remanded EB-3 Case: Food Service

jdentiijdng aaib adettij :$ 
prevent clearly un warrsotcd 
invasion of personal privacy 
U.S. Department of Homeland Security 
20 Mass. Ave., N.W., Rm. A3042 
Washington, DC 20529 
U.S. Citizenship 
and Immigration 
Services 
FILE: EAC-03-23 1-50287 Office: VERMONT SERVICE CENTER Date: 2 4 2006 
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. $ 1 153(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. 
~Abert P. Wiemann, Director 
Administrative Appeals Office 
EAC-03-23 1-50287 
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 case will be remanded. 
The petitioner is a delicatessen. It seeks to employ the beneficiary permanently in the United States as a 
counter supervisor. 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 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. 3 204.5(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 profitlloss 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. § 204.5(d). The priority date in the instant 
petition is April 19, 2001. The proffered wage as stated on the Form ETA 750 is $8.50 per hour, which 
amounts to $17,680.00 annually. On the Form ETA 750B, signed by the beneficiary on April 13, 2001, the 
beneficiary claimed to have worked for the petitioner as a kitchen helper from January 1995 to November 
1997, and beginning in February 2000 and continuing through the date of the ETA 750B. The ETA 750 was 
certified by the Department of Labor on January 16,2002. 
The 1-140 petition was submitted on August 5, 2003. On the petition, the petitioner claimed to have been 
established in 1986 and to currently have 7 employees. With the petition, the petitioner submitted supporting 
evidence. 
In a request for evidence (RFE) dated June 9, 2004, the director requested additional evidence. The director 
specifically requested the original Form ETA 750, evidence establishing that the beneficiary possessed the 
required experience, copies of the beneficiary's Form W-2 Wage and Tax Statements for 2000 and 2001, 
copies of the beneficiary's individual income tax returns for 2000 and 2001, and the petitioner's date of birth. 
EAC-03-23 1-50287 
Page 3 
In response to the RFE, the petitioner submitted additional evidence. The petitioner's submissions in response 
to the RFE were received by the director on August 18,2004. 
In a decision dated September 22, 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 denied the petition. 
On appeal, counsel submits a brief and additional evidence. 
Counsel states on appeal that his analysis of the petitioner's assets and liabilities based on the petitioner's income 
tax return for 2001 and precedent AAO decisions demonstrates that the petitioner had the ability to pay the 
proffered wage in 2001. Counsel submits the beneficiary's W-2 Wage and Tax Statements for 2001, 2002, and 
2003, the petitioner's pay statements, and a copy of the petitioner's 1120s U.S. Income Tax Return for an S 
Corporation for 2001 which is 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. Cornm. 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. 
612 (Reg. Cornm. 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 April 13,2001, the beneficiary claimed to have 
worked for the petitioner as a kitchen helper from January 1995 to November 1997, and beginning in February 
2000 and continuing through the date of the ETA 750B. 
The record contains copies of Form W-2 Wage and Tax Statements of the beneficiary. The beneficiary's Form 
W-2's for 2001,2002, and 2003 show compensation received from the petitioner, as shown in the table below.' 
Wage increase 
Beneficiary's actual needed to pay 
Year compensation Proffered wage the proffered wage 
1 
 The record also includes the beneficiary's Form W-2 Wage and Tax Statement for 2000. The beneficiary's Form W-2 
for 2000 is irrelevant because the petitioner has to establish its ability to pay the beneficiary the proffered wage 
beginning on the priority date, which is April 19,2001. 
EAC-03-23 1-50287 
Page 4 
The above information is insufficient to establish the petitioner's ability to pay the proffered wage in 2001, 
2002, and 2003. 
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 Woodcraft Hawaii, Ltd. v. 
Feldman, 736 F.2d 1305 (9" Cir. 1984)); see also Chi-Feng Chang v. ilwrnburgh, 719 F. Supp. 532 (N.D. Tex. 
1989); K.C.P. Food Co., Znc. 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 (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 Return for an S Corporation for 2001. The record before the director closed on August 
19,2004 with the receipt by the director of the petitioner's submissions in response to the RE. As of 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. The petitioner's 1120s U.S. Income Tax Return for an S Corporation for 2002 and 
2003 do not appear in the record. 
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 return for 2001 shows the amounts for taxable income on line 23 of the Schedule K as shown 
in the table below. 
Tax Wage increase needed Surplus or 
year Net income to pay the proffered wage deficit 
200 1 $1,093.00 $1,896.00" -$803.00 
2002 No Information $1,608.75" No Information 
2003 No Information $1,211.25" No Information 
EAC-03-23 1-50287 
Page 5 
* Crediting the petitioner with the compensation actually paid 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 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 for 2001 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 
200 1 -$4,210.00 $1,896.00" 
2002 No Information $1,608.75" 
2003 No Information $1,211.25* 
* Crediting the petitioner with the compensation actually paid 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 states that for 2001, the petitioner "reported a net income in the amount of $1,093.00 as well as cash on 
hand in the amount of $11,148.00, and accounts receivable in the amount of $5,450.00 and $7,193.00 as 'other 
investments' described on Statement 5 [as] cash deposits and $12,075.00 of merchandise to be sold. This yields 
the sum of $35,866.00 to which the net income must be added giving us $36,959.00 in current assets and net 
income." As stated above, current assets include cash on hand, inventories, and receivables expected to be 
converted to cash within one year. CIS calculates a corporation's current assets by combining information 
shown on Schedule L, lines 1 through 6. The $7,139.00 listed on Schedule L, line 14 as "other assets" and 
described on Statement 6, not Statement 5, as "deposits" will not be added to the petitioner's current assets. 
Moreover, counsel's assertion that "the [petitioner's] net income must be added" to its current assets is 
unacceptable because net income and net current assets are not, in the view of the AAO, cumulative. The 
AAO views net income and net current assets as two different methods of demonstrating the petitioner's 
ability to pay the wage--one retrospective and one prospective. Net income is retrospective in nature because 
EAC-03-23 1-50287 
Page 6 
it represents the sum of income remaining after all expenses were paid over the course of the previous tax 
year. Conversely, the net current assets figure is a prospective "snapshot" of the net total of petitioner's assets 
that will become cash within a relatively short period of time minus those expenses that will come due within 
that same period of time. Thus, the petitioner is expected to receive roughly one-twelfth of its net current 
assets during each month of the coming year. Given that net income is retrospective and net current assets are 
prospective in nature, the AAO does not agree with counsel that the two figures can be combined in a 
meaningful way to illustrate the petitioner's ability to pay the proffered wage during a single tax year. 
Moreover, combining the net income and net current assets could double-count certain figures, such as cash 
on hand and, in the case of a taxpayer like the petitioner who reports taxes pursuant to accrual convention, 
accounts receivable. 
Counsel also states that a close examination of the petitioner's current liabilities for 2001 is necessary, and 
$500.00 in capital stock, $2,483.00 in retained earnings, and $8,068.00 in accrued wages should be deducted 
from the petitioner's current liabilities. As stated above, the petitioner's current liabilities are shown on 
Schedule L, lines 16 through 18. Thus, CIS does not include the $500.00 in capital stock and the $2,483.00 in 
retained earning when calculating the petitioner's current liabilities. 
CIS, however, does look at other current liabilities, which includes accrued wages, in calculating the 
petitioner's current liabilities. Counsel states that "[tlhe $8,068.00 listed in accrued salaries do not represent a 
debt or an account payable . . . [but] is the result of the difference between the cash method of accounting 
versus the accrual method of accounting." The petitioner's tax return for 2001 was prepared pursuant to the 
accrual method, in which revenue is recognized when it is earned, and expenses are recognized when they are 
incurred. AAO would, in the alternative, have accepted tax returns prepared pursuant to cash convention, if 
those were the tax returns the petitioner had actually submitted to IRS. This office is not, however, persuaded 
by an analysis in which the petitioner, or anyone on its behalf, seeks to rely on tax returns or financial 
statements prepared pursuant to one method, but then seeks to shift revenue or expenses from one year to 
another as convenient to the petitioner's present purpose. If revenues are not recognized in a given year 
pursuant to the accrual method then the petitioner, whose taxes are prepared pursuant to accrual, may not use 
those revenues as evidence of its ability to pay the proffered wage during that year. Similarly, if expenses are 
recognized in a given year, the petitioner may not shift those expenses to some other year in an effort to show 
its ability to pay the proffered wage pursuant to some hybrid of accrual and cash accounting. The amounts 
shown on the petitioner's tax returns shall be considered as they were submitted to IRS, not pursuant to 
counsel's adjustments. 
Additionally, counsel states that the analysis and standards used in two other AAO decisions "should be applied 
in this case . . . [and need to be] relied upon in this matter." Counsel, in referencing the two decisions, does not 
provide their published citations. While 8 C.F.R. 5 103.3(c), as cited by the counsel, 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. 5 103.9(a). 
Furthermore, counsel states that "the beneficiary is being compensated at a rate above the proffered wage which 
demonstrates the continued ability of the petitioner to pay the proffered wage to this beneficiary." In support of 
this assertion, counsel submits the petitioner's pay statements for September and October 2004 to show that in 
those two months, the beneficiary was paid $9.00 per hour, which is above the proffered wage of $8.50 per hour. 
The petitioner has to establish its ability to pay the beneficiary the proffered wage beginning on the priority 
date of the visa petition, which is April 19, 2001. Thus, the fact that the petitioner is currently paying a higher 
wage per hour than the proffered wage does not eliminate the fact that the beneficiary was paid less than the 
EAC-03-23 1-50287 
Page 7 
annual proffered wage in 2001, 2002, and 2003. Additionally, the evidence submitted only shows that the 
beneficiary was paid a higher wage per hour during two pay periods, and the record does not show that the 
beneficiary did in fact receive a wage equal to or higher than the proffered wage for all of 2004. 
Despite the foregoing, 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. Comm. 1967). Based on 
evidence in the record, the beneficiary was paid $15,784.00 in 2001, and the wage increase needed to pay the 
proffered wage in 2001 is $1,896.00. The petitioner's 1120s U.S. Income Tax Return for an S Corporation for 
2001 shows that the petitioner had a net income of $1,093.00 in 2001, so that, combined with the wage paid, 
shows that the petitioner had $803.00 less than the necessary amount to pay the proffered wage in 2001. 
According to the petitioner's 1120s U.S. Income Tax Return for an S Corporation for 2001, officers were 
compensated $104,000.00. 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. 
However, CIS, in looking at the totality of circumstances, may examine the financial flexibility that the 
owners have in setting their salaries based on the profitability of their corporation. In this case, the petitioner 
is equally owned by three individuals. Even though it is unlikely that an officer would forego a large part of 
his or her compensation in order to pay the salary of an employee, in this case, $803.00 is 0.77% of the total 
amount of compensation paid to the officers. It is possible that each of the three officers would have been 
willing to forego 0.77% of his or her compensation. Thus, in looking at the totality of circumstances, the 
petitioner had the ability to pay the proffered wage in 2001. 
In her decision, the director erred in stating that the petitioner had -$3,236.00, which is the combination of the 
petitioner's net income and net current assets, to pay the beneficiary. As stated above, net income and net 
current assets are not, in the view of the AAO, cumulative. In addition, when looking at the totality of 
circumstances, it appears that the petitioner, contrary to the director's decision, had the ability to pay the proffered 
wage in 2001. However, a showing that the petitioner had the ability to pay the proffered wage in 2001 is 
insufficient for the appeal to be sustained because the petitioner must show the ability to pay the proffered wage 
beginning on the priority date and continuing until the beneficiary obtains lawful permanent residence. In an RFE 
issued on June 9, 2004, the director did not request evidence of the petitioner's ability to pay the proffered wage 
in 2002 and 2003. In a decision issued on September 22, 2004, the director only discussed the petitioner's ability 
to pay the proffered wage in 2001. The record, therefore, lacks evidence of the petitioner's ability or inability to 
pay the proffered wage in 2002 and 2003, and such evidence was never requested from the petitioner or 
discussed. 
In view of the foregoing, the previous decision of the director will be withdrawn. The petition is remanded to 
the director for consideration of the issue stated above -- whether the petitioner had the ability to pay the 
proffered wage in 2002 and 2003. The director may request any additional evidence considered pertinent. 
Similarly, the petitioner may provide additional evidence within a reasonable period of time to be determined 
by the director. Upon receipt of all the evidence, the director will review the entire record and enter a new 
decision. 
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 director's decision is withdrawn. The petition is remanded to the director for further 
action in accordance with the foregoing and entry of a new decision, which, if adverse to the 
petitioner, is to be certified to the AAO for review.