dismissed EB-3 Case: Rug Repair

- identifying data deleted to 
prevent hriy unwarranted 
invasion of perd privacy 
PUBLIC COPY 
U.S. Department of Homeland Security 
20 Mass. Ave., N.W., Rm. A3000 
Washington, DC 20529 
U. S. Citizenship 
and Immigration 
Services 
bg 
PETITION: 
 Immigrant petition for Alien Worker as an Other Worker, Unskilled pursuant to section 
203(b)(3)(iii) of the Immigration and Nationality Act, 8 U.S.C. 8 1 153(b)(3)(iii) 
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 
Page 2 
DISCUSSION: The service center director denied the employment-based visa petition, and the matter is now 
before the Administrative Appeals Office (AAO) on appeal. The appeal will be dismissed. 
The petitioner is a mg repair and garment cleaning business. It seeks to employ the beneficiary permanently 
in the United States as an oriental rug repairer. 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. 
On appeal, counsel states that the petitioner is a Subchapter S corporation and the personal assets of the 
stockholders and owners of the corporation are relevant in determining whether the petitioner has the ability 
to pay the proffered wage. Counsel submits additional evidence. 
Section 203(b)(3)(A)(iii) of the Immigration and Nationality Act (the Act), 8 U.S.C. 4 11 53(b)(3)(A)(iii) 
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 unskilled labor, not of a temporary or 
seasonal nature, for which qualified workers are not available in the United States. 
The regulation at 8 C.F.R. $ 204.5(1)(3) also provides 
(ii) Other documentation-- 
(D) Other Worker. If the petitioner is for an unskilled (other) worker, it must be 
accompanied by evidence that the alien meets any educational, training and 
experience, and other requirements of the labor certification. 
The regulation at 8 C.F.R. $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 750 was accepted for processing by any office within the employment system of 
the Department of Labor. See 8 CFR 8 204.5(d). Here, the Form ETA 750 was accepted for processing on 
April 27, 2001. The proffered wage as stated on the Form ETA 750 is an annual salary of $19,781. On the 
Form ETA 750B, signed by the beneficiary, the beneficiary did not claim to have worked for the petitioner. 
On the petition, the petitioner claimed to have been established in April 1, 1971, to have twelve employees, 
and to have a gross annual income of $737,545. In support of the petition, the petitioner submitted IRS Form 
Page 3 
1120S, the petitioner's corporate income tax return for 2001, 2002 and 2003. These documents indicated that 
the petitioner had ordinary income of -$6,046 in 2001, $21,192 in 2002, and $41,681 in 2003. The petitioner 
submitted a letter of previous work experience from eheran, Iran, that stated the 
beneficiarv had worked for the business from Aumst 1984 to Aumst 1987. Counsel also submitted 
a 
documents with regard to the assets of 
 sole stockholder and owner. This 
documentation included unaudited 
 assets and liabilities as of June 1, 2001. This 
document identifies Certified Public Accountants, New Yor 
 e bottom of the page. 
An additional sheet identified as Financial Statement appears to be signed by Mr 
 and lists the value of 
his home, his investment account with his investment i 
 nd the value of his 
life insurance policy. Counsel also submitted a statement from d as of June 29, 2001 that 
indicated total investments of $420,292.' Counsel then submitted the petitioner's sole shareholder's life 
insurance policy statement for August 2001. Counsel also submitted the same documentation dated June 1, 
2005, that showed additional assets for ~r including a second home in Pennsylvania, along with a 
Bank of America private client account statement for April 30, 2005, and real estate tax record for Mr. 
home. Counsel stated in a cover letter that the petitioner's business is a subchapter S 
Corporation and therefore all the personal assets of the stockholder and owner of the corporation are relevant 
in determining the petitioner's ability to pay the proffered wage. 
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, and the beneficiary's previous work 
experience as an oriental rug repairer, on October 27, 2005, the director requested additional evidence 
pertinent to that ability. The director specifically requested that the petitioner provide a letter of work 
verification with regard to the requisite two years of prior work experience as an oriental rug repairer as 
stipulated by the Form ETA 750. The director also stated that the petitioner had submitted its Form 1120s for 
the priority date year of 2001; however, this document indicated an ordinary income of -$6,046. The director 
requested that the petitioner submit additional evidence to show its ability to pay the proffered wage of 
$1 9'78 1, and that such evidence might include copies of annual reports accompanied by audited or reviewed 
financial statements, or complete federal tax returns, or a statement from the petitioner's financial officer to 
establish the petitioner's ability to pay the proffered wage.* The director also stated that the petitioner could 
also submit evidence such as accredited profit/loss statements, bank account records, or personnel records. 
With regard to any wages paid to the beneficiary, the director requested copies of the beneficiary's W-2 forms 
if the petitioner had employed the beneficiary as of the priority date year of 2001. 
In response, counsel resubmitted Mr. 
 financial documentation, with an updated statement from 
Merrill Lynch investment firm that indicated ~r. investments totaled $156,797.17 as of April 29, 
2005. Counsel also resubmitted the letter of employment verification originally submitted with the instant 
1 
 This document identifies three accounts covered bv the statement. and the record is not clear whether the 
$420,292 balance represents the assets in Mr. 
 account, or' in all three accounts identified on the 
statement's first page. 
2 
 Since the 1-140 petition indicated the petitioner had twelve employees, the record is not clear why the 
director referred to a letter from the petitioner's officer to establish the petitioner's ability to pay the proffered 
wage. Such a letter is only relevant to petitioners with more than 100 employees. 
Page 4 
petition. Counsel reiterated that the petitioner is a Subchapter S corporation and that the personal assets of the 
petitioner3 would be a relevant factor in determining the petitioner's ability to pay the proffered wage. 
On February 27, 2006, the director denied the petition. The director stated that the petitioner's 2001 income 
tax return indicated ordinary income of -$6,046, and that the Schedule L balance sheet submitted with the 
petitioner's 2001 Form 1120s also indicated the petitioner's liabilities were greater than its  asset^.^ The 
director also stated that the assets of the petitioner's owner could not be considered in determining the 
petitioner's ability to pay the proffered wage. 
On appeal, counsel reiterates that because the petitioner is a subchapter S corporation, the personal assets of 
the petitioner would be a relevant factor in establishing the petitioner's ability to pay the proffered wage. 
Counsel resubmits the petitioner's owner and sole shareholder's financial records in tax years 2001 and 2005. 
These documents include the unaudited statement of assets and liabilities as of June 1, 2001, provided by 
, a signed statement from the petitioner's officer/sole shareholder with regard to his 
financial worth as of June 2001, a Merrill Lynch statement for June 2001, and the petitioner's owner's life 
insurance policy value as of August 27,2001. 
Counsel in the initial petition, in response to the director's request for further evidence, and on appeal, states 
that based on the petitioner's structure as a subchapter S corporation, the personal assets of the petitioner's 
owner and sole shareholder is a relevant factor in determining the petitioner's ability to pay the proffered 
wage. Twice counsel refers to the petitioner's owner's assets as the petitioner's assets. 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. It is further noted that even if the petitioner's owner's assets 
could be considered, the petitioner's owner's has significant assets that are not liquidable to serve as a source 
of further funding to pay the proffered wage. These non-liquidable assets would include real estate properties, 
and life insurance policies. 
It is noted that unlike a corporation, a sole proprietorship is not legally separate from its owner. Therefore the 
sole proprietor's income, liquefiable assets, and personal liabilities can also considered as part of the 
petitioner's ability to pay. However, the petitioner is structured as a Subchapter S corporation, not a sole 
proprietorship. The AAO realizes that sole shareholders in corporations do have the authority to allocate 
expenses of the corporation for various legitimate business purposes, including for the purpose of reducing 
the corporation's taxable income; however, the sole shareholder is not obligated to cover the petitioner's 
expenses. The AAO will discuss this factor further in these proceedings. 
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 
3 
 Counsel appears to refer to the petitioner's sole shareholder and officer, not the petitioner. 
4 
 The director's reference to the petitioner's assets and liabilities alludes to the petitioner's net current assets. 
The AAO will discuss the petitioner's net current assets more completely further in these proceedings. 
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 
ETA 750, the beneficiary stated that she had not worked for the petitioner prior to the filing date of the labor 
certification. The petitioner also did not present any evidentiary documentation to establish that the petitioner 
had paid the beneficiary a salary equal to or greater than the proffered wage. In the instant case, the petitioner 
did not establish that it employed and paid the beneficiary the full proffered wage in 2001 and onward. 
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), affd, 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 retums, 
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 evidence indicates that the petitioner is structured as an S corporation. 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 petitioner's tax returns for 2001, 2002 and 2003 
shows the following amounts of ordinary income: -$6,046 in 2001, $21,192 in 2002, and $41,68 1 in 2003. 
Thus, the petitioner has established that it has sufficient net income in tax year 2002 and 2003 to pay the 
proffered wage of $19,781. However, a petitioner must establish the elements for the approval of the petition 
at the time of filing. A petition may not be approved if the beneficiary was not qualified at the priority date, 
but expects to become eligible at a subsequent time. Matter of Katigbak, 14 I&N Dec. 45,49 (Cornm. 1971). 
The petitioner has not established that it has the ability to pay the proffered wage as of the April 27, 2001 
priority date. 
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. 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. 
Page 6 
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 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. As previously stated, the petitioner established its ability to pay the proffered wage as of tax 
year 2002 and 2003 based on its net income. The petitioner submitted the following information for tax year 
200 1 : 
Ordinary Income 
Current Assets 
Current Liabilities 
Net current assets 
These figures fail to establish the ability of the petitioner to pay the proffered wage as of the priority date. The 
petitioner has not demonstrated that it paid the full proffered wage to the beneficiary. In 2001, the petitioner 
shows a net income of -$6,046, and net current assets of -$89,587, and has not, therefore, demonstrated the 
ability to pay the proffered wage in tax year 2001 out of its net income or net current assets. 
As noted previously, contrary to counsel's assertion with regard to S corporations, the assets of the sole 
shareholder/officer are not viewed as corporate assets. However, the sole shareholder of a corporation has the 
authority to allocate expenses of the corporation for various legitimate business purposes, including for the 
purpose of reducing the corporation's taxable income. Compensation of officers is an expense category 
explicitly stated on the Form 1120s U.S. Corporation Income Tax Return. For this reason, the petitioner's 
figures for compensation of officers may be considered as additional financial resources of the petitioner, in 
addition to its figures for ordinary income. 
To determine whether or not an entity's officer compensation would have been available to the proffered 
wage, CIS examines many issues, including the flexibility that the shareholders have in setting their own 
compensation; the profitability of the corporation; whether the officer compensation is discretionary as 
opposed to wages which are not discretionary; andlor whether the officer compensation is substantially more 
than the amount of the proffered wage. In addition, the CIS would examine whether the amount of officer 
compensation varies over the course of the pertinent years, and whether the officer receiving the 
compensation is the sole owner/stockholder or majority owner/stockholder. 
In addition, the totality of the circumstances (i.e., other information in the record) should support the fact that 
the petitioner is a viable, profitable enterprise. Such information would include issues examined in Matter of 
Sonegawa, 12 I&N Dec. 612 (BIA 1967). This precedent decision relates to petitions filed during 
-- - 
5 
 According to Barron 's Dictionary qf Accounting Terms 117 (3'* 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 1 18. 
Page 7 
uncharacteristically unprofitable or difficult years but only in a framework of profitable or successful years. In 
Matter of Sonegawa, the courts looked at such issues as the petitioner's longevity, number of employees, and 
reputation, in examining the totality of the petitioner's circumstances. . 
The documentation presented here indicates that as the petitioner's sole shareholderlofficer, 
holds 100 percent of the company's stock. According to the petitioner's 2001, 2002, and 2003 tax returns, 
Mr. 
 elected to pay himself $78,000 in officer compensation each year. The record reflects no further 
substantiation of this compensation, such as W-2 Forms. With regard to the sole shareholder's use of his 
compensation to reduce the corporation's taxable income, the record reflects that while the sole shareholder's 
compensation remain fixed, the petitioner's taxable income rose in the years 2002 and 2003. This would 
suggest that the sole shareholder's compensation is more of a salary rather than a variable compensation to 
reduce tax liability. 
In looking at the officer compensation in relation to the proffered wage, the proffered wage of $19,781 is 
slightly more than 25 per cent of the officer compensation for 2001, namely $78,000. The 1-140 petition also 
reflects that the petitioner has been in business since 1971, although the petitioner submitted no further 
information as to this claimed longevity. While the record indicates a negative net income in the 2001 priority 
year, nevertheless, the petitioner had profitable years in tax years 2002 and 2003, with sufficient net income 
to establish its ability to pay the proffered wage. 
It is noted that while the petitioner's owner has submitted evidence of his willingness to use personal assets to 
pay the proffered wage, he has not submitted any documentation that he would be willing to reduce his 
compensation, which appears to be a fixed salary rather than a variable compensation, to pay the proffered 
wage. 
With regard to the totality of the petitioner's circumstances, the petitioner has submitted no further 
information with regard to its reputation, and overall profitability, particularly in the years prior to the 2001 
priority date and subsequent to this date. Furthermore, the petitioner's gross profits and level of salaries paid 
to its claimed twelve employees, and the sole officer's compensation does not vary significantly over the 
three years in question.6 Such factors suggest a lack of flexibility in allocating the profits of the corporation 
into other legitimate business expenses. Upon examination of the issues identified above, and after examining 
the totality of the petitioner's circumstances, the AAO does not find that the preponderance of the evidence 
shows that the petitioner's sole shareholder could have reallocated the petitioner's officer compensation to 
pay the proffered wage. Thus, the petitioner did not establish its ability to pay the proffered wage in the 
priority year 2001 based on the petitioner's officer compensation. Therefore the petitioner did not establish its 
ability to pay the proffered wage as of the 2001 priority date year and to the present. 
The burden of proof in these proceedings rests solely with the petitioner. Section 291 of the Act, 8 U.S.C. 
9 1361. The petitioner has not met that burden. 
It is noted that the wages paid in the priority year of 2001 were higher than in any of the subsequent two 
years in question. 
- Page 8 
ORDER: The appeal is dismissed.