dismissed EB-3 Case: Engineering

'den-g data deleted to 
prevent clearly unwarranted 
invaeiooorpersoaplprivlry 
PUBLIC COPY 
U.S. Department of Homeland Security 
20 Mass. Ave., N.W., Rm. A3042 
Washington, DC 20529 
U. S. Citizenship 
and Immigration 
Services 
FLE: EAC-05-007-5 1 143 Office: VERMONT SERVICE CENTER Date: HAY 0 2 2m 
IN RE: 
PETITION: 
 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. 
Administrative Appeals Office 
EAC-05-007-5 1 143 
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 engineering consultants firm. It seeks to employ the beneficiary permanently in the 
United States as a product engineer manager (traffic database service). As required by statute, a Form ETA 
750, Application for Alien Employment Certification approved by the Department of Labor, accompanied the 
petition. 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 and denied the 
petition accordingly. 
Section 203(b)(3)(A)(i) of the Immigration and Nationality Act (the Act), 8 U.S.C. 5 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 or seasonal nature, for which qualified workers are not available in the United 
States. Section 203(b)(3)(A)(ii) of the Act provides for the granting of preference classification to qualified 
immigrants who hold baccalaureate degrees and who are members of the professions. 
The regulation at 8 C.F.R. 5 204.5(g)(2) states: 
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 either in the 
form of copies of annual reports, federal tax returns, or audited financial statements. In a case 
where the prospective United States employer employs 100 or more workers, the director 
may accept a statement from a financial officer of the organization which establishes the 
prospective employer's ability to pay the proffered wage. In appropriate cases, additional 
evidence, such as profitAoss statements, bank account records, or personnel records, may be 
submitted by the petitioner or requested by [Citizenship and Immigration Services (CIS)]. 
The petitioner must demonstrate the continuing ability to pay the proffered wage beginning on the petition's 
priority date, which is the date the Form ETA 750 was accepted for processing by any office within the 
employment system of the Department of Labor. See 8 C.F.R. 5 204.5(d). The priority date in the instant 
petition is December 26, 2001. The proffered wage as stated on the Form ETA 750 is $98,089.00 annually. 
On the Form ETA 750B, signed by the beneficiary on December 13, 2001, the beneficiary did not claim to 
have worked for the petitioner. The ETA 750 was certified by the Department of Labor on February 19, 
2004. 
The 1-140 petition was submitted on October 8, 2004. On the petition, the petitioner claimed to have been 
established in 1995, to currently have 7 to 10 employees, and to have a gross annual income of $307,216.00. 
With the petition, the petitioner submitted supporting evidence. 
In a decision dated November 8, 2004, the director determined that the evidence did not establish that the 
petitioner had the ability to pay the proffered wage as of the priority date and continuing until the beneficiary 
obtains lawful permanent residence, and denied the petition. 
EAC-05-007-5 1 143 
Page 3 
On appeal, counsel submits a brief and additional evidence. Counsel states on appeal that CIS failed to examine 
the entire record because CIS did not take into consideration the petitioner's retained earnings and the petitioner's 
balance sheets, and the petitioner has met its burden in establishing its ability to pay the proffered wage because 
the petitioner submitted additional evidence. Counsel submits the petitioner's Certificate of Incorporation and 
copies of the Form 1040 U.S. Individual Income Tax Returns for the petitioner's owner for 2001,2002, and 2003. 
Counsel also submits additional copies of evidence already in the record. 
The submission of additional evidence on appeal is allowed by the instructions to the Form I-290B, which are 
incorporated into the regulations by the regulation at 8 C.F.R. 5 103.2(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 1988). 
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. Comrn. 1977). See also 8 C.F.R. 5 204.5(g)(2). In 
evaluating whether a job offer is realistic, CIS requires the petitioner to demonstrate financial resources sufficient 
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. 
6 12 (Reg. Cornrn. 1967). 
In determining the petitioner's ability to pay the proffered wage, CIS will first examine whether the petitioner 
employed the beneficiary at the time the priority date was established. If the petitioner establishes by 
documentary evidence that it employed the beneficiary at a salary equal to or greater than the proffered wage, 
this evidence will be considered prima facie proof of the petitioner's ability to pay the proffered wage. In the 
instant case, on the Form ETA 750B, signed by the beneficiary on December 13, 2001, the beneficiary did not 
claim to have worked for the petitioner. 
As another means of determining the petitioner's ability to pay the proffered wage, CIS will next examine the 
petitioner's net income figure as reflected on the petitioner's federal income tax return for a given year, 
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 Woodcrafr Hawaii, Ltd. v. 
Feldman, 736 F.2d 1305 (9" Cir. 1984)); see also Chi-Feng Chang v. Thornburgh, 719 F. Supp. 532 (N.D. Tex. 
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. 111. 1982), afd., 703 F.2d 571 (7" Cir. 1983). In K.C.P. Food Co., Inc., 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. 623 F. Supp. at 1084. The 
court specifically rejected the argument that the Service should have considered income before expenses were 
paid rather than net income. Finally, there is no precedent that would allow the petitioner to "add back to net cash 
the depreciation expense charged for the year." See Elatos Restaurant Corp., 632 F. Supp. at 1054. 
The evidence indicates that the petitioner is an S corporation. The record contains copies of the petitioner's Form 
1120s U.S. Income Tax Returns for an S Corporation for 2001,2002, and 2003. The record before the director 
closed on October 8, 2004 with the receipt by the director of the 1-140 petition and supporting documents. As of 
EAC-05-007-5 1 143 
Page 4 
that date the petitioner's federal tax return for 2004 was not yet due. Therefore the petitioner's tax return for 2003 
is the most recent return available. 
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. Where an S 
corporation has income from sources other than from a trade or business, that income is reported on Schedule K. 
Where the Schedule K has relevant entries for either additional income or additional deductions, net income is 
found on line 23 of the Schedule K. 
The petitioner's tax returns show the amounts for taxable income as shown in the table below. 
Tax Wage increase needed Surplus or 
year Net income to pay the proffered wage deficit 
* The full proffered wage, since the record contains no evidence of any wage 
payments made by the petitioner to the beneficiary in those years. 
The above information is insufficient to establish the petitioner's ability to pay the proffered wage in 2001, 
2002, and 2003. 
As an alternative means of determining the petitioner's ability to pay the proffered wage, CIS may review the 
petitioner's net current assets. Net current assets are a corporate taxpayer's current assets less its current 
liabilities. Current assets include cash on hand, inventories, and receivables expected to be converted to cash 
within one year. A corporation's current assets are shown on Schedule L, lines 1 through 6. Its current 
liabilities are shown on lines 16 through 18. If a corporation's 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. The net current assets are expected to be converted to cash as the proffered wage becomes due. Thus, 
the difference between current assets and current liabilities is the net current assets figure, which if greater 
than the proffered wage, evidences the petitioner's ability to pay. 
Calculations based on the Schedule L's attached to the petitioner's tax returns yield the amounts for net 
current assets as shown in the following table. 
Tax Net Current Assets Wage increase needed 
year End of year to pay the proffered wage 
1 
 Only the first page of the petitioner's Form 1120s U.S. Income Tax Return for an S Corporation for 2003 appears in the 
record. Thus, the AAO will use the petitioner's ordinary income as listed on line 21 of page one. 
EAC-05-007-5 1 143 
Page 5 
2003 No Information $98,089.00* 
* The full proffered wage, since the record contains no evidence of any wage 
payments made by the petitioner to the beneficiary in those years. 
The above information is insufficient to establish the petitioner's ability to pay the proffered wage in 2001, 
2002, and 2003. 
Counsel asserts that "[CIS] erred by not incorporating the petitioner's retained earnings into an examination 
of ability to pay the wage." Counsel also cites to 8 C.F.R. 5 204.5(g)(2) as permitting the petitioner to submit 
retained earnings as profit/loss statements. Evidence in support of this assertion includes a letter from the 
petitioner's tax, accounting, and financial advisor stating that the petitioner "did have the available funds to 
pay the salary offered in the forms of retained earnings" and balance sheets listing the petitioner's retained 
earnings. 
The regulation at C.F.R. 5 204.5(g)(2) states that "[iln appropriate cases, additional evidence, such as 
profit/loss statements, bank account records, or personnel records, may be submitted." Nowhere in the 
regulation does it state that retained earnings may be submitted as additional evidence. At any rate, the 
federal tax returns in the record have a line item on the Schedule L for retained earnings.* In addition, 
profit/loss statements are not among the three types of evidence, enumerated in 8 C.F.R. 5 204.5(g)(2), required to 
illustrate a petitioner's ability to pay the proffered wage. While this regulation allows additional material "in 
appropriate cases," the petitioner in this case has not demonstrated why all three types of documentation specified 
at 8 C.F.R. § 204.5(g)(2) are inapplicable or otherwise paint an inaccurate financial picture of the petiti~ner.~ 
Retained earnings are the total of a company's net earnings since its inception, minus any payments to its 
stockholders. That is, this year's retained earnings are last year's retained earnings plus this year's net 
income. Adding retained earnings to net income and/or net current assets is therefore duplicative. Therefore, 
CIS looks at each particular year's net income, rather than the cumulative total of the previous years' net 
incomes represented by the line item of retained earnings. 
Further, even if considered separately from net income and net current assets, retained earnings might not be 
included appropriately in the calculation of the petitioner's continuing ability to pay the proffered wage 
because retained earnings do not necessarily represent funds available for use. Retained earnings can be 
either appropriated or unappropriated. Appropriated retained earnings are set aside for specific uses, such as 
reinvestment or asset acquisition, and as such, are not available for shareholder dividends or other uses. 
Unappropriated retained earnings may represent cash or non-cash and current or non-current assets. The 
The amounts listed for retained earnings in the letter from the petitioner's tax, accounting, and financial advisor do not 
match those on the petitioner's tax returns. 
 According to the letter, "[rletained earnings for [the petitioner] were 
significant for 2001, 2002, 2003, and 2004. 
 They were $130,746.00, $126,291.00, $265,840.00 and $232,146.00 
respectively." According to the petitioner's tax returns, retained earnings in 2001 and 2002 were $24,524.00 and 
$4,368.00 respectively. 
Counsel states that the petitioner's balance sheets should be examined because the petitioner's tax returns are based on 
the accrual accounting system, and "returns [on the petitioner's tax returns] do not recognize all the funds [the] 
[pletitioner had disposable." However, he does not state why copies of annual reports or audited financial statements are 
not available. 
EAC-05-007-5 1 143 
Page 6 
record does not demonstrate that the petitioner's retained earnings are unappropriated and are cash or current 
assets that would be available to pay the proffered wage.4 
Counsel also asserts that "[CIS] erred by not exercising its power to examine additional evidence such as 
balance sheets. Evidence in support of this assertion includes the petitioner's balance sheets for 2001, 2002, 
2003, and part of 2004. 
The balance sheets in the record are essentially financial statements. The regulation at 8 C.F.R. 5 204.5(g)(2) 
makes clear that where a petitioner relies on financial statements to demonstrate its ability to pay the proffered 
wage, those financial statements must be audited. An audit is conducted in accordance with generally 
accepted auditing standards to obtain a reasonable assurance that the financial statements of the business are 
free of material misstatements. The unaudited financial statements that counsel submitted with the petition 
are not persuasive evidence. The unsupported representations of management are not reliable evidence and 
are insufficient to demonstrate the ability to pay the proffered wage. 
Moreover, counsel states that the petitioner has met its burden in demonstrating its ability to pay the proffered 
wage because it met the burden set by K.C.P. Food Co., lnc. v. Sava, 623 F. Supp. 1080 (S.D.N.Y. 1985) and also 
provided additional evidence. Counsel states that the court in K.C.P. Food Co., Inc. "did not state [that] [CIS] 
must only use the corporate tax returns and the court did not state [that] [CIS] could not use additional evidence." 
CIS does look to other evidence, aside from tax returns, in determining a petitioner's financial ability to pay the 
proffered wage. In fact, as stated above, 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 (Reg. Comrn. 
1967). 
Counsel also states that "[CIS] refers to [K. C.P. Food Co., Inc.] to argue it may properly rely on corporate income 
tax returns and that it need not consider [income] before expenses" and tries to differentiate the petitioner in that 
case with the petitioner in the case at hand. As stated above, 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 Cop v. Sava, 632 F. Supp. 1049, 1054 (S.D.N.Y. 1986) (citing Tongatapu Woodcrafi Hawaii, 
Ltd. v. Feldman, 736 F.2d 1305 (9" Cir. 1984)); see also Chi-Feng Chang v. Thornburgh, 719 F. Supp. 532 (N.D. 
Tex. 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 57 1 (7" Cir. 1983). 
Furthermore, counsel asserts that the petitioner has met its burden in demonstrating its ability to pay the proffered 
wage because the petitioner has one primary shareholder, and the shareholder "could have easily left the funds 
[that he received as income] in [the petitioner] to pay the offered salary." Evidence in support of this assertion 
includes the petitioner's Certificate of Incorporation, and the Form 1040 U.S. Individual Income Tax Returns for 
the petitioner's owner for 2001,2002, and 2003. 
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 
The letter from the petitioner's tax, accounting, and financial advisor states that "small corporations often set the 
earnings aside as a form of savings to be used as needed to support corporation activities. These funds are therefore 
readily and immediately available to the company at any time." No evidence supporting this statement accompanied the 
letter. A general statement that is not supported by documentary evidence is not sufficient for purposes of meeting the 
burden of proof in these proceedings. Matter of Sojjici, 22 I&N Dec. 158, 165 (Comm. 1998) (citing Matter of Treasure 
Craft of California, 14 I&N Dec. 190 (Reg. Comm. 1972)). 
EAC-05-007-5 1 143 
Page 7 
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 (Cornrn. 1980), and Matter of 
Tessel, 17 I&N Dec. 631 (Act. Assoc. Cornrn. 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. 
After a review of the evidence, it is concluded that the petitioner has not established its ability to pay the 
salary offered as of the priority date of the petition and continuing until the beneficiary obtains lawful 
permanent residence. The decision of the director to deny the petition was correct, based on the evidence in 
the record before the director. 
The burden of proof in these proceedings rests solely with the petitioner. Section 291 of the Act, 8 U.S.C. 5 1361. 
The petitioner has not met that burden. 
ORDER: The appeal is dismissed.