Will the EB5 Visa Pilot Program be Renewed in 2012?

As reported in a recent blog, the number of applicants for the EB5 visa hit an all-time high for the first quarter of the 2011/12 immigration year and has reached a level causing concern that the quota of 10,000 visas could, for the first time, be used before the end of the year.

The increasing popularity of the EB5 visa program may be due to a number of factors including concerns that the $500,000 investment requirement could be raised in September 2012 when the EB5 visa pilot program is due for renewal.  A number of commentators have noted that the investment level has remained static for many years and would need to be raised to nearer $1,000,000 to reflect inflation and the U.S. dollar decline against many other currencies.

It has also been noted that the current $500,000 is well below similar programs from other countries as can be seen from the table below.

There are a number who view the current $500,000 investment level as just too low.

• Uncertainty whether the program will continue in its present format after the Presidential elections later this year, when the wider question of comprehensive immigration reform may be up for review.
• Increasing demand for the regional center programs that are at least proven over a reasonable period,  i.e. those that have a 100% level of both I-526 and I-829 success and have repaid earlier investors. (Contact us for more detail about the positives and negatives of the various programs).

Processing time for the granting of I-526 petitions by The United States Citizenship and Immigration Service (USCIS) has recently been under two months for certain regional center programs. For more EB5 visa information or to arrange a briefing with one of our partners contact Chase Brodsky via telephone at: +1-561-771-1330 or via email: chase@whicheb5.com

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This may at first seem a strange question, but when you look at the basics of what different groups want from the EB5 visa process, the implications of the question become more apparent.

Let’s examine what different organizations want from the EB5 visa process.

• The US government devised the program to create jobs in areas of higher unemployment in the USA. Each EB5 visa investment of $500,000 is intended to create at least ten jobs for US workers.
• The EB5 regional center may have different priorities depending upon its set up.

Generally regional centers, or the projects they are offering, need your capital to fund a particular project; however, the mechanics behind the operating philosophies of these centers can vary enormously. Some centers have been in operation from the start of the EB5 program and have a measurable track record. Some with many years experience across a range of business sectors.

Other centers have been approved much more recently by the United States Citizenship and Immigration Service (USCIS), and some of these were formed specifically because the funding for a particular project could not be raised through any of the traditional financing sources.

• You, the EB5 visa investor generally want the quickest safest route to achieve US permanent resident status for your immediate family and the return of your $500,000 capital in a specified period of time.

It cannot always be assumed that the requirements of the three groups i.e. The Government, The Regional Center and Yourself the EB5 applicant will necessarily converge, as can be seen from the following three examples.

The government’s key focus is job creation and there are certainly a number of EB5 programs that have an excellent track record in creating jobs. However, job creation in itself does not necessarily create a financially viable project and there are a number of examples of regional center projects that have created many jobs over several years that have yet to repay any investor funding.

The regional centers key focus is generally to raise funding to carry out a specific project, however, the range and quality of these projects can vary enormously. Some have already raised significant funding from one or more sources where, with others, EB5 investors may be the only source of funding.

The view the key players behind regional centers have of the immigrant investor can be very important. For some the EB5 applicant is simply a source of funding for a business proposal, whereas some regional centers also attach considerable importance to the needs and difficulties of the immigrant family and have a particular integrity tied into the whole process.

For more information on the philosophy, success and failure behind different EB5 regional centers contact the EB5 specialists at Which EB5 by email: info@whicheb5.com or by telephone at +1-561-771-1330

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Over the past few months there have been a number of articles written that express concern about the dangers of excess office space in a number of cities throughout the USA.

A recent feature through Associated Press covered potential concerns over the development of the New York World Trade Center project. The article stated that tenants were still being sought for one of the buildings in the development. (link to article)

This is not the first report that has indicated, in the current economic climate, it is proving more challenging to fill leases for office complexes. This situation is not helped as leases come up for renewal in existing office complexes and tenants seek to negotiate lower rentals in the light of increasing availability and market forces.

A number of EB5 visa programs are based on new build commercial office facilities and some of these are totally dependent on 100% financing from EB5 visa applicants. Given current difficulties in obtaining alternative financing for commercial construction, some developers have turned to the EB5 visa program as the only means of raising the necessary funds. However, if office developments are starting construction without potential leases in place, EB5 visa applicants may have a number of questions that need answering, such as:-

•           Without tenants in place will the necessary jobs be created?  Without these jobs it is possible that the EB5 visa holder will not have conditions removed from their visa, (after two years). This could lead to potential deportation.

•           If the project is completed and insufficient tenants are found, how easy will it be to get my $500,000 capital back in a reasonable timeframe? The exit strategy or return of the $500,000 capital is often a big unanswered question about EB5 visa financing.

•           Is the project in an area where they may already be an over-supply of similar accommodation, which at best could negatively impact on potential rental income?

•           How long before the office lease market is likely to recover in specific areas?

Unfortunately, potential EB5 visa applicants can find it very difficult to get full answers to these questions, particularly if they are reliant on the regional center or their sales agents to give an unbiased evaluation of the potential success or failure of a program.

Obtain independent and unbiased information on the EB5 visa from financial and legal experts contact chase@whicheb5.com or call +1-561-771-1330

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EB5 Visa Holders – Non-Resident Tax is part two of our series on tax planning for EB5 visa holders who become legal permanent residents of the USA.

Changing citizenship to avoid taxes: Not advisable

There is a special tax on former citizens and long-term permanent residents whose main reason for moving to a foreign country is to avoid U.S. income tax or estate and gift taxes.  Section 877 imposes this tax regardless of your reason for changing citizenship and moving abroad.

You’re subject to this tax if you’re an expatriate with a net worth of $2,000,000 or more (adjusted for inflation), and if your average annual net income tax liability for the five years before you left the U.S. was $147,000 or more for 2011 ($151,000 for 2012). All expatriates who are subject to this tax under the code have to submit a statement of residence and citizenship and a statement of assets and liabilities.

If you fall into this category, the IRS automatically assumes that you’ve changed your citizenship and/or moved abroad to avoid taxes in the U.S.

There is only a small class of high net worth expatriates who are not assumed to have moved or changed citizenship for tax reasons. This class is also described in Code Section 877. If you think Section 877 may affect you, it’s worth checking to see if you fall into this group.

This exempted class of expatriates consists of the following:

• Expatriates who were dual citizens at birth and who have remained citizens of the second country;
• Expatriates who, at the time they became expatriates, were citizens of their birth country, or of the birth country of their spouse or of either of their parents;
• Expatriates who were in the U.S. for no more than 30 days each year during the 10 years before they became expatriates;
• Expatriates who renounced U.S. citizenship before they reached age 18½.

The Internal Revenue Service has begun many programs to identify non-filers and to improve compliance.  In the Middle East alone the number of returns filed has increased by 51% due to compliance programs.

The IRS created Form 2555EZ to simplify filing.  It also revised Publication 593—tax highlights for U.S. citizens and residents going abroad—to encourage taxpayers to file. In addition, Publication 519—the U.S. Tax Guide for Aliens—and the instructions to Form 1040 NR (non-resident) make former citizens and long-term resident aliens aware of their potential tax liability under Section 877.

The IRS has also put a number of programs in place to identify non-filers.  If you are an expatriate and aren’t filing your U.S. taxes, keep in mind that eventually you’ll be identified as a non-filer.  And like elephants, the IRS never forgets.

For a free tax consultation, contact:

Glazer Financial Network (Maurice M. Glazer); email: mglazer@whicheb5.com

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Today we cover part one of a two-part series on Tax Responsibilities of Lawful Permanent Residents. This is a very important subject for potential EB5 visa immigrants. The following information has been provided by Maurice M. Glazer a specialist in international tax and accounting; we welcome him to our team. Please give us your opinion of this information and do not hesitate to contact Maurice for advice. You can read more about Mr. Glazer at our “EB5 Visa Team” page.

Tax Responsibilities of Lawful Permanent Residents

If it’s January it must be tax season…. Many U.S. citizens and lawful permanent residents of the U.S. (green card holders) move to another country and forget or choose not to file a tax return in the U.S. But be warned: The U.S. requires you to file a tax return accounting for your worldwide taxable income—and the statute of limitations never runs out.

In many cases, you may have few or no U.S. taxes to pay, thanks to exclusions and deductions that you may qualify for as an expatriate. But you definitely are required to file if you are a U.S. citizen or resident alien. Not filing can create major issues. For instance, if you live abroad for 10 years and then return to the United States, the penalties and interest you’ve accrued may be more than the actual tax.

The U.S. Internal Revenue Service (IRS) is working with the State Department and with the Immigration and Naturalization Service (INS) to improve compliance with the tax return requirement.

One bit of good news: A U.S. citizen or resident alien doesn’t need to file a tax return unless gross income for the year is over a certain amount. The amount varies depending on your tax status. (See box for details.)

Even when you’re required to file a return, you may be able to cut or eliminate your U.S. taxes, thanks to the foreign earned income exclusion, the housing exclusion and deduction, and the tax credit you get for any foreign taxes you’ve paid. For 2011, you can exclude from taxes up to $92,900 of income you’ve earned abroad. The housing exclusion and deduction are living expenses above $40.72 per day for 2011.

Legal ways to zero out taxes

Fortunately, there are also deductions from gross income that you can take. See Section 911 of the tax code for these. You can also deduct foreign housing costs that you paid, or that were paid on your behalf, which are above the base amount.  You need to file these items on form 2555 or form 2555 EZ.  According to the IRS, it’s important to file these forms even if you’ve earned less than the amount you’re allowed to exclude.

U.S. citizens and long-term permanent residents can also take a credit for taxes paid to a foreign government.  This credit is explained in section 901 of the income tax code. You report the tax credit on form 1116.

Almost half of those filing non-resident tax returns show no tax liability because of these two codes, Sections 901 and 911.

Additional forms to complete

If you’re self-employed and no foreign social security is being withheld from your earnings, you must file a Schedule C with your U.S. tax return and pay U.S. self-employment tax on your net earnings (that is, after deducting your expenses).  The self-employment tax is 15.3%. It is not reduced by the foreign earned income exclusion or by foreign tax credits.

If you own more than a 10% ownership in a foreign corporation, you are required to file a special form reporting that interest.  If the corporation is making a profit, it will be a “controlled foreign corporation,” and you could owe U.S. tax on its earnings.

If you are a beneficiary or a trustee of a foreign trust (for instance, a fideicomiso), or you have a bank account with a balance over $10,000, you must also file a special form.

You can be fined up to $10,000 or more for not filing any of these forms—and since there is no statute of limitations, the fines can be levied many years from now when the IRS and Hacienda (Mexico’s tax department) finally start sharing information. You can also be liable for individual state income taxes.

Tomorrow we will cover: Changing citizenship to avoid taxes: Not advisable

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The EB5 visa process seems to have had more than its share of misleading information and fraud over the years.

Following checks on the EB5 visa program we have come across a number of problems that could have been avoided if proper independent and impartial due diligence had been thoroughly carried out before applying for the EB5 visa.

Despite earlier complaints however, dubious sales claims continue to be made by a number of regional centers, as well as some EB5 visa consultants; these need to be looked into.

Ongoing examples of dubious claims that need further elaboration and explanation include:

“An EB5 visa in just 6 months”

While it is correct that some center programs have actually received I-526 approval from The United States Citizenship and Immigration Service (USCIS) in a very short time period, this is certainly not the norm. If time is an important factor when you are considering permanent residence in the USA it is critical to receive independent advice on the time line record of different regional centers.

“Only government approved regional center”

While there are regional centers operated by Governments there are important issues to be aware of. The operation is via State Government not The Federal Government. Although a regional center may itself be operated by a State Government, the programs it offers are generally in the private sector. This becomes particularly important when the $500,000 the EB5 visa holder invested is to be repaid. If anything goes wrong it is highly unlikely the State will step in and repay the money, repayment will be down to the private sector program operators.

“A guaranteed return of your investment”

There are very few real guarantees in the current economic climate and although this claim has been used by agents selling EB5 visa programs outside the USA it needs to be looked at with caution.

“The safest regional center program”

One of the conditions relating to the EB5 visa requires project investment to be “at risk”, there can be no guarantees of the return of the $500,000 investment. While some programs may seek to lower risk factors no program can claim to be risk free.

These are just a few of the reasons why these statements need further research as they either fail to give the whole story or they are just plain wrong.

If you are considering the EB5 visa it is very important that you are given hard-hitting, in-depth, impartial advice from experts who have actually visited regional center programs, can arrange for you to have specialist financial and legal advice and have a 100% successful track record with several hundred EB5 visa holders.

For more information contact Chase Brodsky at Which EB5

Which EB5 Visa Blog - Immigration to the USA Using the EB5 Visa

Earlier today we posted a video blog regarding the fact that in the first quarter of the fiscal year 2012 the USCIS issued more than 2300 EB5 visas. Many of our readers have asked us to give statistics for EB-5 visa usage in earlier years.

Below you will see an official USCIS slide from the recent EB5 stakeholders conference call that details the EB-5 visa usage ffrom 2005 though first quarter 2012.

If you would like to discuss how these figures might impact your EB=5 visa application please contact us immediately for a free briefing.

Which EB5 Visa Blog - Immigration to the USA Using the EB5 Visa

EB5 Visa statistics for 2012 show we might exceed the limit and run out of visas in 2012

For details of how this may impact your EB5 visa application contact Chase Brodsky at +1-561-771-1330 or via email at chase@WhichEB5.com for a free briefing.

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The simple answer to this question is that if you fail to get an I-829 approval on your EB5 visa you face possible DEPORTATION from the USA; there are no guarantees that you will get an I-829!

Unfortunately, this is a point that is too often ignored or missed by people looking at the EB5 visa as their best option for obtaining permanent residence in the USA.

Some families assume, or are led to believe by regional centers or their agents, that once they have applied for the EB5 visa and been approved by the United States Citizenship and Immigration Service (USCIS) through an I-526 petition, all the hard work is over and they are permanent residents of the USA.

However, the important point to keep in mind is that entry into the USA on the EB5 visa is initially through a conditional green card issued for a two-year period.

In a specific time frame, towards the end of this two-year period, it is necessary to file an I-829 (removal of conditions) petition. Success at this stage sees the removal of these conditions and a permanent green card; failure at I-829 could result in deportation.

Although the conditions for removal seem straightforward there is no guarantee that they will be met.

These conditions relate to:-

•           Sufficient evidence that each investment of $500,000 has been invested in line with the original I-526 application. This should not be taken for granted; there have been examples of a regional center moving funds to an alternate program which led to refusals at the I-829 stage.

•           Sufficient evidence on the creation of ten jobs per investor in the approved targeted employment area.

There are a number of issues that can occur during the two-year period of the conditional green card that could compromise the likelihood of obtaining the I-829 petition and having the conditions removed.

To name a few:-

•           Downturn in the industry in which the project operates

•           Problems in the development or construction of a real estate project

•           Problems in the viability of a project leading to the creation of insufficient jobs to satisfy the ten jobs per investor criteria.

The importance of seeing the entire picture prior to selecting the most appropriate regional center for your EB5 visa application is critical. Which EB5 have a 100% track record for several hundred EB5 visa clients across a number of regional centers. For independent EB5 visa information contact Which EB5.

Which EB5 Visa Blog - Immigration to the USA Using the EB5 Visa

A recent question we were asked concerned the expiration of the EB5 regional center pilot program in September 2012. The client was concerned that if he chooses a particular regional center program that was slow to fill-up he could risk the project not being fully funded by the end of the program.

This is an important question that raises a number of issues:-

• The EB5 visa regional center pilot program is due to expire in September 2012 unless it is extended or made permanent by the US Congress.
• Currently applications are being processed by The United States Citizenship and Immigration service (USCIS) in a time period that can vary from less than two months to over a year.
• This time period can be longer if an applicant receives a Request for Further Evidence Notice (RFE) by USCIS, particularly if USCIS need more information specifically on the chosen program.

Although there are a number of regional centers currently offering EB5 visa projects they are certainly not all created equally.

Some regional center programs are well proven, have a lengthy 100% track record and have extensive evidence of performance. In certain cases, applications have taken under two months to be approved by USCIS.

Others regional centers struggle to attract investors and raise concerns whether they will attract enough investor funding to be able to fully fund their project. Some of these regional centers need a very high numbers of investors, others only need a small number to fill up.

If a program fails to be funded prior to the expiration of the pilot program and cannot raise enough alternative funding at a difficult time on capital markets, there may be cause for concern that a project may not go ahead which places the EB5 visa investor in a potentially risky situation.

There are a number of reasons that programs can face problems filling their spaces, these include:-

•           Their marketing or sales process

•           An inherent problem with the project

•           Is it simply not an attractive project

For further detailed information on the many EB5 visa regional center programs contact Which EB5 for independent and experienced advice on EB5 visa matters.

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