dismissed
EB-3
dismissed EB-3 Case: Culinary
Decision Summary
The appeal was dismissed because the petitioner, a corporation, failed to demonstrate its continuing ability to pay the proffered wage from the priority date. The AAO rejected the petitioner's argument that the owner's personal assets could be considered, affirming that a corporation is a separate legal entity from its owners and its financial ability must be established through its own records, such as tax returns.
Criteria Discussed
Ability To Pay Proffered Wage
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identifying data deleted to prevent clearly anwarranted invasion of pers0n;al privacy U.S. Department of Homelana becurtry 20 Mass. Ave., N.W., Rrn. 3000 Washington, DC 20529 U.S. Citizenship and Immigration Services 84 EAC 05 017 50320 , . 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. 8 1153(b)(3) ON BEHALF OF PETITIONER: 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 Page 2 DISCUSSION: The preference visa petition was denied by the Director, Vermont Service Center, and is now before the Administrative Appeals Office on appeal. The appeal will be dismissed. The petitioner is a Mexican restaurant organized as a corporation. It seeks to employ the beneficiary permanently in the United States as a foreign specialty cook (Mexican). As required by statute, the petition is accompanied by a Form ETA 750, Application for Alien Employment Certification, approved by the U. S. 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. The record shows that the appeal is properly filed, timely and makes a specific allegation of error in law or fact. The procedural history in this case is documented by the record and incorporated into the decision. Further elaboration of the procedural history will be made only as necessary. As set forth in the director's denial dated June 29, 2005, the single issue in this case is whether or not the petitioner has the ability to pay the proffered wage as of the priority date and continuing until the beneficiary obtains lawful permanent residence. Section 203(b)(3)(A)(i) of the Immigration and Nationality Act (the Act), 8 U.S.C. 4 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 at 8 C.F.R. 5 204.5(g)(2) states in pertinent part: Abilily ofprospective 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, 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). The petitioner must also demonstrate that, on the priority date, the beneficiary had the qualifications stated on its Form ETA 750 Application for Alien Employment Certification as certified by the U.S. Department of Labor and submitted with the instant petition. Matter of Wing's Tea House, 16 I&N Dec. 158 (Act. Reg. Comrn. 1977). Here, the Fonn ETA 750 was accepted on April 24, 2001.' The proffered wage as stated on the Form ETA 750 is $12.00 per hour ($24,960.00 per year). 1 It has been approximately five years since the Alien Employment Application has been accepted and the proffered wage established. According to the employer certification that is part of the application, ETA Form Page 3 The AAO takes a de novo look at issues raised in the denial of this petition. See Dor v. INS, 891 F.2d 997, 1002 n. 9 (2d Cir. 1989)(noting that the AAO reviews appeals on a de novo basis). The AAO considers all pertinent evidence in the record, including new evidence properly submitted upon appeal.' Because the director determined the evidence submitted with the petition was insufficient to demonstrate the petitioner's continuing ability to pay the proffered wage beginning on the priority date, consistent with 8 C.F.R. $204.5(g)(2), the director requested on January 3, 2005, pertinent evidence of the petitioner's ability to pay the proffered wage beginning on the priority date. As the Form ETA 750 stated that the petitioner employed the beneficiary since February 2001, the director requested, inter alia, that the petitioner provide copies of the beneficiary's W-2 Wage and Tax Statements for 2002 and 2003. According to counsel in her letter dated March 30, 2005, the beneficiary worked for the petitioner during fiscal year 2002 and 2003 but only part-time due to family obligations. No wage information for the beneficiary was submitted by the petitioner in this matter. Failure to submit requested evidence that precludes a material line of inquiry shall be grounds for denying the petition. 8 C.F.R. 9 103.2(b)(14). Relevant evidence in the record includes copies of the following documents: the original Form ETA 750, Application for Alien Employment Certification, approved by the U.S. Department of Labor; U.S. Internal Revenue Service Form 1120s tax returns for 2001, 2002 and 2003; explanatory letters from counsel dated October 18,2004, and, March 30,2005; statements by the petitioner's accountant dated March 14,2005, and, March 29, 2005; a copy of web pages accessed March 30, 2005 concerning the petitioner's business; a restaurant menu; and, copies of documentation concerning the beneficiary's qualifications as well as other documentation concerning the petitioner's business. The evidence in the record of proceeding shows that the petitioner is structured as an S corporation. On the petition, the petitioner claimed to have been established in 1998 and to currently employ 11 workers. According to the tax returns in the record, the petitioner's fiscal year is based on a calendar year. On the Form ETA 750B, signed by the beneficiary on April 17,2001, the beneficiary claimed to have worked for the petitioner fiom February 2001 to present (i.e. April 17, 2001). According to the CIS Form G-325A, the beneficiary first was employed by the petitioner in September 2000 as a tortilla maker. On appeal, counsel asserts that the owners of petitioner are permitted to capitalize their own businesses through their personal funds and that the personal funding may be taken into account in determining the ability to pay the proffered wage. Counsel contends that although the organizational form of the petitioner is an S corporation, it is operated as a sole proprietorship, and, the owner of the corporation "infuses her personal resources into the business to pay for expenses ...." Counsel contends that "had the owners and principals of the employer's business enterprise opted to pay themselves less income, the employer [i-e. the petitioner] would have had the ability to pay the proffered wage," and, because of the nature of the taxation of - - - - - - - - 750 Part A, Section 23 b., states "The wage offered equals or exceeds the prevailing wage and I [the employer] guarantee that, if a labor certification is granted, the wage paid to the alien when the alien begins work will equal or exceed the prevailing wage which is applicable at the time the alien begins work." 2 The submission of additional evidence on appeal is allowed by the instructions to the CIS Form I-290B, which are incorporated into the regulations by the regulation at 8 C.F.R. 103.2(a)(l). The record in the instant case provides no reason to preclude consideration of any of the documents newly submitted on appeal. See Matter of Soriano, 19 I&N Dec. 764 (BIA 1 988). Page 4 S corporations, officer compensation taken as an expense on the tax returns may be considered as evidence of the ability to pay the proffered wage. Counsel asserts that since the petitioner is a S corporation, case precedent such as Matter of M, 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. 63 1 (Act. Assoc. Comm. 1980) does not apply to the present case. Further, counsel cites as precedent, Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967), Matter of Great Wall, 16 I&N Dec. 142, 144-145 (Acting Reg. Comm. 1977), Ranchito Coletero, 2002-INA-104 (2004 BALCA), certain unpublished AAO cases,3 and, a CIS Interoffice Memorandum (HQOPRD 90A6.45) dated May 4, 2004. As a preface to the following discussion, contrary to counsel's assertion, Citizenship and Immigration Services (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 of M, 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. 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. 5 204.5, permits [CIS] to consider the financial resources of individuals or entities who have no legal obligation to pay the wage." Accompanying the appeal, counsel submits a legal brief dated August 26,2005, and, additional evidence that includes copies of the following documents: an explanatory letter from counsel dated July 29, 2005; a cover letter from counsel dated August 26, 2005; the director's decision dated June 29, 2005; a statement from the petitioner's accountant dated August 25, 2005 with Schedule L to the petitioner's Form 1120s for 2003; approximately 26 pages of photos, web pages information, and, a news article about the petitioner's business; an incomplete draft of a letter from the petitioner dated July 2, 2004; a letter from the petitioner dated September 1,2004; and, a copy of all previously submitted documents mentioned above including the petition and adjustment application. The petitioner must establish that its job offer to the beneficiary is a realistic one. Because the filing of an ETA 750 labor certification application establishes a priority date for any immigrant petition later based on the ETA 750, the petitioner must establish that the job offer was realistic as of the priority date and that the offer remained realistic for each year thereafter, until the beneficiary obtains lawful permanent residence. The petitioner's ability to pay the proffered wage is an essential element in evaluating whether a job offer is realistic. See Matter of Great Wall, 16 I&N Dec. 142 (Acting Reg. Comm. 1977). See also 8 CFR $ 204.5(g)(2). In evaluating whether a job offer is realistic, CIS requires the petitioner to demonstrate financial resources suficient to pay the beneficiary's proffered wages, although the totality of the circumstances affecting the petitioning business will be considered if the evidence warrants such consideration. See Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967). ------ 3 Counsel refers to a decision issued by the AAO but does not provide its published citation. While 8 C.F.R. tj 103.3(c) provides that precedent decisions of CIS are binding on all its employees in the administration of the Act, unpublished decisions are not similarly binding. Precedent decisions must be designated and published in bound volumes or as interim decisions. 8 C.F.R. tj 103.9(a). Page 5 In determining the petitioner's ability to pay the proffered wage during a given period, 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 has not established that it employed and paid the beneficiary the full proffered wage fi-om the priority date. 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). Reliance on the petitioner's gross sales and profits exceeded the proffered wage is misplaced. Showing that the petitioner's gross sales and profits exceeded the proffered wage is insufficient. Similarly, showing that the petitioner paid wages in excess of the proffered wage is insufficient. The petitioner's appellate argument that its depreciation expenses should be considered as cash is misplaced. In K.C.P. Food Co., Inc. v. Sava, 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. Id. at 1084. 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 that 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 tax returns demonstrate the following financial information concerning the petitioner's ability to pay: In 2001, the Form 1120s stated net income4 of $36,393.00. 4 Ordinary income (loss) from trade or business activities as reported on Line 2 1. Internal Revenue Service Form 1 120S, Line 21, states the petitioner's ordinary business income or loss. Where an S corporation's income is exclusively from a trade or business, CIS considers net income to be the figure for ordinary income, shown on line 21 of page one of the petitioner's Form 1120s. The instructions on the Form 1120S, U.S. Income Tax Return for an S Corporation, state on page one, "Caution, Include only trade or business income and expenses on lines la through 2 1 ."Where an S corporation has income from sources other than from a trade or business, Page 6 In 2002, the Form 1120s stated net income of $6,030.00. In 2003, the Form 1 120s stated net income of $14,5 10.00. Since the proffered wage is $24,960.00 per year, the petitioner did not have the ability to pay the proffered wage fiom an examination of its net income for years 2002 and 2003. If the net income the petitioner demonstrates it had available during the 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 and include cash-on-hand. 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. The petitioner's net current assets during 2001 were $22,120.00; during 2002 were $5,754.00; and during 2003 were $582.00. Therefore, for the years 2002 and 2003, the petitioner did not have sufficient net current assets to pay the proffered wage. Therefore, from the date the Form ETA 750 was accepted for processing by the U.S. Department of Labor, the petitioner had not established that it had the continuing ability to pay the beneficiary the proffered wage as of the priority date through an examination of wages paid to the beneficiary, or its net income or net current assets except for 200 1. As already stated, counsel contends that "had the owners and principals of the employer's business enterprise opted to pay themselves less income, the employer [i.e. the petitioner] would have had the ability to pay the proffered wage," and, because of the nature the taxation of S corporations, officer compensation taken as an expense on the tax returns may be considered as evidence of the ability to pay the proffered wage. Several net income is found on Schedule K. The Schedule K form related to the Form 1120 states that an S corporation's total income from its various sources are to be shown not on page one of the Form 1120S, 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-03/i1120s.pdf, Instructions for Form 1120S, 2002, at http://www.irs.gov/~ub/irs-02/il120s.pdf, (accessed February 15, 2005). 5 According to Barron 's Dictionary of Accounting Terms 1 17 (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 as accounts payable, short-term notes payable, and accrued expenses (such as taxes and salaries). Id. at 1 18. Page 7 statements from the petitioner's accountant were submitted to support counsel's assertion. There were no statements introduced into the record from the owners and principals of the petitioner offering to relinquish officer compensation to pay the proffered wage. There is no evidence that the owners and principals of the petitioner relinquished officer compensation to pay the proffered wage. Going on record without supporting documentary evidence is not sufficient for purposes of meeting the burden of proof in these proceedings. Matter of Sofici, 22 I&N Dec. 158, 165 (Comm. 1998). The unsupported statements of counsel on appeal or in a motion are not evidence and thus are not entitled to any evidentiary weight. See INS v. Phinpathya, 464 U.S. 183, 188-89 n.6 (1984); Matter ofRamirez-Sanchez, 17 I&N Dec. 503 (BM 1980). A visa petition may not be approved based on speculation of future eligibility or after the petitioner or beneficiary becomes eligible under a new set of facts. See Matter of Michelin Tire Corp., 17 I&N Dec. 248 (Reg. Comm. 1978); Matter of Katigbak, 14 I&N Dec. 45, 49 (Comm. 1971). A petitioner may not make material changes to a petition in an effort to make a deficient petition conform to CIS requirements. See Matter of Izurnmi, 22 I&N Dec. 169, 176 (Assoc. Comm. 1998). Without documentary evidence to support the claim, the assertions of counsel will not satisfy the petitioner's burden of proof. Counsel is citing Ranchilo Coletero, 2002-INA-104 (2004 BALCA), for the premise that the financial circumstances of a sole proprietor should be taken into consideration in determining the ability to pay the proffered wage. Ranchito Coletero concerned entities in an agricultural business regularly fail to show profits and typically rely upon individual or family assets. Counsel does not state how the Department of Labor's (DOL) Board of Alien Labor Certification Appeals (BALCA) precedent is binding on the AAO. While 8 C.F.R. $ 103.3(c) provides that precedent decisions of CIS are binding on all its employees in the administration of the Act, BALCA decisions are not similarly binding. Precedent decisions must be designated and published in bound volumes or as interim decisions. 8 C.F.R. 4 103.9(a). Moreover, Ranchito Coletero deals with a sole proprietorship and is not directly applicable to the instant petition, which deals with a corporation. The AAO is not bound to follow the published decision of a United States district court in cases arising within the same district. See Matter of K-S-, 20 I&N Dec. 7 15 (BIA 1993). Counsel urges the consideration of the beneficiary's proposed employment as an indication that the petitioner's income will increase. Counsel cites Masonry Masters, Inc. v. Thornburgh, 875 F.2d 898 (D.C. Cir. 1989)' in support of this assertion. Although part of this decision mentions the ability of the beneficiary to generate income, the holding is based on other grounds and is primarily a criticism of CIS for failure to specify a formula used in determining the proffered wage. As stated, the beneficiary only worked part-time for an unspecified time in 2002 and 2003 for the petitioner. Further, in this instance, no detail or documentation has been provided to explain how the beneficiary's employment as a foreign specialty cook (Mexican) will significantly increase profits for petitioner. The petitioner has not, however, provided any standard or criterion for the evaluation of such earnings. For example, the petitioner has not demonstrated that the beneficiary will replace less productive workers, or has a reputation that would increase the number of customers. This hypothesis cannot be concluded to outweigh the evidence presented in the corporate tax returns. Counsel cites Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967), for the proposition that CIS in its discretion may consider the totality of the petitioner's circumstance in its determination, based upon the evidence submitted, of the petitioner's ability to pay the proffered wage. Matter of Sonegawa relates to petitions filed during uncharacteristically unprofitable or difficult years but only in a framework of profitable or successful years. The petitioning entity in Sonegawa had been in business for over 11 years and routinely earned a gross annual income of about $100,000. During the year in which the petition was filed in that case, the petitioner changed business locations and paid rent on both the old and new locations for five months. There were large moving costs and also a period of time when the petitioner was unable to do regular business. The Regional Page 8 Commissioner determined that the petitioner's prospects for a resumption of successful business operations were well established. The petitioner was a fashion designer whose work had been featured in Time and Look magazines. Her clients included Miss Universe, movie actresses, and society matrons. The petitioner's clients had been included in the lists of the best-dressed California women. The petitioner lectured on fashion design at design and fashion shows throughout the United States and at colleges and universities in California. The Regional Commissioner's determination in Sonegawa was based in part on the petitioner's sound business reputation and outstanding reputation as a couturiere. No unusual circumstances have been shown to exist in this case to parallel those in Sonegawa, nor has it been established that 2002 and 2003 was an uncharacteristically unprofitable period for the petitioner. Counsel asserts that the "financial flexibility" of the owners' of petitioner in establishing their compensation should be evidence of the ability to pay the proffered wage. Without documentary evidence to support the claim, the assertions of counsel will not satisfy the petitioner's burden of proof. The unsupported assertions of counsel do not constitute evidence. Matter of Obaigbena, 19 I&N Dec. 533, 534 (BIA 1988); Matter of Laureano, 19 I&N Dec. 1 (BIA 1983); Matter of Ramirez-Sanchez, 17 I&N Dec. 503, 506 (BIA 1980). In tax year 2002 and 2003, compensation of officers was stated as $40,500.00 and $39,000.00 respectively. The record of proceeding does not contain evidence that any of the petitioner's owners could or would forego officer's compensation to pay the proffered wage. Since the proffered wage is $24,960.00 per year, it is not credible to believe that an owner would apply officer's compensation for those years to pay the proffered wage. Counsel asserts on the appeal that there is another way to determine the petitioner's ability to pay the proffered wage from the priority date by employing the beneficiary and replacing an existing worker who is the owner. Counsel cites no legal precedent for the contention, and, according to regulation,6 copies of annual reports, federal tax returns, or audited financial statements are the means by which petitioner's ability to pay is determined. The assertions of counsel do not constitute evidence. Matter of Obaigbena, 19 I&N Dec. 533, 534 (BIA 1988); Matter of Ramirez-Sanchez, 17 I&N Dec. 503,506 (BIA 1980). Wages already paid to others are not available to prove the ability to pay the wage proffered to the beneficiary at the priority date of the petition and continuing to the present. Moreover, there is no evidence that the position of the owner involves the same duties as those set forth in the Form ETA 750. If that employee performed other kinds of work, then the beneficiary could not have replaced him or her. Further, in this instance, no detail or documentation has been provided to explain how the beneficiary's employment as a foreign specialty cook (Mexican). will significantly increase petitioner's profits. This hypothesis cannot be concluded to outweigh the evidence presented in the corporate tax returns. The evidence submitted fails to establish that the petitioner has the continuing ability to pay the proffered wage beginning on the priority date. The burden of proof in these proceedings rests solely with the petitioner. Section 291 of the Act, 8 U.S.C. 8 136 1. The petitioner has not met that burden. ORDER: The appeal is dismissed. 8 C.F.R. €J 204.5(g)(2).
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