sustained EB-2 Case: Computer Software

U.S. Department of Homeland Security 
20 Mass Ave , N.W., Rm. 3000 
. Wash~ngton, DC 20529 
U. S. Citizenship 
and Immigration 
L 
- J 
PUBLIC COPY 
FILE: Office: CALIFORNIA SERVICE CENTER Date: Auo 0 7 2006 
WAC 05 209 50757 
IN RE: . Petitioner: 
Beneficiary: 
PETITION: 
 Immigrant Petition for Alien Worker as a Member of the Professions Holding an Advanced 
~egrek or an Alien of Exceptional Ability Pursuant to Section 203(b)(2) of the Immigration 
and Nationality Act, 8 U.S.C. 9 1153(b)(2) 
ON BEHALF OF PETITIONER: 
INSTRUCTIONS: 
This is the decision of the Administrative Appeals Office in your case. All documents have been returned to 
the office that originally decided your case. Any further inquiry must be made to that office. 
0 
Administrative Appeals Office 
DISCUSSION: The preference visa petition was denied by the Director, California Service Center, 
and is now before the Administrative Appeals Office (AAO) on appeal. The appeal will be sustained 
and the petition will be approved. 
The petitioner is a computer software services company. 
 It seeks to employ the beneficiary 
permanently in the United States as a software engineer pursuant to section 203(b)(2) of the 
Immigration and Nationality Act (the Act), 8 U.S.C. 3 1153(b)(2). In pertinent part, section 203(b)(2) 
of the Act provides immigrant classification to members of the professions holding advanced degrees or . 
their equivalent and whose services are sought by an employer in the United States. As required by 
statute, the petition was accompanied by certification fi-om the Department of Labor. The director 
determined that the petitioner had not established that it had the continuing ability to pay the 
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 beneficiary the proffered wage beginning on the priority date of the visa petition and denied the 
petition accordingly. 
On appeal, counsel submits a brief and additional evidence. 
 Counsel asserts that the "taxable 
income" figure is a useless number for purposes of determining ability to pay as taxpayers reduce 
their incomes by items as permitted by the Internal Revenue Service (IRS). For the reasons 
discussed below, this assertion runs counter to numerous federal court decisions. Nevertheless, 
counsel correctly asserts that the director made a material factual error in determining that the 
petitioner had not accounted for the wages of 16 employees on its tax returns. 
The regulation at 8 C.F.R. 9 204.5(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 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, the day the Form ETA Form 9089 was accepted for processing by any office within the 
employment system of the Department of Labor. See 8 C.F.R. 3 204.5(d). Here, the ETA Form 
9089 was accepted for processing on May 25, 2005. The proffered wage as stated on the Fonn ETA 
750 is $68,973 annually. On the ETA Form 9089, Part J, signed by the beneficiary, the beneficiary 
claimed to have worked for the petitioner as of June 1,2003. 
On the petition, the petitioner claimed to have an establishment date in 1984, a gross annual income 
of $1.2 million, and 16 employees. The petitioner did not list its net annual income as requested on 
the form. In support of the petition, the petitioner submitted an unaudited profit and loss statement 
reflecting a net loss of $25,578.48 from April 1, 2004 through March 31, 2005. The petitioner also 
submitted its 2003 Form 1120, U.S. Corporation Income Tax Return, for April 1, 2003 through 
March 31, 2004, reflecting a taxable income before net operating loss deduction and special 
deductions of $18,154, current aksets of $103,036, current liabilities of $428,188 and net current 
assets of ($325,152). While the petitioner only listed $55,877 in salaries and wages, it listed 
$204,300 in compensation of officer and $397,094 in cost of labor (Schedule A). 
Because the director deemed the evidence submitted insufficient 'to demonstrate the petitioner's 
continuing ability to pay the proffered wage beginning on the priority date, on October 12, 2005, the 
director requested additional evidence pertinent to that ability for 2000 through 2004. In accordance 
with 8 C.F.R. 5 204.5(g)(2), the director specifically requested quarterly wage reports, the 
beneficiary's Form W-2 for 2003 and 2004 and the petitioner's tax return for "the year 2003 & 
2004." 
In response, counsel noted that the priority date is ~ay 25, 2005 and that the petitioner need not 
establish its ability to pay prior to that date. The petitioner submitted its tax returns for April 1, 2004 
through March 31, 2005. The tax return reflects a taxable income of $1,354, current assets of 
$124,882, current liabilities of $475,314 and net current assets of ($350,432). While the petitioner 
listed only $41,370 in salaries and wages, it listed $176,675 in compensation of officers and 
$411,869 in cost of labor (Schedule A). The petitioner also submitted quarterly wage and 
withholding reports for the last quarter of 2004 through the third quarter of 2005 and the 
beneficiary's 2004 Form W-2. The quarterly wage reports and Form W-2 Wage and Tax Statements 
reflect that the beneficiary earned $56,254.82 in 2004, $15,432 in the first quarter of 2005, 
$15,822.12 in the second quarter of 2005 and $17,190 in the third quarter of 2005. 
The director determined that the evidence submitted did not establish that the petitioner had the 
continuing ability to pay the proffered wage beginning on the priority date, and, on November 21, 
2005, denied the petition. In the decision, the director incorrectly listed the petitioner's taxable 
income for the accounting period ending March 31,2003 as $3,405, the amount of net operating loss 
deduction. As discussed above, the taxable income before net operating loss deduction and special 
deductions was $18,154. The director also reviewed the salaries and wages entry on the petitioner's 
tax returns, without reviewing compensation of officers or cost of labor entries, and determined that 
it could not account for paying 16 employees minimum wage. The director further determined that 
the beneficiary's Form W-2 for 2004 was not credible as it conflicted with the total wages paid in 
that year. Once again, the director failed to take into account the petitioner's cost of'labor entries. 
Finally, the director concluded that the removal of names and social security numbers of employees 
other than the beneficiary from the petitioner's quarterly wage reports precluded a material line of 
inquiry. Specifically, the director reiterates his conclusion that the wages and salaries reported on 
the petitioner's tax returns are inconsistent with 16 employees and asserts that without the names and 
social security numbers, it cannot be determined the number of employees or how much each 
earned. This conclusion is unexplained, as the petitioner did not omit the wages of each employee. 
On appeal, counsel asserts that "taxable income" is a meaningless figure. Rather, counsel asserts 
that the director should have used the petitioner's gross receipts or sales as the relevant figure. 
Counsel further notes, correctly, that wages and salaries can be listed on three separate lines on a tax 
Page 4 
return, including cost of labor on Schedule A. Counsel then prorates the proffered wage for the 
period after the priority date and deducts the wages actually paid during that period to determine that 
the petitioner need only demonstrate an ability to pay an additional $624 in 2005. The petitioner 
submits IRS publications, a statement from a certified public accountant, an October 2005 bank 
statement and IRS data confirming the beneficiary's 2004 wages as provided on the 2004 Form W-2 
submitted in this proceeding. 
Where the petitioner has submitted the requisite initial documentation required in the regulation at 
8 C.F.R. $j 204.5(g)(2), Citizenship and Immigration Services (CIS) will first examine whether the 
petitioner employed and paid the beneficiary during the relevant 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 pro'of of the petitioner's ability to pay 
the proffered wage. In the instant case, the petitioner did not establish that it employed and paid the 
beneficiary the full proffered wage in 2005. We will consider counsel's request to prorate the 
proffered wage below. ' 
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, CIS will next examine the net income figure reflected on 
the petitioner's federal income tax return, without consideration of depreciation or other expenses. 
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), afd, 703 F.2d 571 (7th Cir. 1983). Showing that the petitioner's gross 
receipts 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 CIS, 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. Counsel 
makes no attempt to distinguish any of these cases. As such, counsel's assertion that the director 
should have considered the petitioner's gross income' is not persuasive. 
Nevertheless, the petitioner's net income is not the only statistic that can be used to demonstrate a 
petitioner's ability to pay a proffered wage. 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, CIS will review the petitioner's assets. 
We reject, however, any argument that the petitioner's total assets should have been considered in 
the determination of the ability to pay the proffered wage. The petitioner's total assets include 
depreciable assets that the petitioner uses in its business. Those depreciable assets will not be 
converted to cash during the ordinary course of business and will not, therefore, become funds 
available to pay the proffered wage. Further, the petitioner's total assets must be balanced by the 
(, 
 petitioner's liabilities. Otherwise, they cannot properly be considered in the determination of the 
petitioner's ability to pay the proffered wage. Rather, CIS will consider net current assets as an 
alternative method of demonstrating the ability to pay the proffered wage. 
Net current assets are the difference between the petitioner's current assets and current liabilities.' A 
corporation's year-end current assets are shown on Schedule L, lines l(d) through 6(d). Its year-end 
current liabilities are shown on lines 16(d) through 18(d). If a corporation's end-of-year net current 
assets are equal to or greater than the proffered wage, the petitioner is expected to be able to pay the 
proffered wage out of those net current assets. 
While the petitioner submitted the required initial evidence, that evidence does not cover the priority 
date. The evidence does, however, reflect a recent positive net income and a high payroll. 
Regarding the salient portion of 2005, counsel requests that CIS prorate the proffered wage for the 
portion of the year that occurred after the priority date. We will not consider 12 months of income 
towards an ability to pay a lesser period of the proffered wage any more than we would consider 24 
months of income towards paying the annual proffered wage. In this matter, however, the petitioner 
has provided evidence of the beneficiary's wages by quarter, allowing reasonable prorating. We are 
persuaded by this evidence, in addition to the bank statements submitted, that the petitioner has now 
established its ability to pay the proffered wage as of May 25,2005. 
The burden of proof in visa petition proceedings remains entirely with the petitioner. Section 291 of the 
Act, 8 U.S.C. 5 1361. The petitioner has sustained that burden. 
 ', 
ORDER: 
 The decision of the director is withdrawn. The hppkal is sustained and the petition is 
approved. 
According to Barron 3 Dictionary ofAccounting 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). Id. at 118.