Do I want to Immigrate to the U.S. under the EB-5 Immigrant Investor Program?
Most people who consider whether to immigrate to the U.S. under the EB-5 Immigrant Investor Program go through a process of researching and soul searching, thinking about just how badly they want to immigrate to the U.S. when it comes at the cost of tying up in a low-return investment $900,000 of hard-earned investment capital, paying a program fee to a regional center of around $50,000 (which, in recent times, regional centers have been agreeing to lower, sometimes by as much as half), and paying attorney’s, government, translator’s, shipping, and other fees that, in total for all three stages of the EB-5 process, range from $25,000 to $40,000. Moreover, they typically look at all the other options to see if there is not some other less costly or faster option that allows them to invest in a business or asset that the investor would prefer. This article, and the other articles that you will receive in our newsletter service, will help you in that process by posing the hard and relevant questions in order to find solutions for yourself.
There are four fundamental questions that prospective EB-5 investors need to pose:
1. Do I need permanent residence in the U.S., or am I better served with just having a non-immigrant temporary visa for the U.S.?
2. What are the burdens that I am taking on with the EB-5 Immigrant Investor Program and with permanent residence in the U.S.?
3. Do I want to immigrate to the U.S. badly enough that I am willing to take on the burdens that come with the EB-5 investment and with the permanent resident status in the U.S.?
4. If I want permanent residence in the U.S., is the EB-5 Immigrant Investor Program the best solution for me to obtain permanent residence in the U.S.?
Now, let us look for some answers to these questions.
1. Do I need permanent residence in the U.S., or am I better served with just having a non-immigrant temporary visa for the U.S.?
First, let us look at what the difference is between permanent residence and a non-immigrant visa. Permanent residence is a type of immigration status that allows a person to live in the U.S. for an unlimited period of time and to engage in any lawful activity that the person wishes, including doing nothing at all. Permanent residents can do most things that citizens can do except vote in elections, but permanent residents can lose their permanent residence through spending too much time outside of the U.S. or through committing a serious crime that results in the person being deported from the U.S.
Non-immigrant visas are issued for a limited period of time, and allow a person to be in the U.S. for a limited period of time in order to engage in a specific activity. There are many different types of non-immigrant visas, but I will list a few of the most common. There is a B-1/B-2 visa that is issued for anywhere from 6 months to 10 years, but it allows the visa holder to visit the U.S. for a maximum of 6 months on vacation or for business. There is the F-1 student visa that allows a person to live in the U.S. and study for a designated period of the degree or non-degree program. There is an E-2 investor visa, available to people from specific countries that have an investor treaty with the U.S., to invest in and operate their own business in the U.S. There are the L-1A manager and L-1B specialist transfer visas for being transferred to the U.S. to work in the U.S. subsidiary or affiliate of the business where the person currently works abroad. Finally, there is an H-1B visa for specialist workers who are employed for domestic U.S. companies.
At first glance, these various visa types seem like they would enable a person to pursue most any type of activity in which a person would reasonably want to engage; however, the requirements for these visas and the way that the immigration examiners and consular officers decide visa applications place these visas out of reach for most applicants. The following are some of the most common problems that come up with non-immigrant visas:
First, many non-immigrant visa applications each year are denied by consular officers due to the consular officer’s split-second subjective conclusion that the person is likely to decide to immigrate to the U.S. after arriving here with the visa.
Second, many visa applications each year are denied because the USCIS immigration examiners apply very restrictive and subjective interpretations of the requirements for the visa, and the immigration examiners are often looking for ways to deny the application.
Third, in the case of the H-1B visa, it is subject to an annual quota, and more applications are submitted than there are visas available. As a result, the entire quota of visas is used up on the first day of the year when applications are being accepted. The rest of the year, the H-1B visa is not available.
Fourth, in the case of the B-1/B-2 visitor visa, even though the law stipulates only that the visitor can stay in the U.S. no more than 180 days per visit, Customs and Border Protection agents enforce the policy that the visitor cannot stay for longer than 6 months, in total, per year.
Fifth, in the case of the E-2 investor visa and the L-1A manager transfer visa, both of which are frequently obtained by entrepreneurs to establish and build a business in the U.S., often the business owner obtains the visa the first time, but then after investing extensive capital and effort into building the business, the business owner’s visa is not renewed, or the business owner does not succeed in using the business as a basis for obtaining permanent residence.
Sixth, the children of holders of the E-2 investor and L-1A manager transfer visas often reach 21 and age out before the parents manage to obtain permanent residence, and so the child is left to fend for himself/herself in the immigration system.
The problems with the non-immigrant visas lead us to several conclusions:
Non-immigrant visas are unreliable and unpredictable as a way to live in the U.S.
Non-immigrant visas are suitable only for people who are satisfied to live in the U.S. temporarily, because USCIS and the consulates set up so many obstacles to people being able to reach permanent residence through these visas, and renewal of the visa is far from certain.
People who visit the U.S. as tourists under Visa Waiver Program or under the B-2 visa must plan on spending no more than 6 months per year in the U.S. In order to spend more than six months of the year in the U.S., it is necessary to obtain permanent residence.
2. What are the burdens that I am taking on with the EB-5 Immigrant Investor Program and with permanent residence in the U.S.?
Two of the main obligations that come with becoming a permanent resident (and a conditional permanent resident during the two-year conditional resident period) are: 1) becoming a U.S. tax resident taxable on worldwide income; and 2) the conditional permanent resident needs to live primarily in the U.S., otherwise, he or she can lose the (conditional) permanent residence through abandonment. While I do not advise on tax matters, I can mention this basic fact of tax law, which is an important consideration for many EB-5 investors, and one that prompts EB-5 investors to do tax planning before they begin their period conditional permanent residence.
It is important for those deciding whether to immigrate under the EB-5 program to consider that they must establish and maintain their residence in the U.S. Since many EB-5 investors are very busy and engaged in their business or professional career in their homeland, and so it becomes complicated how the investor can spend enough time in the U.S. Different investors have found different solutions to this situation.
Some families have as their top priority helping their children to immigrate to the U.S., regardless of whether both parents immigrate. In many cases, the primary earner in the family gifts the investment funds to the spouse, who becomes the EB-5 investor and immigrates together with the children. The primary earner spouse can immigrate at a later time, under a process called follow-to-join, when a more convenient and suitable time to immigrate to the U.S. arrives, and can visit the U.S. from time to time as a tourist visitor. The primary earner can use this strategy in order to delay, or avoid altogether, becoming a U.S. tax resident and becoming taxable in the U.S. on the worldwide income.
Another alternative is for the parent to gift the investment funds to a son or daughter over 18 years of age, who can then immigrate as the investor. If the parent later decides to immigrate to the U.S., once the son or daughter obtains citizenship, he or she can petition for the parents to immigrate to the U.S. Many families, particularly those with more than one child under 21 years of age, find it more advantageous to have one or both parents to invest and immigrate together with all the children based on just one investment of $900,000 rather than multiple investments of $900,000 by each son or daughter. Funds gifted by a parent or other relative can qualify an EB-5 investor, but it must be documented how the gift giver acquired the funds.
Other families pursue immigration under the EB-5 program together in order not to be separated. In that situation, the primary earner travels back and forth and tries to maintain the residence in the U.S., or sells the business or gives up the job abroad in order to move full-time to the U.S. We have a blog posting on our website, which discusses steps that can be taken in order to establish and maintain residence in the U.S., and counter any arguments by immigration officers that the person has abandoned his residence in the U.S. If you are interested to read this blog posting, please click here.
3. Do I want to immigrate to the U.S. badly enough that I am willing to take on the burdens that come with the EB-5 investment and with the permanent resident status in the U.S.?
This is a question that each investor and his/her family must decide for themselves, since it is a very personal question.
Sometimes, though, it is a question not about whether the parents want to immigrate, but about helping the children to immigrate. When the point is to enable the children to immigrate, children above 18 years in age can receive the investment funds as a gift and invest on their own behalf. In this way, parents who are not willing to accept the obligations arising from permanent residence can accomplish the goal of enabling their children to immigrate to the U.S. without taking on the obligations and restrictions arising from permanent residence in the U.S.
4. If I want permanent residence in the U.S., is the EB-5 Immigrant Investor Program the best solution for me to obtain permanent residence in the U.S.?
One of the great advantages of the EB-5 program is that it allows for “self-petitioning” whereby the investor petitions for himself or herself without relying on a third party such as a U.S.-based employer or a relative to petition for the permanent residence. As mentioned above, it is very difficult, first of all, even to obtain a work visa in order to work for a U.S. employer, since the quota for the H-1B visa is oversubscribed already on the first day of the year when it becomes possible to apply.
There is no “labor certification” process involved, which means that one does not have to go through an elaborate process of proving that there is no qualified, willing, able, and available American worker who could perform the job that the immigrant would like to perform. When a U.S. employer wants to petition for an immigrant to obtain permanent residence, it is necessary to go through the very long, difficult, and expensive process of offering the job to U.S. workers and proving that there is no qualified, willing, able, and available American worker who could perform the job that the immigrant would like to have. Moreover, the immigrant cannot be the owner of the business and sponsor himself or herself for the green card as an employee of the business.
There are very limited exceptions for immigrants to self-petition for permanent residence through employment or business. First, if the immigrant has extraordinary ability in the sciences, arts, education, business, or athletics, then the immigrant can self-petition. That is limited, by definition, to only a small percentage of the working population. Second, a person who is a manager (or owner and manager) of a substantial business abroad, who is transferred to the U.S. to manage a substantial business in the U.S. cannot self-petition, but can be petitioned for by the company, and that company can belong to the immigrant. Applying for permanent residence in this category typically comes down to hair splitting with USCIS over whether the manager’s job duties, the size of the hierarchy under the individual in the U.S. business, and the person’s pay rate all satisfy a very subjective and vague definition of being a “multinational manager or executive”. Needless to say, very few such petitions are approved for investors operating small businesses, particularly if the business has less than 10 employees. Third, there is the possibility to self-petition under the standard EB-5 program whereby the investor operates his or her own business. With the standard EB-5 program, the complications typically arise from the investor not being able to obtain a visa to set up and build the business to the point that it qualifies for the EB-5 green card, or even if the investor obtains the visa, the investor often does not succeed in building the business up sufficient to succeed in meeting the requirements for the EB-5 green card.
We have articles on our blog that discuss these self-petition green card options in further detail:
Obtaining the green card as a multinational manager
Comparison of the Regional Center EB-5 Program and the Standard EB-5 Program
One other advantage of the EB-5 program is that, aside from investors from China, Vietnam, and India, the program is not backlogged for investors from other countries. China is currently backlogged by 5 years, Vietnam by 3 years, and India by 1.5 years. Just to clarify what I mean by “backlog” is that each green card category is subject to a quota, and when there are more applicants (and they count not just the principal applicant, but also each member of the immigrant’s family separately) than there are green cards available in that category, then a waiting list forms, which is referred to as a backlog. The backlog becomes important at the second stage of the process, when it comes time to apply for the immigrant visa through the U.S. consulate in the applicants country of residence or through USCIS in the U.S., if the person is currently residing in the U.S. under a long-term visa. Applicants can process to the second step only once their priority date (the date when they filed the first-stage I-526 petition) is approximately within 6 months of reaching the front of the backlog waiting line.
It also bears mentioning that some people obtain permanent residence through sponsorship by relatives. However, it should be noted that the quota backlog waiting times for such cases are typically very long, measured in years. For instance, siblings of U.S. citizens can wait for 14+ years before they are able to complete the immigration process based on sponsorship by the U.S. citizen sibling. Unmarried sons and daughters, 21+ years of age, of a permanent resident can wait 5.5+ years. Unmarried sons and daughters, 21+ years of age, of a U.S. citizen can wait 6+ years. Married sons and daughters of U.S. citizens can wait 12+ years. If sons or daughters of permanent residents marry, they are ineligible to be sponsored by the permanent resident parent, but the married son or daughter (plus spouse and any children) can be sponsored by the parent once that parent becomes a U.S. citizen. The only family-based immigration categories that are not subject to quotas and backlogs are for immediate relatives of U.S. citizens such as spouse, children under 21, and parents of a U.S. citizen.
In summary, there are other green card options out there, but they are not available to most people because they do not have a U.S. employer or a U.S. citizen relative. Even with an employer sponsor, the immigrant has to struggle through the labor certification process and then still wait through years of quota backlog in order to complete the immigration process. Similarly, in the family-based immigration context, there are long delays due to the backlogs in the quota system that can leave immigrants waiting nearly a decade or more.
Conclusion
Each person must make his or her own decision about whether to immigrate permanently to the U.S., and if so, how much one is willing to sacrifice in order to do so, or to enable one’s family members to immigrate to the U.S. After examining the complexity of the procedures and the obstacles to pursuing permanent residence in the other categories, it becomes clear that the popularity of the EB-5 Immigrant Investor Program, and going to the extreme length of investing $900,000 in order to qualify, owes more to the complexity, delay, or inaccessibility of the other categories than to the attractiveness of the EB-5 category itself.
In upcoming articles, we will discuss, in further detail, how the EB-5 program functions and how it compares to other non-immigrant and immigrant options, and in the process, we will help you to answer the questions posed from the outset in this article.