U.S. Immigration Environment And Its Impact on Business

Presented by:

Shahrzad Allen Dan Fales

Today’s Speakers Shahrzad Allen, Attorney at Law Shahrzad practices in the area of Immigration and Naturalization law. She has an in-depth understanding of the immigration process both nationally and globally. She keeps abreast of changes in the law and has deep experience in all aspects of immigration, including family-based, employment-based and investment-based immigrant and non-immigrant visa programs. She has successfully represented clients from all over the world before the United States Citizenship and Immigration Services and various U.S. consulates. Additionally, Shahrzad has counseled and represented a diverse corporate client base ranging from small family owned businesses to multinational corporations.

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Today’s Speakers Dan Fales, Shareholder, Clark Schaefer Hackett Dan works with clients on both inbound and outbound international issues. He has been involved in transactional matters including international restructurings, mergers, acquisitions, and financings. He works with U.S. companies as they make their first forays into international operations and provides clients with tax favorable structures for international expansion. Dan serves as the primary advisor to the shareholders and owners of various closely-held and family-owned businesses, providing counsel on their global and U.S.-based income, estate taxes, and succession planning. When his clients are multinational taxpayers, or executives with overseas assignments, Dan has the specialization to plan strategies that minimize their potential tax liabilities.

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U.S. Immigration Environment And Its Impact on Business

Presented by:

Shahrzad Allen Dan Fales

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Shahrzad P. Allen Attorney at Law

Immigration and Naturalization

OFFICE: 937-813-8091

FAX: 937-813-8526

EMAIL : SPALAW@EARTHLINK.NET

3460 S DIXIE HWY

2ND FLOOR

DAYTON, OH 45439

Acronyms And Definitions

DHS: The Department of Homeland Security

USCIS: U.S. Citizenship and Immigration Services

CBP: Customs and Border Protection

DOS: The Department of State

Petitioner: U.S. Entity/ Employer

Beneficiary: Foreign National Employee

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U.S. Visa: Permission to travel to a port of entry and request permission to enter the U.S.

NONIMMIGRANT VISA Visa Issued to those who intend on being in the U.S. on a temporary basis: • As a tourist • To receive medical treatments • For business • To attend a college or university • For temporary employment

Limited duration and does not lead to obtaining permanent residency in the U.S.

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IMMIGRANT VISA Visa issued to those who intend to live in the U.S. permanently and give up their permanent residence outside of the U.S.

U.S. Visa: Permission to travel to a port of entry and request permission to enter the U.S.

EMPLOYMENT BASED VISAS H-1B L-1

INVESTMENT BASED VISAS E-2 EB-5

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Basic Criteria of the H-1B Visa Allows U.S. employers to petition for foreign nationals who will temporarily perform services in a specialty occupation for the petitioning entity

The “specialty occupation” standard • The position offered must require a U.S. bachelor’s degree • The Beneficiary must posses a U.S. degree or its equivalent • The salary for the position must be at or higher than the “prevailing wage”

Petitioning company must file a Labor Condition Application with the Department of Labor and obtain its approval before filing an H-1B petition

Often used by petitioning entities to hire engineers, medical doctors, professors and scientist

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H-1B VISA

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Requirements • Specialty occupation • Employee qualifies for the

specialty occupation • Certified Labor Condition

Application • Valid employment relationship

Duration • Initial visa is usually issued for up

to three years • May be extended for an

additional period of up to three years

• Maximum validity period of six years

H-1B Cap There is a congressionally-mandated limit per fiscal year • 65,000 visas available for bachelor-level positions • Additional 20,000 for U.S. Master’s degree or higher degree

graduates • Beneficiaries who will work at institutions of higher education or

affiliated nonprofit entities, nonprofit research organization or governmental research organizations are exempt from the cap

• Petitions filed for Beneficiaries who are current H-1B workers and have been counted previously against the cap do not count toward the mandated cap

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Basic Criteria of L-1 Visa For intracompany transferees, allowing U.S. companies who have global presence to transfer employees of foreign entities from outside the U.S. to a U.S. parent, affiliate or subsidiary company for temporary employment

Unlimited number of visas are available

Petitioning company does not have to obtain an approval from the Department of Labor

Two types of L-1 status • L-1A: employees performing managerial or executive assignment in

the U.S. • L-1B: employees who will perform specialized knowledge assignments

in the U.S.

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L-1 VISA

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Requirements • Qualifying corporate

relationships between the foreign company and the U.S. company

• Qualified employment abroad by the transferee

• Qualified position in the U.S.

Duration L-1A: Executives or Managers • Usually issued for three years • May be extended for additional two year

periods • Maximum validity period of seven years

L-1B: specialized knowledge • Usually issued for three years • May be extended for one additional two

year period • Maximum validity period of five years

Basic Criteria of the E-2 Visa Allows foreign nationals to live and work in the U.S. if they invest funds in an enterprise in the U.S. and be actively involved in its operation and development

No set minimum amount that must be invested in the U.S. as long as the investment is “substantial” • “substantial”: amount “sufficient to demonstrate the investor’s

commitment to the enterprise” • “proportionality test”: used to compare the amount of the funds

invested and the total value of the enterprise • Generally, the lower the cost of the enterprise, the higher the

investment must be to be considered “substantial”

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E-2 VISA

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Requirements • Existence of a treaty of

commerce between the U.S. and the country of the foreign national’s nationality

• Enterprise must be a real and operating commercial enterprise

• Enterprise must be for profit • Investor must be in a position to

develop and direct the enterprise • Investment must be at risk

Duration • May be issued for up to five years • May be extended as long as the

enterprise is viable and the investor continues to be actively involved in operating the enterprise

• No limit on the number of extensions granted

Basic Criteria of the EB-5 Visa Created to stimulate the U.S. economy through capital investment and job creation by foreign investors

Investors can live and work in the U.S. if they invest a minimum amount in a new commercial enterprise which creates new job opportunities for U.S. workers

This is an immigrant visa, therefore not a visa of limited duration

If all requirements are met, the investor, his / her spouse and unmarried children under the age of twenty-one will obtain lawful permanent residency status / Green Card • The permanent residency will be conditional for the first two years • A petition to remove the conditions must be filed prior to the expiration of the

two year period and once approved, the investor and qualified family members will receive their permanent Green Cards

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EB-5

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Requirements • Minimum capital investment of $1,000,000 in a commercial enterprise • Minimum capital investment may be reduced to $500,000 if the

investment in an enterprise that is located in a “targeted employment area”

• Required investment can be in the form of cash, inventory, and equipment • Investment must be at risk • Investment must result in the creation of ten full-time jobs for U.S. workers • Investor must be actively engaged in the management of the enterprise,

passive investors do not qualify for this classification

Duration • Permanent

U.S. Tax Implications of Immigration

Presented by:

Dan Fales

You Must Determine your U.S. Tax Status A “United States person” means a citizen or resident of the U.S.

- IRC § 7701(a)(30)(A)

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Resident Alien vs Nonresident Alien An alien individual is a Resident Alien if he/she is

(i) A lawful permanent resident of the U.S. at any time during the year. IRC § 7701(b)(1)(A)(i)

(ii) Such individual meets the substantial presence test. IRC § 7701(b)(1)(A)(ii)

Any individual that is not a citizen or a resident alien is a nonresident alien. IRC § 7701(b)(1)(B)

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The Substantial Presence Test

If an individual is present in the U.S. for at least 31 days during the calendar year and the sum of the number of days present in the U.S. during the current year and the 2 preceding years [determined by formula] is 183 or greater then they meet the substantial presence test.

- IRC § 7701(b)(3)

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The Substantial Presence Formula

Days in the U.S.

Current Year

1st Preceding Year

2nd Preceding Year

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Factor

1

1/3

1/6

Presence in the United States

With limited exception, an individual shall be treated as present in the U.S. on any day if they spent any part of the day in the U.S.

- IRC § 7701(b)(7)

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U.S. Income Tax Implications of Being a United States Person

A United States person is taxed on his/her worldwide income for the entire period they are classified as a United States person.

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U.S. Tax Regime for Nonresident Aliens

The U.S. can only tax income of Nonresident Aliens on income that is connected to U.S. sources of income.

There must be sufficient nexus of the income for the U.S. to assert its taxing jurisdiction.

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There are 2 Types of Income Nonresident Aliens Must Know

1. Income connected with U.S. trade or business also known as “Effectively Connected Income” or ECI

2. Fixed, Determinable and Periodic (FDAP) Income

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Fixed, Determinable & Periodic (FDAP) Income

FDAP income is subject to a flat 30% tax, unless reduced by treaty, on the gross amount of U.S. sourced income.

- IRC § 871(a)

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Effectively Connected Income (ECI)

ECI is taxed at graduated rates and deductions are permitted.

- IRC § 871(b)

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U.S. Withholding Tax on Nonresident Aliens

Chapter 3, subchapter A, IRC §§ 1441 to 1446 imposes federal withholding of income tax by the payor of certain payments to Nonresident Aliens.

The statutory rate is 30% - IRC § 1441(a). But this amount is often reduced by U.S. bilateral income tax treaties.

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U.S. Bilateral Tax Treaties

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Questions?

Want More Information?

Shahrzad Allen – Attorney at Law spalaw@earthlink.net 937.813.8091 Dan Fales - Chair, International Business Services Group dfales@cshco.com 513.768.7526

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