dismissed EB-3 Case: Restaurant

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U.S. Department of HomeJand Security
20 Mass, Ave., N.W., Rm. 3000
Washington, DC 20529
U,S, Citizenship
and Immigration
Services
FILE:
SRC-05-153-51406
Office: TEXAS SERVICE CENTER Date: APR 2 e 11)81"
, ,
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INRE: Petitioner:
Beneficiary:
PETITION: Immigrant petition for Alien Worker as a Skilled Worker or P~ofessional pursuant to section
203(b)(3) ofthe 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.
www.uscis.gov
Page 2
DISCUSSION: The preference visa petition was denied by the Acting Director (Director), Texas Service
Center, and is now before the Administrative Appeals Office (AAO) on appeal. The appeal will be dismissed.
The petitioner is a restaurant. It seeks to employ the beneficiary permanently in the United States as a
bookkeeper. As required by statute, the petition is accompanied by a Form ETA 750, Application for Alien
Empioyment Certification, approved by the Department of Labor (DOL). 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 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 September 13, 2005 denial, the only 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. § 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 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.
Comm. 1977). \
Here, the Form ETA 750 was accepted on February 21,2001. The proffered wage as stated on the'Form ETA
750 is $23,360 per year. The Form ETA 750 states that the position requires two years of experience in the
job offered.
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
(.
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Page 3
pertinent evidence in the record, including new evi~ence properly submitted upon appeal]. Relevant evidence
in the record includes the petitioner's corporate federal tax returns for 2001 through 2004, Form 941
employer's quarterly federal tax returns for the fourth qllarter of 2003, all four quarters of 2004 and the year
of 2005, statements of changes in financial positions, bank statements of the petitioner's bank accounts for a
period from January 2002 to May 2005, and the beneficiary's W-2 form for 2004. The record does not
contain any other evidence relevant t? the petitioner's ability to pay the wage.
The evidence in the record of proceeding shows that the petitioner is structured as an S corporation. The
petitioner claimed to have been established in 1999, to have a gross annual income of $884,886, to have a net
annual income of $9,324, and to currently employ 25 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 on February 14,2001, the
beneficiary did not claim that she was working for the petitioner at that time. '
On appeal, counsel asserts that the director misinterpreted Citizenship and Immigration Services (CIS) policy,
non-precedent decisions and precedent decision~; that depreciation should be considered in determining the
petitioner's ability to pay the proffered wage; and that the evidence submitted clearly demonstrated the ability
to pay the proffered wage.
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 C.F.R. § 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 ofSonegawa, 12 I&N Dec.
612 (Reg. Comm. 1967).
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 submitted Form 941 for the fourth quarter of 2003, allfour quarters of 2004 and
2005 showing the petitioner paid salaries to its employees. However, none of the quarter's wage reports
demonstrates that the petitioner paid the beneficiary any amount of compensation in the releva~t years. In
general, 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. The petitioner also submitted the
beneficiary's W-2 form for 2004, which shows that the petitioner paid the beneficiary $8,470 in 2004. Thus,
the petitioner failed to establish that it had paid the beneficiary the full proffered wage from the priority date
in 2001 onward,S. The petitioner is obligated to demonstrate that it could pay the full proffered wage in 2001
through 2003 and the difference of $14,890 in 2004 between wages actually paid to the beneficiary and the
proffered wage.
I 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. § l03.2(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).
Page 4
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. Etatos Restaurant Corp. v. Sava, 632 F. Supp. 1049, 1054 (S.D.N.Y. 1986)
736 F.2d 1305 (9th Cir. 1984»; see also Chi-Feng
Chang v. Thornburgh, 719 F. Supp. 532 (N.D. Texas 1989); KCF. 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 its gross income and gross profit is misplaced. Showing that the petitioner's total income
exceeded the proffered wage is insufficient. Similarly, showing that the petitioner paid wages in excess of the
proffered wage is insufficient.
In KCF. 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. On appeal counsel argues that.
deprecil;ltion should be considered in determining the petitioner's ability to pay the proffered wage. However,
counsel's reliance on the petitioner's depr~ciation in determining its ability to pay the proffered wage is
misplaced. Counsel refers to a decision issued by the AAO concerning depreciation, but does not provide its
published citation. 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, unpublished decisions are not similarly binding. Precedent decisions
must be designated and published in bound volumes or as interim decisions. 8 C.F.R. § 103.9(a). Instead, the
. court in KCP. Food Co., Inc. v. Sava 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 requ~st 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 Etatos, 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 through 2004. On appeal counsel also submits copies of the first page of Form 1120S filed by Goody
Foody Corporation - Proforma located at 6360 N. Navarro St., Victoria, Texas for 2001 through 2004. The
record of proceeding also contains complete copies of these tax forms but the figures are different. Doubt cast
on any aspect of the petitioner's proof may, of course, lead to a reevaluation of the reliability and sufficiency
of the remaining evidence offered in support of the visa petition. Matter ofHo, 19 I&N Dec. 582, 591 (BIA
1988). The AAO cannot accept these excerpts because they are incomplete and do not contain evidence that they
are copies of IRS filed tax returns. The AAO will review and consider the petitioner's tax returns for 2001
through 2004 already submitted in the record as primary evidence in determining the petitioner's ability to pay the
proffered wage in the instant case. The petitioner's 2001 through 2004 tax returns demonstrate the following
financial information concerning the petitioner's ability to pay the proffered wage of $23,360 per year or the
difference between wages actually paid to the beneficiary and the proffered wage from the priority date:
Page 5
• In 2001, the Form 1120S stated a net income 2 of$8,214.
• In 2002, the Form 1120S stated a net income of $(7,200).
• In 2003, the Form 1120S stated a net income of $(8,176).
• In 2004, the Form 1120S stated a net income of$9,412.
Therefore, the petitioner did not have sufficient net income to pay the full proffered wage in 2001 through
2003 and did not have sufficient net income to pay the difference of$14,890 in 2004 between wages actually
paid to the beneficiary and the proffered wage.
If the net income the petitioner demonstrates it haq 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. 3 A
corporation's year-e~d current assets are shown on Schedule L, lines I through 6. Its year-end current
liabilities are shown 'on lines 16 through 18. If the total ofa 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 $33,921.
• The petitioner's net current assets during 2002 were $10,634.
• The petitioner's net current assets during 2003 were $17,994.
• The petitioner's net current assets during 2004 were $(6,316).
2 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 Ia through 21."
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 1120S 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 line 23 (line 17e in 2004) of
the Schedule K, Shareholders' Shares of Income, Credits, Deductions, etc. For example, an S corporation's
rental" real estate income is carried over from the Form 8825 to line 2 of Schedule K. Similarly, an
S corporation's income from sales of business property is carried over from the Form 4979 to line 50f
Schedule K. See Internal Revenue Service, Instructions for Form 1120S (2003), available at
http://www.irs.gov/pub/irs-prior/i1120s--2003.pdf; Instructions for Form 1120S (2002), available at
http://www.irs.gov/pub/irs-prior/i1120s--2002.pdf.
3According to Barron's Dictionary of Accounting Terms 117 (3fd 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). [d. at 118.
IJ
Page 6
The above calculation indicates that for the year of 2001 the petitioner had sufficient net current assets to pay
the proffered wage, however, the petitioner did not have sufficient net current assets to pay the full proffered
wage in 2002 and 2003, did not have sufficient net current assets to pay the difference between wages actually
paid to the beneficiary and the proffered wage in 2004.
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 continuing ability to pay the beneficiary the proffered wage from
2002 to 2004 through an examination of wages paid to the beneficiary and its net income or net current assets.
The record of proceeding contains copies of bank statements for the petitioner's business checking accounts
covering January 2002 through May 2005. Counsel's reliance on the balances in the petitioner's bank
accounts is misplaced. First, bank statements are not among the three types of evidence, enumerated in 8 C.F.R.
§ 204.5(g)(2), r~quired to illustrate a petitioner's ability to pay a proffered wage. While this regulatioil allows
additional material "in appropriate cases," the petitioner in this case has not demonstrated why the documentation
specified at 8 C.F.R. § 204.5(g)(2) is inapplicable or otherwise paints an inaccurate financial picture of the
petitioner. Second, bank statements show the amount in an account on a given date, and cannot show the
sustainable ability to pay a proffered wage. Third, no evidence. was submitted to demonstrate that the funds
reported on the petitioner's bank statements somehow reflect additional available funds that were not reflected on
its tax return, such as the petitioner's taxable income (income minus deductions) or the cash specified on
Schedule L that was considered in determining the petitioner's net current assets.
Counsel cites Matter ofSonegawa, 12 I&N Dec. 612 (BIA 1967) and argues that applying rules of Sonegawa
to the instant case would seem to warrant a favorable finding that the petitioner had the 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 Sanegawa
had been in business for over 11 years and routinely earned a gross annual income of about $100,000. During
the year in ~hich 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 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 petitione(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 Sanegawa, nor has it been
established that the years 2002 through 2004 were uncharacteristically unprofitable years for the petitioner in
a framework of profitable or successful years.
/
Counsel argues that consideration of the petitioner's growth (increase of wages paid by 109% and gross
revenues by 12% over the past four years) is appropriate, and establishes with even greater certainty that the
petitioner has more than adequate ability to pay the proffered wage. However, against the projection of future
earnings, Afatter afGreat Wall, 16 I&N Dec. 142,144-145 (Acting Reg. Comm. 1977) states: .
Page 7
I do not feel, nor do I believe the Congress intended, that the petitioner, who admittedly could
not pay the offered wage at the time the petition was filed, should subsequently become eligible
to have the petition approved under a new set of facts hinged upon 'probabilityand projections,
even beyond the information presented on appeal.
In addition, CIS record shows that the petitioner (under the name of t with the same
federal employer identification number) filed another 1-140 Immigrant Petition for Alien Worker (receipt
number: SRC-02-029-62495) on October 3, 2001. The previous beneficiary was admitted as a lawful
permanent resident (with Form OS-155A receipt number: SRC-04-071-53434)' on January 8, 2004.
Therefore, the petitioner must show that it had sufficient income to pay the two beneficiaries the proffered
wages during the years from 2001 to 2004. The petitioner failed to establish its ability to pay the instant
beneficiary the proffered wage, and therefore, it is likety that it would fail to establish its ability to pay the
two.
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 the Department of Labor.
The evidence submitted does not establish that the petitioner had 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.
§ 1361. The petitioner has not met that burden.
ORDER: The appeal is dismissed.
/