U.S. Immigration and Visas

Foreign investors in U.S. real estate are often concerned about how U.S. immigration and visa laws apply to them. Clearly, their residency status is also relevant to their tax situation. It is impossible to treat the complexity of U.S. immigration law in a few words. U.S. immigration laws are under constant change. A major revision took place with the Immigration and Naturalization Act of 1996. You should consult a qualified attorney to help you and your client understand how current law applies. Do not rely on the following summary as legal advice. Aliens should be aware that if they wish to remain for longer than thirty days in the U.S., they must register with an immigration authority.

Visas

Most individuals who want to live permanently in the United States must first enter through a temporary visa. Some of the temporary visa types are briefly described below. Citizens of Canada and Mexico are eligible for special treatment under NAFTA.

§  B-1 “Business Visitor”

This visa allows an individual to incorporate in the U.S., acquire property, sign contracts, and perform certain other business activities, but it does not allow the individual to directly manage a U.S. business or receive U.S.-sourced wages.

L-1 "Intracompany Transferee"

This visa pertains to individuals who own or work for a foreign corporation that is directly related to a U.S. corporation that employs the individual in an executive, managerial, or special-knowledge capacity.

§  E-1 "Treaty Trader"

This visa is available to individuals from nations that have a treaty of trade and commerce with the United States. The visa allows the holder, spouse and minor dependents to live in the United States for an indefinite number of years.

§  E-2 "Treaty Investor"

This visa allows a foreign individual or corporation to live in the U.S. while actively investing in, operating, and managing a U.S. business.

§  EB-5 “Million Dollar Investor”

This visa is available for individuals who plan to make a capital contribution of $1 million to an enterprise.

§  H1-B "Temporary Professional Worker”

This visa allows an individual with a bachelor's degree from the U.S. or abroad, to remain in the U.S. for six years while employed in a professional position with a U. S. employer.

§  O and P “Extraordinary”

These visas are available for aliens of “extraordinary" ability in the sciences, arts, education, business or athletics.

Permanent Visa

The alien investor or professional worker may become a permanent resident according to the following general process:

§  Step 1 - Establish a U.S. business enterprise and begin trade with the United States (L-1) or begin H-1B employment.

§  Step 2 - Obtain an L-1 or H-1B visa.

§  Step 3 - Travel to the United States on an as-needed basis, maintaining non-residence status in the United States for tax purposes.

§  Step 4 - Obtain permanent residency after a year in business, if the business is viable and the investor and corporation meet certain requirements. In the case of H-1B professionals, the individual and his/her family can remain in the United States only for seven years unless they obtain permanent alien labor certification by obtaining a bona fide job offer from a U.S. employer in which the foreign worker and family are not directly involved.

§  Step 5 - Obtain U.S. citizenship after five years from granting of resident status.

Taxation Information (Substantial Presence Test)

Under the provisions of the substantial presence test, an alien individual may be considered a USA resident if he or she is present in the USA for more than 30, but less than 183, days during the current calendar year and meets the requirements of the three-year 183-day test. The 183-day test is satisfied only if the sum of the following is equal to at least 183 days:

1.   The number of days present in the USA during the current taxable year, plus

2.   One third of the days present during the immediately preceding calendar year, plus

3.   One sixth of the days present during the second preceding year.

For example, if the alien has been present in the United States for 122 or more days during each of the past three calendar years, the days would be calculated as follows:

122	Number of days present in the calendar year
+41	One third of 122
+20	One sixth of 122
=183	In this case, the alien would pass the substantial presence test because the total number of days is at least 183.

Tax Treaties

U.S. Income Tax Treaties
Aruba	Finland	Korea	Philippines
Australia	France	Luxembourg	Poland
Austria	Germany	Malta	Romania
Barbados	Greece	Morocco	Sweden
Belgium	Hungary	Netherlands	Switzerland
Bermuda	Iceland	Netherlands Antilles	Trinidad & Tobago
Canada	Ireland	New Zealand	Russia
Cyprus	Italy	Norway	United Kingdom
Denmark	Jamaica	Pakistan
Egypt	Japan	People’s Republic of China

The U.S. also has estate tax treaties with some of these countries; gift tax treaty with Australia; combined estate and gift tax treaties with Austria, France, UK, Sweden and Japan.

Countries Whose Qualified Residents Are Not Subject to Branch Profits Tax
Aruba	Hungary	Pakistan
Austria	Ireland	Philippines
Belgium	Jamaica	Sweden
People's Republic of China	Korea	Switzerland
Cyprus	Malta	United Kingdom
Denmark	Morocco	Iceland
Egypt	Netherlands	Italy
Finland	Netherlands Antilles	Japan
Germany	Norway	Luxembourg

Treaties that Allow Imposition of Branch Profits Tax
Austria	France	Romania
Barbados	New Zealand	South Africa
Canada	Poland	Trinidad and Tobago
		Russia

State & Local Regulations

While numerous states have distinct laws restricting or regulating foreign investment, most state and local laws relate to disclosure, land use and taxation for aliens and U.S. citizens alike. Specific requirements are available from each state department of revenue.

State-Level Restrictions and Reporting Requirements

Most states have some kind of restrictions and reporting requirements on foreign real estate investment. You should be familiar with them for the states where you do business.  

State-level restrictions vary, but in general, they concern:

§  Type of property that can be owned.

§  Amount of property that can be owned.

§  Limits on duration of ownership.

§  How title can be acquired.

§  Ownership by individuals versus by business entities.

Reporting considerations include:

§  Income tax.

§  Inheritance and estate taxes.

§  Disclosure of owner's name and property identification.

County and Local Requirements

Counties and local governments generally have no restrictions exclusive to offshore investors: building codes, zoning, public notices, condemnation, environmental impact reports, recording requirements, moratoria, assessments, landlord-tenant laws are applied to all owners equally.

Reporting considerations include:

§  Income tax.

§  Ad valorem taxes.

OBTAINING FLORIDA DRIVER’S LICENSES

By Donna Scarlatelli

While driving without a valid driver’s license is not a ground for deportation, it is a sure way to have the Immigration and Customs Enforcement (“ICE”) take a closer look at whether you are legally in the United States. And events can escalate from this initial infraction with detention a serious threat.   This is an issue that is of great concern to most foreign nationals in the U.S.. Every immigration attorney understands that clients are motivated to find solutions to their immigration problems by the lack of a current, valid driver’s license.

So what are the rules?   The State of Florida Department of Highway Safety and Motor Vehicles (“HSMV”) has been responsive to the needs of the vast immigrant community in Florida. It has a well-developed web site on obtaining driver’s licenses at www.hsmv.state.fl.us/ddl.   There are separate rules for permanent resident immigrants and non-immigrants who are in the U.S. pursuant to a temporary visa, even when that visa status is pending an extension. Basically, if you can prove who you are and that you are here in the U.S. in a legal immigration status, then you are entitled to a temporary driver’s license.  Canadian citizens have an extra bit of help. They do not typically receive proof of a valid entry when they cross the border or fly into the U.S.. So the State will give a Canadian citizen a temporary one year driver’s license without any evidence of an extended legal stay in the United States.

The acceptable documents that will allow non-immigrant visa holders to obtain a temporary license are specified at http://www.hsmv.state.fl.us//intranet/ddl2/Bulletins/NonImmigClass.html.   These include receipts for extensions of benefits. The type of temporary license and the length of duration are specified in these instructions as well. It is a good idea to bring this list with you when applying for a license.

Florida law is clear as to who is permitted a driver’s license. The actual law is Florida Statute Section 322.08 and can be found at www.flsenate.gov/Statutes.  Nevertheless, Sarasota, Lee and Collier counties often deny driver’s licenses to foreign nationals even though they present the correct documents. These authorities indicate that they rely on local county tax collector rules which are more restrictive. If you encounter problems in any of the HSMV offices, you should contact the state headquarters in Tallahassee and report the problem. Their office has generally been quick to resolve the issue.  

JOBS THAT WILL GET YOU EASIER ENTRY AND A “QUICK?” GREEN CARD IN THE US

By Donna Scarlatelli, Esq.

Let’s start out by rehashing an old favorite topic – the H-1B visa. Unless you are going to be transferred to the States as a manager of a multi-national company, or make a substantial commercial investment and put yourself at the unmerciful mercy of the US Consul, then the most likely credible option for short-term admission as something more than a tourist is the H-1B. The H-1B applies to professionals and the visa is limited by Congress to 65,000 new visas every federal fiscal year. That starts on October 1. You can apply for the visa up to six months ahead; that’s April 1. But each year the spots get captured earlier and earlier. Last year the quota closed on May 19. We predict that this year, most, if not all, of the 65,000 will be spoken for within the first couple of weeks of April. So, if you are lucky enough to have a US employer who will file in April and wait for you until October, and you meet the professional requirements, then you are lucky indeed.

That brings us to green cards. The bad news is that there are no longer any magic occupations that will get you a speedy green card. Nurses and physical therapists are still favored because they appear on a schedule of shortage occupations and can avoid the labor certification process with the Department of Labor before you get to the Immigration Service. But the quota in this category is no longer wide open. So, while they are still strong ways to immigrate, they are not the immediate answers that they once were.

The good news is that the second preference category (EB2) green cards for jobs remain open. This means that if you hold the equivalent of an American advanced degree, and have the sponsorship of a US company in a job that requires this advanced degree, then you can get your green card relatively quickly- approximately 8 to 12 months. The speedy process is thanks to the current Department of Labor alien labor certification system known as PERM. PERM is now working well and a good immigration strategist can secure an approved labor certification in about 4 months. With those applications that will qualify for EB2, once the PERM is granted, the remaining immigration process moves along quickly as well. The better news is that the Immigration Service allows one to qualify in EB2 even without the advanced degree if the sponsoring employer indicated an alternative requirement of a bachelor’s degree plus five years of progressive work experience. Therefore, many potential immigrants may qualify based on the combination of their education and professional experience.

So, what jobs would qualify for EB2? Here the Department of Labor holds most of the cards. The job must carry a Zone 5 classification in its occupational listing to be included as one that requires an advanced degree. In this ever-challenging game of labor certifications, the Department of Labor has been revising its list of Zone 5 jobs and steadily decreasing the number of those positions which qualify. Some of the more manageable jobs still include Engineering Managers, Private Sector Executives, Counselors, Economists and Post-Secondary Teachers. Some catch-all jobs like marketing research and financial analysts or computer software or hardware engineers or network administrators are now classified as Zone 4 and don’t make it into the EB2 category.

If you are seriously thinking of trying to qualify for a quick green card, I suggest you go to www.online.onecenter.org and look at the job listings and review the descriptions included in the generic titles and then the job zone. You might be surprised at what you can squeeze into. Also included in this site are jobs indicted as “in demand.” That will help you realize that it is very possible to prove to the Department of Labor that there are no qualified, available, able or willing American workers for that job being offered to you. But, if it’s not a Zone 5 job, you can expect to wait about 3 to 5 years for your green card. Of course, you can always consider the top category for green cards of extra-ordinary ability, outstanding professors or researchers or multi-national managers or executives. But that’s a different article. Happy hunting! Call me if you get lost!

GREEN CARDS THROUGH INVESTMENT

TYPICALLY IN ABOUT A YEAR

by Mark Ivener, Attorney

For foreign investors looking for freedom and flexibility to live and work in the United States in a way accommodating to their lifestyles, the little-known EB-5 investor category can provide an excellent opportunity to accomplish this goal through the obtaining of Green Cards.  

There are essentially two EB-5 programs, i.e. the Regular program and the Regional Center program. In order for an applicant to qualify under the Regular program, the following three basic requirements must be met:  investment in a new commercial enterprise; investment of at least $1 million (or $500,000 in certain cases) into the business, and creation of employment for at least 10 full-time U.S. workers.

The investment may consist of the contribution of various forms of capital, including cash, equipment, inventory, property, and other tangible equivalents. An investment amount of $1 million is generally the minimum. However, $500,000 is acceptable if the business is situated in a “targeted” employment area, i.e. one that has experienced unemployment of at least 150 per cent of the national average rate or a rural area, as designated by the U.S. Office of Management and Budget.   

The second program within the EB-5 category, i.e. the Regional Center program, is ideal for the retiree or inactive investor due in large part to the “indirect employment” feature of this program. The Regional Center program advantageously removes the 10 full-time employee requirement of the Regular program and substitutes the less-restrictive “indirect employment creation,” which allows the investor to qualify by proving a combination of 10 direct and/or indirect employees who are new to the Regional Center.

The EB-5 policy management requirement is minimal in that the investor can be a limited partner and still qualify as long as the limited partners have a policy making role. Thus, for those who are not interested in day-to-day management or running an active business, Regional Center programs offer a more acceptable inactive form of investment, than do Regular program investments.

Another advantage of Regional Center programs that adds to the flexibility of this Green Card category is that the investor is not required to live in the place of investment; rather, he or she can live wherever he/she wishes in the United States.

Under mandate by Congress, Regional Center EB-5 petitions are given priority by CIS (formerly INS) which, among other benefits, often results in a quicker path to approval. Each Regional Center program must be pre-approved by CIS in order to be eligible to qualify for EB-5 Green Cards. For example, among a total of about 5 active Immigration approved EB-5 programs, the following two primary programs may be noted, with operating histories of 4-10 years:

• A real estate limited partnership program that offers an investment in commercial properties in Seattle for both accredited immigrant and U.S. investors. This program, which was granted INS designation as a Regional Center in 1996, generally involves acquisition and redevelopment of low-yielding industrial properties, and renovation them into commercial properties, including office space, retail shops, hotel, storage space, etc. Investors participate as limited partners of a limited partnership, and earn a monthly return from tenant rentals after property renovation, as well as a share of future appreciation from the project when sold. Investment periods vary, but cannot end before receipt of the permanent Green Card by the investor. The minimum investment amount for this program is $525,000.

§  A limited partnership program that makes low interest loans to businesses in Philadelphia available only to accredited immigrant investors. Business investment and development in this program, which has been a CIS Regional Center designee since 2003, targets industry sectors that demonstrate strong indications of expansion, growing employment needs, and returns on investments. This Regional Center directs its efforts at financing projects and developing enterprises within targeted sectors, including hospitality and tourism, trade, technology, higher education, and transportation. The minimum investment period for this program is 5 years. The minimum required amount of investment for this program is $525,000.

The procedure for filing an EB-5 Investor Green Card petition is relatively straightforward. The investor must present evidence that traces the funds through bank transfers and other documentation, from the investor directly to the enterprise. The money can be the investors own funds or in the form of a loan or gift, which would allow a parent to gift a son or daughter.

After the investor completes a thorough business and financial due diligence analysis of the viability of the Regional Center business opportunity, the investment is made and a petition is filed by the foreign investor with CIS, requiring CIS to approve that the applicant and the investment are eligible for EB-5 status, which takes on average 3 months.   

If the investor is already in the U.S., he or she then applies for a Green Card through CIS. No interview customarily is required, and approval for most cases has been taking approximately 9 months.   If the investor resides abroad, an application for the Green Card is generally made at the U.S. Embassy or Consulate in the investor’s home country, where an interview is necessary. Approval of the Green Card in this case takes on average also about 9 months.

In either of the above two scenarios, in most Regional Center cases, the entire process generally takes about one year. This is the situation for most applicants based on the current CIS and State Department Consular processing times, however times may vary depending on the circumstances of each case.

Once CIS approves the investor’s Green Card, it is conditional for a period of two years. Conditional Green Card status confers the same rights as the permanent Green Card.

Between 21-24 months after the conditional Green Card has been approved, the investor must reconfirm that the investment has been made or is still in place and that the employment requirement has been fulfilled or maintained. In a Regional Center case, this is not a problem because the invested funds are still in the real estate limited partnership pursuant to the business plan, as in the case of the above described EB-5 program. An application to remove the conditional Green Card status is then filed with CIS.

Once the condition has been removed, a full Green Card is granted for permanent resident status. From the time of application for the conditional Green Card until approval of the removal of condition usually takes about 3½ – 4 years. Thereafter, in an approved Regional Center case, depending on the terms of their agreement, the investment may be sold, and the investor will still maintain the permanent Green Card.

In summary, no quota backlog, freedom to live anywhere in the United States, a passive form of investment with no required direct management responsibilities, priority standing within the Immigration process, and an accelerated path to Green Card procurement – all are important factors which make the little-known EB-5 Green Card Regional Center category an ideal investment vehicle for the inactive investor or retiree who wishes to live and work in the United States.

As with other U.S. Immigration visas, applicants also need to take into account U.S. and foreign tax and other business and personal planning considerations.

Copyright ã 2007 Mark Ivener   All rights reserved.

Mark Ivener, managing partner of Ivener & Fullmer LLP, a business immigration law firm in Los Angeles and New York, has been practicing immigration law for over 30 years and is the author of 5 books on immigration law and visas. Email: mark@usworkvisa.com - Web: www.usworkvisa.com –

Toll free telephone: 866-767-1800

FOR LOVE AND AFFECTION: MARRIAGE TO AMERICAN CITIZENS

by Donna Scarlatelli, Esq.

We generally counsel potential clients that there are four ways to get a “green card” or lawful permanent residency in the U.S.: (1) through a job offer, (2) through asylum, (3) through the Diversity Visa Lottery and (4) through the sponsorship of a close relative, such as a spouse, parent or adult child, who is a permanent resident or American citizen. Given that: (1) the visa quota system is now supremely overtaxed and green cards through jobs will require lengthy waits, (2) Congress is strongly considering eliminating the Diversity Visa Lottery and (3) winning asylum is a difficult and risky undertaking and, even when successful, means a long wait in line for a green card, family sponsorship through marriage is likely to be given a second, hard look by many people.

Any good immigration attorney will steer her clients away from marrying exclusively to obtain a green card. The Immigration Marriage Fraud Amendments of 1986, have lead to tough scrutiny of fraudulent or sham marriages and given the Government the authority to impose criminal penalties on both the immigrating alien and the U.S. citizen participant. At the very least, a finding of marriage fraud by the USCIS will initiate removal or deportation proceedings and could result in the alien’s detention pending the removal hearings. Certainly, walking down this aisle is more treacherous than any marriage aisle. And just as your parents taught you to choose carefully and take precautions, you should do so here as well.

The 1986 law requires that where the couple has been married for less than two years when the alien is granted permanent residence, that residence is only conditional and is given for a period of two years. At the end of that condition period, the couple files a joint petition to remove the condition on the permanent residency. This system gives the USCIS a second chance to determine if that initial marriage was valid and bonafide to begin with or whether the couple was marrying to evade the immigration laws. Since Congress determined that it could not find that any marriage which did not survive for a minimum of two years was fraudulent, there are waivers available to the requirement that both spouses file the joint petition, such as where the marriage has ended in a final divorce, the U.S. citizen spouse is deceased, or where the alien is the victim of abuse. All others must timely file this joint petition and many will be called back to the offices of the USCIS for a repeat interview.

This leads one to the question: what is a valid marriage? Don’t people marry for a variety of reasons? Isn’t it the ever-occurring subject of every gossip as to why that beautiful young woman married that ugly old geezer? Why didn’t that widower wait longer before hitching up with that gold-digging hussy? Didn’t her parents warn her not to get involved with that loafer? What does he/she see in him/her anyway? My grandmother always told me it’s just as easy to fall in love with a rich man as it is a poor man.

But, there is the key word in most peoples’ perception of marriage- love. Thus, our warning to potential clients that marriage must be for love and affection, above all else. Surely there are complicated reasons to marry and love is not the only one. However as far as the USCIS interview is concerned it had better be an over-riding incentive.

The law states that the marriage must be valid at its inception. The courts have decreed that the bride and groom must have intended to establish a life together. While it is the subjective state of mind that is the ultimate factor in the validity of a marriage, the Government finds it near impossible to see inside people’s heads- at least not yet. Therefor, it is the conduct of the two parties, both before and after the marriage, that becomes relevant.

The USCIS will normally ask for documents that appear to them to create a legitimate marital bond. As proof of the behavior prior to the marriage they will look at the marriage ceremony, the guest list, the photos, and the honeymoon. For proof of the bonafide bond after the marriage, they will ask for the types of documents that most couples will normally have begun to acquire within the first six to twelve months of marriage: joint apartment leases, property held by both parties, life insurance policies naming the spouse as the beneficiary, dependent medical insurance coverage, joint car insurance, joint income tax filings, joint bank accounts, jointly-held credit cards and, of course, children born to both parties.

Additionally, as has been popularly portrayed in movies, the USCIS may separate the couple and conduct an intensive interview designed to see if the couple actually know each other and live together. The courts have upheld this procedure and found that inconsistency in the couple’s statements can be the basis for the denial of the green card.   Similarly, the Government may conduct an on-site investigation and question neighbors, relatives and friends. It may “explain” to the U.S. citizen the criminal penalties which can be charged if marriage fraud is found and allow the American spouse to “withdraw” the petition for sponsorship thus leaving the alien spouse with no underlying basis to seek the green card.

But what happens when the marriage is shaky and the couple is separated, but not divorced, at the time of the interview? What about legitimate marriages where the couple may not live together every day of the week due to job requirements or other circumstances? What about those who choose not to co-mingle their funds? What about those who love each other but don’t sleep together? What about homosexual marriages or civil unions? What about dear and committed friends who enjoy a measure of “love and affection” and have married out of convenience- financial, raising children, or otherwise?

In many of these circumstances, if the USCIS applies the correct legal standard, permanent residence can be granted. The marriage must be valid at its inception, regardless of whether the couple is still living together at the time of the USCIS interview. The couple must have intended to build a life together and did not enter into marriage solely to obtain an immigration benefit. Moreover, the courts have found that co-habitation and consummation are not absolute pre-requisites. However, homosexual relationships have yet to be recognized- even where co-habitation, consummation and love and affection are present.

Marriage may become more popular in the coming years as other avenues of legal immigration appear more and more daunting. The USCIS is likely to scrutinize these applications closely once it understands that people will find a way to immigrate and the tide will not be stemmed. That said, couples enter into legitimate relationships for many complex reasons. Just be sure that yours are the right ones and that you are prepared to document your “love and affection” as if your future depended on it, because it does.

Note: You are advised that this information cannot be used for guidance, nor substituted for the advice and council of a licensed attorney, and is provided for general information purposes only.

Internal Revenue Service Circular 230 Disclosure – You are hereby advised that any tax advice contained in this newsletter is not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or to support the marketing of any tax transactions or matters addressed herein.