dismissed EB-3 Case: Automobile Service

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PUBLICcopy
If.S, Department of Homeland Security
20 Mass. Ave., N.\tV., Rm. 3000
Washington, DC 20529
u.s.Citizenship
and Immigration
Services
FILE:
EAC-05-021-51694
Office: VERMONT SERVICE CENTER Date: OCT' 2 4 2.
INRE: Petitioner:
Beneficiary:
PETITION: Immigrant petition for Alien Worker as a Skilled Worker or Professional pursuant to section
203(b)(3) of the Immigration and Nationality Act, 8 U.S.C. § 1153(b)(3)
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.
Robert P. Wiemann, Chief
Administrative Appeals Office
www.uscls.gov
Page 2
DISCUSSION: The preference visa petition was denied by the Director , Vermont Service Center, and is
now before the Administrative Appeals Office (AAO) on appeal. The appeal will be dismissed.
The petitioner is an automobile service. It seeks to employ the beneficiary permanently in the United States
as an automobile mechanic. As required by statute, the petition is accompanied by a Form ETA 750,
Application for Alien Employment Certification (labor certification or the Form ETA 750), approved by the
Department of Labor. 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.
On appeal, counsel submits a brief with copies of evidence previously submitted.'
Section 203(b)(3)(A)(i) of the Immigration and Nationality Act (the Act), 8 U.S.C. § 1153(b)(3)(A)(i),
provides for the granting of preference classification to qualified immigrants who are capable, at the time of
petitioning for classification under this paragraph, of performing skilled labor (requiring at least two years
training or experience), not of a temporary nature, for which qualified workers are not available in the United
States.
The regulation 8 C.F.R. § 204.5(g)(2) states in pertinent part:
Ability ofprospective employer to pay lvage. 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, which is the date the Form ETA 750 Application for Alien Employment Certification, was accepted for
processing by any office within the employment system of the U.S. Department of Labor. See 8 C.F.R. §
204.5(d).
Here, the Form ETA 750 was accepted on Apri126, 2001. The proffered wage as stated on the Form ETA
750 is $19.11 per hour ($39,748.80 per year). On the Form ETA 750B, signed by the beneficiary on April 11,
2001, the beneficiary did not claim to have worked for the petitioner. On the petition, the petitioner claimed
to have been established in 1999, to have gross annual income of $125,267, to have net annual income of
$125,269, and currently to employ 8 workers.
The petitioner submitted the petition with its Form 11208 tax returns for 2001 and 2002, and the owner's
Form 1040 tax returns for 2001 through 2003 pertinent to the petitioner's ability to pay the proffered wage.
1 Although the submission of additional evidence on appeal is allowed by the instructions to the Form 1-290B,
which are incorporated into the regulations by the regulation at 8 C.F.R. § 103.2(a)(1) and the record in the
instant case provides no reason to preclude consideration of any of the documents newly submitted on appeal,
See Matter ofSoriano, 19 I&N Dec. 764 (BIA 1988), the petitioner does not submit new evidence on appeal.
Therefore the AAO will evaluate the decision of the director based on the evidence submitted prior to the
director's decision only.
Page 3
On February 23, 2005, the director denied the petition, finding that the petitioner did not establish that it had
the ability to pay the proffered wage beginning on the priority date.
On appeal counsel asserts that the personal tax returns of the majority shareholder are relevant to determining
the petitioner's ability to pay the proffered wage.
In determining the petitioner's ability to pay the proffered wage during a given period, Citizenship and
Immigration Services (CIS) 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 did not submit any evidence of
the beneficiary's compensation from the petitioner and did not claim to have employed and paid the
beneficiary.
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. SUppa 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 receipts and wage expense is misplaced. 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.
The court in Chi-Feng Chang further noted:
Plaintiffs also contend the depreciation amounts on the 1985 and 1986 returns are non-cash
deductions. Plaintiffs thus request that the court sua sponte add back to net cash the
depreciation expense charged for the year. Plaintiffs cite no legal authority for this
proposition. This argument has likewise been presented before and rejected. See Elatos, 632
F. Supp. at 1054. [CIS] 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.
(Emphasis in original.) Chi-Feng at 537.
The record contains copies of the petitioner's Form 1120S U.S. Income Tax Return for an S Corporation for
2001 and 2002. The petitioner's tax returns evidence that the petitioner was structured as an S corporation
and its fiscal year is based on calendar year. The tax returns demonstrate the following financial information
concerning the petitioner's ability to pay the proffered wage from the priority date.
Page 4
In 2001, the Form 1120S stated net income" of$(7,868).
In 2002, the Form 1120S stated net income of$7,282.
Therefore, for the years 2001 through 2002, the petitioner did not have sufficient net income to pay the
proffered wage of$39,748.80.
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. 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 1 through 6. 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.
Calculations based on the Schedule L's attached to the petitioner's tax returns yield that the petitioner had
current assets of $50,559 and current liabilities of $28,149, therefore, net current assets were $22,410 in 2001;
and that the petitioner had current assets of $41,973 and current liabilities of $28,037, therefore, net current
assets were $13,936 in 2002 .. Therefore, the petitioner did not have sufficient net current assets to pay the
proffered wage for the years 2001 and 2002.
Therefore, the petitioner had not established that it had the ability to pay the beneficiary the proffered wage in
2001 and 2002 through an examination of wages paid to the beneficiary, or its net income or net current
assets.
roceedin contains copies of individual income tax returns for 2001 throu h 2003 filed b
the alleged sole shareholder of the petitioner and
n appea counse asse s a e Income of an S corporation is "passed through" to t e share 0 ders an is
reflected on the shareholder's income tax returns alone, therefore, the tax returns of the majority shareholder
are relevant to determining the petitioner's ability to pay the offered wage. The petitioner's Form 11208 U.S.
Income Tax Return for an S Corporation indicates that the petitioner was incorporated on June 2, 1999 and
2 Where an S corporation has income from sources other than from a trade or business, net income is found on
Schedule K. The Schedule K form related to the Form 1120 states that an 8 corporation's total income from
its various sources are to be shown not on page one of the Form 11208, but on lines 1 through 6 of the
Schedule K, Shareholders' Shares of Income, Credits, Deductions, etc. See Internal Revenue Service,
Instructions for Form 1120S, 2003, at http://www.irsgov/pub/irs-03Iil120s.pdf, Instructions for Form 11208,
2002, at http://\\tww-irs.gov/pub/irs-02/i1120s.pdf, (accessed February 15,2005).
3 According to Barron 's 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.
Page 5
elected as an S corporation on February 14, 2000. The petitioner filed its Form 1120S for 2001 and 2002 as
an S corporation, not a sole proprietorship. Contrary to counsel's assertion, CIS may not "pierce the
corporate veil" and look to the assets of the corporation's owner to satisfy the corporation's ability to pay the
proffered wage. It is an elementary rule that a corporation is a separate and distinct legal entity from its
owners and shareholders. See Matter ofM, 8 I&N Dec. 24 (BIA 1958), Matter of Aphrodite Investments,
Ltd., 17 I&N Dec. 530 (Comm. 1980), and Matter of Tessel, 17 I&N Dec. 631 (Act. Assoc. Comm, 1980).
Consequently, assets of its shareholders or of other enterprises or corporations cannot be considered in
determining the petitioning corporation's ability to pay the proffered wage. Counsel's reliance on the
shareholder's income in determining the petitioning corporation's ability to pay the proffered wage is
misplaced. Because a corporation is a separate and distinct legal entity from its owners and shareholders, the
assets of its shareholders or of other enterprises or corporations cannot be considered in determining the
petitioning corporation's ability to pay the proffered wage. See Matter of Aphrodite Investments, Ltd., 17
I&N Dec. 530 (Cornm. 1980). In a similar case, the court in Sitar v. Ashcroft, 2003 WL 22203713 (D.Mass.
Sept. 18, 2003) stated, "nothing in the governing regulation, 8 C.F.R. § 204.5, permits [CIS] to consider the
financial resources of individuals or entities who have no legal obligation to pay the wage."
Counsel's assertions on appeal cannot be concluded to outweigh the evidence presented in the tax returns as
submitted by the petitioner that demonstrates that the petitioner could not pay the proffered wage from the day
the Form ETA 750 was accepted for processing by any office within the employment system of the
Department of Labor.
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.