estate, machinery, inventory and the like.  These should be considered by the USCIS.  Finally, the employer may have substantial bank account balances or even a large credit line or loan that could be drawn upon to pay the offered salary.  These items too, should be brought to the attention of the USCIS examiner if there is any doubt raised by weak tax returns.
          If a petition is denied for lack of ability to pay, there is a right to appeal to the Administrative Appeals Office in Washington. D.C.  An appeal can take as long as one year to decide.  If an appeal is denied, the final review rests with the local Federal District Court.  An appeal from a petition denial can be won if it can be shown that the denial was in error and that the employer really does have the ability to pay the offered wage.
         Under the new PERM program, proving the employer’s ability to pay may not be as onerous.  Since PERM is adjudicated so quickly, (60 days or less,), the employer may only need to submit one year’s tax return or just financial statements if taxes have not yet been filed. If the employer does not possess sufficient income to pay the offered salary, it is not as onerous to refile another PERM application since it is adjudicated some rapidly.  Refiling a new labor certification may be a viable option if your first petition is denied due to inability to pay.
         (Thomas Stefanski will answer all questions regarding immigration and naturalization for free.  Address questions with a self addressed, stamped envelope  to 13949 Ventura Blvd. Ste. 300 Sherman Oaks, Ca. 91423 or telephone (818) 788-1914 or email tjs@asklawgroup.com for a free consultation.  We speak Tagalog, Ilocano, Fukinese, and many other languages.).