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Imigration Law Update


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Overview of the EB-5 Visa,the types, family immigration law

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Imigration Law Update

  2. 2. EB-5 Program Overview • Two types of EB-5 cases: Individual and Regional Center (RC) • Approximately 90-95% of EB-5 cases are filed through Regional Center Program. • 10,000 “EB-5” immigrant visas per year • $500,000 or $1 million investment • Conditional green card – after 2 years investor needs to remove conditions if investment is sustained and jobs are created
  3. 3. Family Immigration • Who can immigrate with the investor Spouse Unmarried children under 21 • “Aging out” children
  4. 4. EB-5 Structure There are four steps to becoming a Lawful Permanent Resident (LPR) through the EB-5 program 1. Form I-526 immigrant petition approval (9 months adjudication) 2. Adjustment of Status (4-6 months) or Immigrant Visa Consular Processing (6-10 months) 3. Receive 2-year conditional permanent resident (CPR) status 4. Between 21-24 months of receiving CPR status, file Form I-829 petition to remove the conditions (6-8 months) 5. In about 2.5 years, eligible to apply for citizenship
  5. 5. Regional Center • Regional Center – business entity approved by USCIS that coordinates EB-5 investment • Multiple Regional Centers in the same geographic location • Specific Industries • Choosing Regional Center:  Track record of success - I-526 and I-829 approvals  Return of Investment  Conditions of Investment  Reporting on status of investment to investors  Loan or equity projects
  6. 6. Regional Center Exit Strategy • 5-7 years after investment • Resale of investment share or the project property • Outright sale of the property to another public or private investor • Non-recourse leveraged refinancing of the property and distribution to investors of the excess proceeds as “return of capital” • Sale of the interest to a third party investor, including another managed fund, or co-investor or co-developer • Tax-free exchange or swap • Exchange with an “UPREIT” (tax-free) for listed shares in a real estate investment trust or similar public property investment vehicle
  7. 7. Individual v Regional Center EB-5 Individual EB-5 • Investor creates a new business or buys an existing business • $1 million investment amount unless the business is in Targeted Employment Area • 10 direct jobs (W-2) • Engagement in the enterprise (investor cannot have merely passive role) Regional Center EB-5 • Investment in a Regional Center • $500,000 investment amount as most RCs are in TEAs • Indirect jobs count • Investor can be a limited partner, less active role
  8. 8. Individual v Regional Center EB-5 Regional Center EB-5 Individual EB-5  Manage your own business  No need to manage business  Control profits  Creation of jobs possible for  Perfect for retirees the business  Immigration is main concern  Profits are marginal  Limited control over investment  Easy to show job creation  RC will take care of most of the paperwork
  9. 9. General Requirements • Invest capital - $500,000 or $1 million obtained from lawful source • In a New Commercial Enterprise: Created after 11/29/1990; or Restructured or Reorganized; or Expand business resulting in 40% increase in net worth or number of employees • At risk investment • Engage in Management or Policy Formulation • Create or Save 10 full-time jobs for USC, LPR
  10. 10. Investment of Capital • Invested or in the process of investment • Investment must be maintained throughout conditional resident period • Reduced capital threshold of $500,000 if Targeted Employment Area (TEA)  “High unemployment area” – at least 150% of national average, OR  “Rural area” – not within an MSA and not within boundary of any city or town having a population of 20,000 or more
  11. 11. Lawful Source of Capital • 5 years of income tax return required (business and personal) • If foreign country does not have tax return filing requirement – must prove it • Evidence of lawful acquisition of capital  Business earnings  Salary  Gifts  Loans  Sale of Real Estate • Tracing of Funds from Investor to Enterprise
  12. 12. New Commercial Enterprise • Any for-profit business • “New” – means formed after 11/29/1990 • New Commercial Enterprise may be a preexisting business if was created after 1990 • If formed before, have to show substantial reorganization or restructuring - complete transformation of nature of business • Expansion of existing business resulting in 40% increase in net worth or number of employees
  13. 13. “At risk” Investment • Capital can include cash, equipment, inventory or tangible property • Equity interest is required (stock, LLC/LP interest, etc.) • Commitment of capital without guaranteed return • Loans to enterprise will not work • No guaranteed distributions or redemption provisions • May use escrow, conditioning release of funds to enterprise upon approval of I-526
  14. 14. Engage in the Enterprise • Day-to-day managerial control, or • Policy formulation • Corporate officer, board member, limited partner with rights and responsibilities of ULPA • Passive investor will not qualify
  15. 15. Job Creation • Investment must create 10 full-time jobs for 10 workers (USC, LPR, asylee or refugee) • Prove employment with W-2, I-9, payroll records • Independent contractors do not count • Business Plan should detail the timeline for job creation
  16. 16. Job Creation • At Removal of Conditions stage, must show jobs were created or can be expected to be created within a reasonable period of time • Direct vs Indirect Jobs (RC) Direct – employees of the enterprise Indirect – jobs created collaterally or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor.
  17. 17. Job Creation – Troubled Business • Job Creation Exception – Troubled Business • Troubled Business  Has been in existence for at least 2 years  Has incurred a net loss during the 12- or 24-month period prior to I-526 filing, and  The loss for such period is at least equal to 20% of net worth prior to such loss • Focus on preserving jobs  Number of existing employees must be maintained during conditional period  Total positions must be at least 10 (e.g. 8 saved and 2 created)
  18. 18. EB-5 Considerations • Removal of Conditions in 2 years: Capital invested/sustained, jobs created/preserved • Trends in Adjudication • Statistics – over 90% RC EB-5
  19. 19. Other Visa Options • E-2 Investment Visa – Investment can later be used for EB-5 • L-1A Intra-Company Transferee Visa • H-1B Work Visa
  21. 21. Jacob J. Sapochnick, Esq. 619-819-9204