dismissed EB-3 Case: Stonemasonry

identifyingdatadeletedto
preventclearlyunw~ted
invasionof personalpnvacy
U.S. Department of Homeland Security
20 Mass. Ave., N.W.,Rm. 3000
Washington, DC 20529
us. Citizenship
and Immigration
Services
EAC 05 041 50077
Offic~: VERMONT SERVICE CENTER Date: Q 0 1 2006
INRE:
PETITION:
Petitioner:
Beneficiary:
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. § 1 I53(b)(3)
, ON BEHALF OF PETITIONER:
INSTRUCTIONS:
This is the decision of the Administrative Appeals Office in your case. All documents have been returned to
the office that originally decided your case. Any further inquiry must be made to that office.
Robert P. Wiemann, Chief
Administrative Appeals Office
EAC 05 041 50077
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 a residential and commercial contractor. It seeks to employ the beneficiary permanently in
the United States as a stonemason. 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.
The record shows that the appeal is properly filed and timely and makes a specific allegation of error in law or
fact. The procedural history of this case is documented in the record and is incorporated into this decision.
Further elaboration of the procedural history will be made only as necessary.
As set forth in the director's February 16, 2005 decision denying the petition, the single issue in this case is
whether the evidence establishes the petitioner's 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 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.
Section 203(b)(3)(A)(ii) of the Immigration and Nationality Act (the Act), 8 U.S.C. § 1153(b)(3)(A)(ii),
provides for the granting of preference classification to qualified immigrants who hold baccalaureate degrees
and who are members of the professions.
Section 203(b)(3)(A)(iii) of the Immigration and Nationality Act (the Act), 8 U.S.C. § 1153(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(g)(2) states:
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 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 profit/loss 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
EAC 05 041 50077
Page 3
employment system of the Department of Labor. See 8 C.F.R. § 204.5(d). The priority date in the instant
petition is April 30, 2001. The proffered wage as stated on the Form ETA 750 is $30.69 per hour for 35 hours
per week, which amounts to $55,855.80 annually.
The AAO reviews appeals on a de novo basis. See Dorr v. INS. 891 F.2d 997, 1002, n. 9 (2d Cir. 1989). The
AAO considers all pertinent evidence in the record, including any new evidence properly submitted on
appeal.
In the instant appeal, counsel submits a brief and additional evidence.
Relevant evidence submitted on appeal includes tax information relevant to an S corporation. Other relevant
evidence in the record includes the petitioner's 2001 federal income tax return.
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. § 103.2(a)(1). The record in the instant case
provides no reason to preclude consideration of any of the documents newly submitted on appeal. See Matter
ofSorian 0 , 19 I&N Dec. 764 (BIA 1988).
On appeal, counsel states that the director "neglected to consider .that the petitioner is an S Corporation and
that as such, [the] petitioner's shareholders' personal assets received as 'compensation to officers' are the
assets of the corporation." Counsel states further that the petitioner's 2001 federal tax return reflects that
$126,200.00 was paid as compensation to officers, part of which could have been paid to the beneficiary.
Counsel states, in part: "Had the petitioner employed the beneficiary in 2001, the petitioner could have paid
the beneficiary the proffered wage of $55,855.80, and the remainder of the corporation's income would have
been distributed among the officers."
It is noted that evidence in the record, namely the Form G-325A, Biographic Information, which was signed
by the beneficiary on August 5, 2004, reflects that the beneficiary did work for the petitioner in 2001. In fact,
the beneficiary claimed to have worked for the petitioner from July 2000 through the "present." The record,
however, does not contain any evidence that the petitioner paid the beneficiary a salary. It is incumbent upon
the petitioner to resolve any inconsistencies in the record by independent objective evidence. Any attempt to
explain or reconcile such inconsistencies will not suffice unless the petitioner submits competent objective
evidence pointing to where the truth lies. Matter ofHo, 19 I&N Dec. 582, 591-92 (BIA 1988). 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 of Ho, 19 I&N Dec. 582, 591 (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&NDec. 142 (Acting Reg. Comm. 1977). See also
8 C.F.R. § 204.5(g)(2). For each year at issue, the petitioner's financial resources generally must be sufficient
to pay the annual amount of the beneficiary's 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).
EAC 05 041 50077
Page 4
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 April 14,2001, the beneficiary claimed to
have worked for the petitioner beginning in (left blank) and continuing through the date of the ETA 750B. As
discussed above, the beneficiary claimed to have worked for the petitioner from July 2000 through the present
on Form G-325A, Biographic Information, which was signed by the beneficiary on August 5, 2004. The
record, however, contains no W-2 forms or other documentary evidence that the petitioner employed the
beneficiary at a salary equal or greater than the proffered wage.
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. SUppa 1049,1054 (S.D.N.Y. 1986) (citing Tongatapu Woodcraft Hawaii, Ltd v.
Feldman, 736 F.2d 1305 (9 th 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. SUPPa 647
(N.D. Ill. 1982), aff'd., 703 F.2d 571 (7 th Cir. 1983). In KC.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. SUPPa 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. SUpPa at 1054.
The evidence indicates that the petitioner is an S corporation. The record contains a copy of the petitioner's
Form 1120S U.S. Income Tax Return for an S Corporation for 2001. The record before the director closed on
February 16, 2005 without requesting additional evidence from the petitioner. As of that date the petitioner's
federal tax return for 2004 was not yet due. The petitioner, however, did not submit federal tax returns or
other regulatory-prescribed evidence for 2002 and 2003. Thus, CIS is able to analyze the petitioner's federal
tax return information for 2001 only.
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 11208. 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 1a through 21." Where an S corporation has income from sources
other than from a trade or business, that income is reported on Schedule K. An S corporation's total income
frOITI its various sources are reported on lines 1 through 6 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 5 of 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.
Similarly, some deductions appear only on the Schedule K. The cost of business property elected to be treated
as an expense deduction under Section 179 of the Internal Revenue Code, rather than as a depreciation
deduction, is carried over from line 12 of the FOrITI 4562 to line 8 of the Schedule K. See Internal Revenue
Service, Instructions for Form 4562 (2003), at 1, available at http://www.irs.gov/pub/irs-prior/i4562-­
2003.pdf; Internal Revenue Service, Instructions for Form 1120S (2003), at 22, available at
EAC 05 041 50077
Page 5
http://www.irs.gov/pub/irs-prior/i 1120s--2003 .pdf.
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, for income.
In the instant petition, the petitioner's tax return indicates income from activities other than from a trade or
business or additional relevant deductions. Therefore the figures for ordinary income on line 21 of page one
of the petitioner's Form 1120S tax return do not include portions of the petitioner's income or all of its
relevant deductions. For this reason, the petitioner's net income must be considered as the total of its income
from various sources as shown on the Schedule K, minus certain deductions which are itemized on the
Schedule K. The results of these calculations are shown on Line 23 of the Schedule K, for income.
In the instant case, the petitioner's tax return shows the following amount for income on line 23, Schedule K
as shown in the table below.
Tax
year
2001
Net income
$20,763.00
Wage increase needed
to pay the proffered wage
$35,092.80
Surplus or
deficit
-$35,092.80
The above information is insufficient to establish the petitioner's ability to pay the proffered wage in any of
the years at issue in the instant petition.
As an alternative means of determining the petitioner's ability to pay the proffered wages, 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 attached to the petitioner's tax return yield the amount for year-end net
current assets as shown in the following table.
Tax
year
2001
N-et
current
assets
$6,226.00
Wage increase needed
to pay the proffered wage
$49,629.80
Surplus or
deficit
-$49,629.80
Therefore, for the year 2001, the petitioner did not have sufficient net current assets to pay the proffered
wage.
For an S corporation, however, there are other considerations. 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
EAC 05 041 50077
Page 6
compensation of officers may be considered as additional financial resources of the petitioner, in addition to its
figures for ordinary income.
The documentation presented here indicates that holds 100 percent of the company's stock and
~the per.sonal services of the residential and commer.cial contractor bUSil1.ess. According to _
_ 2001 IRS Form 1120S Compensation of Officers, reported on Line 7 of page 1, he elected to pay
himself $126,200 in 2001. It is noted that the record contains no evidence to corroborate this amount, such as Mr.
_ 2001 W-2 Form and/or quarterly wage reports.
CIS (legacy INS) has long held that it may not "pierce the corporate veil" and look to the assets of the
corporation's owner to satisfy the corporation's ability to pay the proffered wage. It is an elementary rule that a
corporation is a separate and distinct legal entity from its owners and shareholders. See Matter ofM, 8 I&N Dec.
24 (BIA 1958), Mattera! Aphrodite Investments, Ltd, 17 I&NDec. 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 the present case, however, CIS would not be examining the personal assets of the petitioner's owner, but,
rather, the financial flexibility that the employee-owner has in setting his salary based on the profitability of his
corporation. It is noted that the officer's compensation for 2001 is $91,107.20 greater than the proffered wage
minus the net income. The record of proceeding, however, does not contain evidence that would demonstrate that
the sole officer could or would forego approximately 28 percent of his officer's compensation in 2001 that could
be redistributed towards having sufficient funds to pay the difference between the wages actually paid to the
beneficiary and the proffered wage in that year. Further, as discussed above, the record of proceeding does not
contain federal tax returns or other regulatory-prescribed evidence for 2002 and 2003.
Counsel's assertions on appeal cannot be .concluded to outweigh the evidence presented in the tax return 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.
Based on the foregoing analysis, the evidence in the record fails to establish the petitioner's ability to pay the
proffered wage as of the priority date and continuing until the beneficiary obtains lawful permanent residence.
In his decision, the director correctly stated the petitioner's net income in 2001 \ and correctly calculated the
petitioner's year-end net current assets for that year. The director found that those amounts failed to establish
the petitioner's ability to pay the proffered wage in that year. The decision of the director to deny the petition
was correct, based all the evidence in the record before the director.
The petition will be denied for the above stated reasons, with each considered as an independent and
alternative basis for denial. In visa petition proceedings, the burden of proving eligibility for the benefit
sought remains entirely with the petitioner. Section 291 of the Act, 8U.S.C. § 1361. Here, that burden has not
been 111et.
ORDER: The appeal is dismissed.
1 In his decision, the director inadvertently typed 2002, as opposed to 2001.