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Immigrant Investor

EB-5 Introduction
Congress created the EB-5 visa category as part of the Immigration Act of 1990, hoping to attract foreign capital to the US and create jobs for American workers. Under section 203(b)(5) of the Immigration and Nationality Act (INA),10,000 immigrant visas per year are available to qualified individuals seeking permanent resident status on the basis of their engagement in a new commercial enterprise.

The key features of EB-5 include:
1. The preference is allotted 10,000 visas per years; there is no pass-down to the investor category from the higher employment-based preferences.
2. There are two groups of investors, those who invest in targeted employment areas and those who invest in anywhere else. No fewer than 3,000 of the annual allotment of visas must go to investors in targeted employment areas. Therefore, separate waiting lists could develop for investor visas for targeted employment areas and for other locations.
3. The labor certification requirement does not apply to the preference. In fact, the preference was created partially in response to the rules of the Department of Labor, which bar the issuance of certifications to investors.
It must be noted that very few foreign investors have found the EB-5 to be an attractive route to U.S. permanent residence. The U.S. tax structure is the main disincentive for prospective investors. Specifically, an immigrant investor is subject to U.S. taxation of his or her worldwide income during the two-year conditional residence period despite having no guarantee that his or her conditional status will be removed.

The EB-5 Visa provides the most flexible path to a green card based on a US investment. The EB-5 visa does not require the applicant to manage the day-to-day affairs of a business. One may invest in an existing business, or a new business. More than one person may invest in the same business. The EB-5 investor may be a minority owner of the business. It allows the beneficiary to engage in commercial enterprise anywhere in the U.S. subject only to some restriction in the pilot program targeting certain areas.
Immediate family members of the EB-5 immigrant can also immigrant with the immigrant investor. No separate immigrant visa petition is required on behalf of such family members.

Permanent resident status based on EB-5 eligibility is available to investors, either alone or coming with their spouse and unmarried children. Eligible aliens are those who have invested -- or are actively in the process of investing -- the required amount of capital into a new commercial enterprise that they have established. They must further demonstrate that this investment will benefit the United States economy and create the requisite number of full-time jobs for qualified persons within the United States.
In general, "eligible individuals" include those:
1. Who establish a new commercial enterprise by:
o creating an original business;
o purchasing an existing business and simultaneously or subsequently restructuring or reorganizing the business such that a new commercial enterprise results; or
o expanding an existing business by 140 percent of the pre-investment number of jobs or net worth, or retaining all existing jobs in a troubled business that has lost 20 percent of its net worth over the past 12 to 24 months; and

2. Who have invested -- or who are actively in the process of investing -- in a new commercial enterprise:
o at least $1,000,000, or
o at least $500,000 where the investment is being made in a "targeted employment area", which is an area that has experienced unemployment of at least 150 per cent of the national average rate or a rural area as designated by OMB; and

3. Whose engagement in a new commercial enterprise will benefit the United States economy and:
o create full-time employment for not fewer than 10 qualified individuals; or
o maintain the number of existing employees at no less than the pre-investment level for a period of at least two years, where the capital investment is being made in a "troubled business," which is a business that has been in existence for at least two years and that has lost 20 percent of its net worth over the past 12 to 24 months.

Removal of conditional status
In order to deter fraud, immigrant investors, their spouses and dependent children are subject to conditional permanent residence for a two-year period. The alien must file a petition to remove the conditions during a 90 day period prior to the second anniversary of the alien lawful admission as a permanent resident. The Immigration and Naturalization Service will examine the business at the end of the two year period to determine whether or not the alien has complied with all of the requirements.

The alien must also show that he or she "sustained the actions required for removal of the conditions" during his or her residence in the United States. An alien entrepreneur will have met this requirement if he or she has "substantially met" the capital investment requirement and has continuously maintained this investment during the conditional residence period. The entrepreneur residence may be terminated at the end of the two-year period or earlier if it is found that the business was not established, or was established solely to evade immigration laws or that the requirements were otherwise violated.
In order to become a lawful permanent resident, eligible investors must file a CIS Form I-829, Petition by Entrepreneur to Remove Conditions. Form I-829 must be filed within 90 days before the second anniversary of an Alien Investor admission to the United States as a conditional resident.

Pilot Program
In order to increase interest in the existing immigrant investor category, Congress created an immigrant investor pilot program in 1993. The most important feature of the law is that it relaxes the job creation requirement applicable to immigrant investors by allowing aliens investing in new commercial enterprises located within regional centers to establish "reasonable methodologies" for determining the number of jobs created, including such jobs which are estimated to have been created indirectly through revenues generated from increased exports resulting from the pilot program. As originally enacted in 1993, the program was to last five years expiring on September 30, 1998. Subsequent amendments extended the immigrant investor pilot program for an additional 10 years until September 30, 2008. The 1997 amendment also increased the number of visas set aside for the program from 300 to 3,000 visas annually. These numbers are drawn from the overall total set aside for the EB-5 investor category; the 3,000 visas include visas for the spouses and unmarried minor children of qualified immigrants. In addition, the latest extension, enacted in December 2003, permits the USCIS to give priority to petitions filed by aliens seeking EB-5 classification under the pilot program.                                        

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