sustained EB-3 Case: Manufacturing

U.S. Department of Homeland Security 
20 Mass. Ave., N.,W., #m. 3000 
Wash~ngton, DC 20529 
U. S. Citizenship 
and Immigration 
Services 
PUBLIC CIOQY 
 L, 
1. 
FILE: Office: VERMONT SERVICE CENTER Date: 
m22zoos 
IN RE: Petitioner: 
Beneficiary: 
PETITION: Immigrant petition for Alien W.orker as a Skilled Worker or Professional pursuant to section 
203(b)(3) of the Immigration and Nationality Act, 8 U.S.C. 5 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. 
+dministratlve Appeals Office 
Page 2 
DISCUSSION: The preference visa petition was denied by the Acting Center Director (Director), Vermont 
Service Center, and is now before the Administrative Appeals Office (AAO) on appeal. The appeal will be 
sustained. 
The petitioner is a manufacturer of warp knit fabrics. It seeks to employ the beneficiary permanently in the 
United States as a maintenance mechanic. As required by statute, the petition is accompanied by a Form ETA 
750, Application for Alien Employment Certification (labor certification application or Form ETA 750), 
approved by the Department of Labor. 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. 
Counsel filed a timely appeal with a brief and additional evidence.' 
Section 203(b)(3)(A)(i) of the Immigration and Nationality Act (the Act), 8 U.S.C. 9 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 demonstiate 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 CFR 
tj 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 April 27, 2001. The proffered wage as stated on the Form ETA 
750 is $17.60 per hour ($36,608 per year). The Form ETA 750 states that the position requires one (1) year of 
training in electronics or computers and two (2) years of experience in the job offered. On the Form ETA 
1 
The submission of additional evidence on appeal is allowed by the instructions to the Form I-290B, which 
are incorporated into the regulatiofis by the regulation at 8 C.F.R. tj 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 AAO will first evaluate the decision of the director, based on the 
evidence submitted prior to the director's decision. The evidence submitted for the first time on appeal will then 
be considered. 
,750B signed by the beneficiary on April 19, 2001, the beneficiary did not claim to have worked for the 
petitioner. On the petition, the petitioner claimed to have been established in 1979, to have a gross annual 
income of $3,549,675, to have a net annual income of $825,042, and to currently employ 26 workers. 
With the petition, the petitioner submitted its Form CBT-100, New Jersey Corporation Business Tax Return 
for 2001 pertinent to its ability to pay the proffered wage. On May 9, 2005, the director issued a request for 
evidence (RFE) for the petitioner's US federal tax returns for 2001 through 2004 or annual reports for 2001 
through 2004 with audited or reviewed financial statements and W-2 forms for the beneficiary. In response to 
the RFE, the petitioner submitted Forms CBT-100 for its fiscal years 2001 through 2004. 
The director denied the petition on January 11; 2006, finding that the evidence submitted with the petition and 
in response to the RFE did not establish that the petitioner had the continuing ability to pay the proffered 
wage beginning on the priority date. 
On appeal, counsel asserts that the evidence submitted on appeal and the totality of circumstance establish the 
petitioner's continuing ability to pay the proffered wage from the priority date. 
In determining the petitioner's ability to pay the proffered wage during a given period, Citizenship and 
Immigration Services (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 record of proceeding contains the 
petitioner's Form 941 Employer's Quarterly Federal Tax Return, Form W-3 Transmittal of Wage and Tax 
Statements and Form W-2 Wage and Tax Statement for all employees for 2001, 2002 and 2003. However, 
the petitioner did not submit evidence that the petitioner paid any compensation to the beneficiary, nor did the' 
beneficiary claim to have worked for the petitioner. In general, wages already paid to others are not available to 
prove the ability to pay the wage profferect-to the beneficiary at the priority date of the petition and continuing to 
the present. Therefore, the petitioner has not established that it employed and paid the beneficiary the 
proffered wage during the period from the priority date to the present. 
If the petitioner does not establish that it employed and paid the beneficiary an ainount 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-~en~ 
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), aff'd, 703 F.2d 571 (7th Cir. 1983). 
Reliance on the petitioner's gross receipts, depreciation/amortization deduction or wage expense is misplaced. 
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 returns, 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 court in Chi-Feng Chang further noted: 
Page 4 
Plaintiffs also contend the depreciation amounts on the 1985 and 1986 returns are non-cash 
deductions. Plaintiffs thus request 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 Elatos, 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 
Despite the director's specific request for federal tax returns in the RFE, the petitioner submitted New Jersey 
tax returns instead. The record of proceeding contains copies of the petitioner's Form CBT-100 New Jersey 
Corporation Business Tax Return for its fiscal years 2001 through 2004. The evidence shows that the 
petitioner is structured as a C corporation and the fiscal years last from August 1 to July 3 1. The tax returns 
demonstrate the following financial information concerning the petitioner's ability to pay the proffered wage 
of $36,608 per year from the priority date. 
In the fiscal year 2001 (811100-7/31/01), the Form CBT-100 stated net income2 of $(224,781). 
In the fiscal year 2002 (81110 1-713 1/02), the Form CBT-100 stated net income of $1 69,640. 
In the fiscal year 2003 (811102-713 1/03), the Form CBT-100 stated net income of $105,679. 
In the fiscal year 2004 (811103-713 1/04), the Form CBT-100 stated net income of $14,124. 
Therefore, for the fiscal years 2001 and 2004, the petitioner did not have sufficient net income to pay the 
proffered wage while the petitioner established its ability to pay the proffered wage for the fiscal years 2002 
and 2003. 
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. On appeal counsel claims that the petitioner had the total assets of 
$1,955,542, $1,930,582, $1,494,544 and $1,390,054 in the years 2001 through 2004 respectively. Contrary to 
counsel's assertion, the AAO rejects the idea that the petitioner's total assets should have been considered in 
the determination of the ability to pay the proffered wage. 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. 
2 
 CIS considers taxable income before net operating loss deduction and special deductions as reported on Line 
28 of Form 1120 as the petitioner's net income in purpose of immigration visa processing. Similarly in the 
instant case we consider Form CBT-100 Schedule A Line 28, Taxable income before net operating loss 
deductions and special deductions as net income. See Line 28, Schedule A, Form CBT-100 "Taxable income 
before net operation loss deductions and special deductions line 11 less line 27 must agree with line 28, page 
1 of the Unconsolidated Federal Form 1120, or the appropriate line item from the Federal Forms 1120-IC- 
DISC, 1120-FSC or 1120-A, whichever is applicable. 1120-S filers who have not elected to be New Jersey S 
Corporations must report the amount from line 7, Schedule S-1 of the CBT-loo)." 
Page 5 
Net current assets are the difference between the petitioner's current assets and current liabilitie~.~ 
 A 
corporation's year-end current assets are usually shown on Schedule L, lines 1 through .6 of Form 1120, and 
its year-end current .liabilities are shown on -lines 16 through 18.   ow ever, in the instant case, since the 
petitioner submitted New Jersey Form CBT-100 instead of federal Form 1120, the petitioner's year-end 
current assets are shown on Schedule B, lines 1, 2, 7, 8, and 1 7,4 and the year-end current liabilities are shown 
on lines 21 through 23.' If the total of a 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 were $122,985 in 2001 
and $(23,527) in 2004. Therefore, the petitioner had sufficient net current assets to pay the proffered wage of 
$36,608 in 2001 but the petitioner's net current assets were not sufficient for the proffered wage in 2004. 
Counsel asserts in his brief accompanying the appeal that there is another way to determine the petitioner's 
ability to pay the proffered wa e from the riority date. Counsel submits Form 1120 U.S. Corporation 
Income Tax Return filed by g. and Subsidiaries for the fiscal years 2001 through 2004 and 
asserts that the petitioner is.a subsidiary of - -Evidence shows that 
owns 100% of shares of the,petitioner, however, both the petitioner and 
C corporations with their own federal employer identification numbers. Contrary to counsel's assertion, 
because a corporation is a separate and distinct legal entity from its owners and shareholders, the 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. See Matter ofAphrodite Investments; Ltd., 17 I&N Dec. 530 
(Cornm. 1980). In a similar case, the court in Sitar v. Ashcroft, 2003 WL 22203713 (D.Ma?s. Sept. 18,2003) 
Ytated, "nothing in the regulation, 8 C.F.R. 5 204.5, permits. [CIS] to consider the financial 
resources of individuals or entities who have no legal obligation to pay the wage." In the instant case, the 
income or assets of the parent company, cannot be considered in determining the 
petitioner's ability to pay the proffered wage. 
On appeal, counsel submitted - and Subsidiaries' reviewed financial statements for the 
fiscal years 2001 through 2005. The regulation at 8 C.F.R. § 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 
accountant's report that accompanied those financial statements makes clear that they are reviewed 
statements, as opposed to audited statements. The unaudited financial statements that counsel submitted with 
the petition are not persuasive evidence. Reviews are governed by the American Institute of Certified Public 
Accountants' Statement on Standards for Accounting and Review Services (SSARS) No. 1 ., and accountants 
only express limited assurances in reviews. As the account's report makes clear, the financial statements are 
the representations of management and the accountant expresses no opinion pertinent to their accuracy. The 
3 
 According to Barron 's Dictionary of Accounting Terms 117 (3'd 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 note's payable, and accrued expenses (such as taxes and salaries). Id. at 118. 
4' 
Line 1. Cash; Line 2. Trade notes and accounts receivable; Line 7. New Jersey State and Local government 
obligations; Line 8. All other government obligations; and Line 17. Inventories. 
Line 21. Accounts payable; Line 22. Mortgages, notes, bonds payable in less than 1 year; and Line 23. 
Other current liabilities. 
Page 6 
unsupported representations of management are not reliable evidence and are insufficient to demonstrate the 
ability to pay the proffered wage. 
Counsel recommends the use of retained earnings to pay the proffered wage. 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 andlor 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 
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. 
 . , +. .:,. -- 
Counsel's argument concerning the petitioner's size, longkvity, and number of employees, however, cannot 
be overlooked. Although CIS will not consider gross income without also considering the expenses that were 
incurred to generate that income, the overall magnitude;of the entity's business activities should be considered 
when the entity's ability to.pay is marginal or borderline. See Matter of Sonegawa, 12 I&N Dec. 612 (Reg. 
Comm. 1967); In the present case, the petitioner:is:a manufacturer of warp kit fabrics, was incorporated in 
1979, and has been in business for 22 years at the time the Form ETA 750 was filed. The petitioner had $3.5 
million in gross receipts and paid out $285,644 in wages and compensation of officers during the year in 
which the priority date was established.i~he record shows that the petitioner had gross receipts of more than 
$3.3 million, and paid officer's compe&ation of $348,612 and salaries and wages of $122,461 in 2004. After 
reviewing the totality of circumstanceslin 2004, the AAO found that the petitioner has the ability to pay the 
proffered 'wage in 2004 while it established its ability to pay in 2001 through 2003 with its net income or net 
current assets. 
Finally, the Immigrant Petition for Alien Worker (Form 1-140) indicated that the proffered position was not a 
new position, thereby .implying that the beneficiary would be replacing a previously hired employee. 
Although the director did not inquire into this question in the RFE, the validity of the job offer would be 
further strengthened if the beneficiary had been replacing and assuming the salary of an employee who had 
left the organization. However, as the record is devoid of evidence regarding the identity and actual salary of 
the previous employee, this factor may not be considered in the current matter. Regardless, a review of the 
record confirms that the job offer is realistic and can be satisfied by the petitioner. See Matter of Great Wall, 
16 I&N Dec. 142 (Acting Reg. Cornrn. 1977). Thus, assessing the totality of circumstances in this individual 
case, it is concluded that the petitioner has proven its financial strength and viability and has the ability to pay 
the proffered wage. 
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 met that burden. 
ORDER: The appeal is sustained. The decision of the director is withdrawn. The petition is approved.