The National Law Review recently published an article by Kate Kalmykov of Greenberg Traurig, LLP regarding I-526 Requests for Evidence:
1. Lack of five years of tax returns. In countries where tax returns are not readily available it is advisable for applicants to provide copies of the relevant sections of the law that explain the tax filing requirements, as well as corroborating evidence from independent third parties such as accountants. In certain countries employers pay taxes directly on their employees. In these cases it is advisable that EB-5 investors request this documentation directly from their employer or a corroborating letter attesting to their salary and compliance with the tax filing requirements of their home country.
2. Sale of Property. USCIS seems to be requesting extensive documentation related to the sale of property if it was purchased less than 7 years ago. Investors are advised to present sales contracts, deeds, and bank statements showing the sale and transfer of proceeds from the sale of property. In cases where property was purchased over 7 years ago and evidence is not readily available, as long as a reasonable explanation for the lack of funds is given, USCIS seems to be showing more leniency.
3. Home Equity Loans as Source of Funds. As the EB-5 program grows in popularity, many investors, particularly those from China have begun to obtain home equity loans for their EB-5 investments. While investment through loan proceeds are permitted in EB-5, USCIS requires that the Investor prove that they have secured the loan with collateral as well as evidence that they are able to make payments on the loan from a lawful source.
4. Loans from a Petitioner’s Business, another popular source of EB-5 investment funds, particularly with Chinese nationals. In these cases, USCIS often requests proof of approval from the company’s Board of Directors for issuance of the loan. Likewise, USCIS requires proof that the investor has the ability to repay the loan.
5. Petitioner’s Salary. USCIS often requests evidence to show that the investor has a level of income and savings that enables the investor to make the EB-5 investment. To this end, USCIS may request proof of the investor’s yearly expenses as well as records of ongoing salary.
6. Retained Earnings from Investor’s Business. Investors must demonstrate that they were allowed access to the funds that they ultimately used for their EB-5 investment and that they had authority to make distributions to themselves.
7. Gift Taxes. More and more USCIS is requesting proof that the investor has complied with the home country’s gift tax requirements. Likewise, the giftor must demonstrate their source of funds, as well as their understanding that the gift was made without an expectation of repayment.
8. Use of Intermediaries. In some countries, like China individuals are restricted in the amount of foreign currency that they can exchange each year. Where “friends and family” are used to assist in transferring money out of the country, bank statements or currency exchange receipts are often required to demonstrate:
- Transfers from the investor to the friends and family members
- Transfers from each friend and family member to the investor’s overseas account
- Transfer from the Investor to the Regional Center
9. Proof of Common Country Specific Currency Practices. Many countries operate on a “cash” economy and money is not often deposited in banks. In these instances, it is important to provide independent, third-party evidence of these practices to account for any “gaps” in the trace of funds.
10. Proof of Source of Administrative Fee. In addition to the required $500,000 (TEA investments) or $1,000,000 investment amount required by the EB-5 regulations, regional centers often charge a one-time administrative fee ranging from $30,000-60,000 to each investor. EB-5 investors that have been through the process know that the regulations only require that they demonstrate the source of their EB-5 investment. Not their entire net worth or earnings over time. However, USCIS has begun to impose an additional requirement as of late by requesting that investors demonstrate the source and trace of their administrative fee.
©2012 Greenberg Traurig, LLP
